Eli Lilly breaks with drug industry over doctor-payment disclosure bill

Pharmaceutical manufacturer Eli Lilly & Co. broke with the drug industry and endorsed a Senate bill that would require disclosure of industry payments and gifts to physicians.

The drug industry has been ambivalent about a federal “sunshine law,” which sets Lilly’s strategy apart.

{mosads}After months of talks with Lilly and others, Senate Finance Committee ranking member Chuck Grassley (R-Iowa) and Aging Committee Chairman Herb Kohl (D-Wis.) on Tuesday unveiled a revised version of legislation they originally put out last September.

“Eli Lilly deserves credit for its endorsement of the Sunshine Act and the leadership role it is taking for greater transparency in the pharmaceutical industry,” said Grassley, who noted he also had the support of the Association of American Medical Colleges.

“We applaud Eli Lilly for endorsing transparency and hope the rest of the pharmaceutical industry follows their lead,” Kohl said.

The bill aims to curb real and perceived conflicts of interests between physicians and the companies that make and sell pharmaceuticals, medical devices and medical supplies. The revised bill reflects concessions made to industry interests to win their support, including federal preemption of state “sunshine laws.”

Industry sales representatives routinely provide gifts — from office supplies branded with product names to lavish lunches for physicians and their staffs — as part of their sales strategy. In addition, companies frequently offer lucrative compensation to doctors for side work, such as consulting and speaking fees, pay travel expenses to conferences and provide research funding.

According to critics, these practices create an atmosphere rife with the potential for abuse. The pharmaceutical industry spends tens of billions of dollars a year to promote drugs to physicians.

The Pharmaceutical Research and Manufacturers of America (PhRMA) and the American Medical Association (AMA), along with other interest groups, have long held that their voluntary ethical standards are adequate.

Some in Congress are skeptical, however, and a growing number of states have begun moving ahead on their own; Maine, Minnesota, Vermont, West Virginia and the District of Columbia already have laws on the books.

The Grassley-Kohl bill would pre-empt those state laws, even if they are stricter than the proposed federal bill.
Lilly found itself squarely in the middle of the controversy surrounding the drug industry’s financial relationships with physicians in March. At an Aging Committee hearing, a former Lilly sales representative, Shahram Ahari, offered a scathing critique of the industry’s sales tactics, including the use of gifts.

“The strategy behind these gifts is to draw attention to the pharmaceutical products and to serve as reminders of the company’s generosity. These reminders generate a conscious or subconscious desire to return the ‘favor,’ ” Ahari said, according to written testimony.

Lilly did not support the original version of the bill, introduced in November 2007, but its lobbyists have been working with Grassley, Kohl and their aides for months, they said.

The fruits of Lilly’s efforts are evident in the revisions.

Under the legislation, the public would have access to an Internet database listing when doctors get at least $500 in money or gifts from a single company during a year; gifts worth less than $25 would not be included. Penalties would range from $1,000 to $50,000 per violation, up to a $250,000 annual limit.

The $500 disclosure trigger and the maximum per-violation fine are more industry-friendly than in the original version of the bill, which also did not include an annual cap on penalties.

Under the original measure, any gift worth more than $25 would have triggered disclosure. Both versions of the bill exempt a number of payments or in-kind contributions to physicians, such as free samples for patient use.

According to Lilly, these modifications were not its highest priorities: The most important change is federal preemption.

“The way to go here is with a uniform federal standard,” Lilly Assistant General Counsel Michael Bigelow said.

“Each of [the states] have different things within their law that require us to report different things,” said Edward Sagebiel, Lilly’s manager of corporate communications.

Lilly said that its stance on the Sunshine Act is consistent with other voluntary actions it has taken in recent years, such as publishing its clinical trial data and information about its educational and charitable grants on the Web.

In the company’s official statement, Lilly President and CEO John Lechleiter said, “Lilly welcomes greater transparency in the healthcare system and believes this legislation represents an important step in building public trust and confidence in the relationships between the pharmaceutical and device industries and physicians.”

“Lilly is definitely leading the industry and being far more aggressive,” said Sonya Sotak, Lilly’s director of federal affairs. The company has tried to persuade PhRMA and the Biotechnology Industry Organization to adopt its position, she said. “We’ve been very clear that we believe that this is something that the drug industry should be engaged in,” she said.

PhRMA has not taken a position on the sunshine bill. In a statement, PhRMA Senior Vice President Ken Johnson cautioned, “It is important that whatever information disclosed is accurate and provided with adequate context that does not inadvertently imply that these interactions are inappropriate.”

Lilly’s previous transparency initiatives brought it into close contact with Grassley and his staff, leading to their work on the sunshine bill, Bigelow said. Indeed, Grassley praised Lilly on the Senate floor for its prior efforts the day he and Kohl introduced the original version of the bill.

“They called us up and we came and met with them,” Bigelow said.

The modifications made by Grassley and Kohl appear to address at least some of the concerns raised by others, including the AMA and the Advanced Medical Technology Association (AdvaMed). Neither group had reviewed the new bill or could comment.