The news: This week, British pharmaceutical company GlaxoSmithKline announced it will reform its sales practices, phasing out direct payments to doctors for product promotion and ending tying compensation of its sales staff to the number of prescriptions written.
Chief executive Andrew Witty said that Glaxo was making the move "to try and make sure we stay in step with how the world is changing," and that it had absolutely nothing to do with a looming bribery investigation in China (where officials claim Glaxo paid doctors to attend conferences that never actually happened).
Glaxo is the first major drug company to make such a move, and it's auspiciously timed, given that the Affordable Care Act (ACA) requires those same companies to begin disclosing how much money they're shelling out to doctors by next year.
Glaxo is one of the largest pharmaceutical companies in the world, and commands global third-quarter sales this year of $10.1 billion.
"Patients should have the right to know if their physician is getting paid by a certain drug company or has a financial interest in something that they are prescribing," said Sen. Amy Klobuchar, who fought for the disclosure requirements that were later tied into the ACA.
So what's it mean? It's a move in the right direction, and one that will clear up one of the most longstanding questions of medical ethics in the modern pharmaceutical industry. The switch is also long overdue. According to a Financial Times investigation, companies like Glaxo paid U.S. doctors more than $1 billion in 2012 to promote medication and proprietary medical products.
The Week observes that these rule changes might be less major than the casual observer would immediately suspect, noting that tens of thousands of medical sales reps have been let go since 2006 now that specialists do more of their own prescribing and that the company is still free to market by providing grants through for-profit corporations.
But the new rules may temper overprescription of unnecessary drugs by removing incentives for well-known medical professionals to act as spokesmen for big drug companies. A recent study in JAMA Internal Medicine found that doctors are wildly overprescribing antibiotics, while other articles found that anti-psychotic and stimulant prescription rates have tripled in the last decade. Doctors should be free to utilize new treatments, but they need to hear about their efficacy from unbiased sources.
Why is it happening now? Don't credit the rule-change to sudden corporate benevolence. Glaxo recently paid out a $3 billion settlement ruled in 2012 over unlawful promotion of certain prescription drugs and failure to report safety data, and the investigation in China is adding to concerns over its marketing practices. Meanwhile, it's clear that the company isn't exactly salivating over the prospect of making its direct payments to doctors public - and probably, neither are doctors who make large sums of money by promotingtheir products. All these factors have added to the pressure on Glaxo to change its marketing strategy.
But still, it's nice to see the change, and Glaxo is smart to recognize the new oversight on the industry and be the first to adapt.