The California Biotech Law Blog wrote a blog posting on March 21st about legislation under consideration which would require doctors to disclose the acceptance of gifts from drug companies and we addressed the issue of whether doctors should have an ethical duty to disclose potential conflicts to patients; however, a column today by Peter Huber in Forbes.com looks at a new angle to this debate: whether the public should really be concerned about doctor bias against drug companies?

The crux of Huber’s argument  is that some doctors out there are biased against the drug companies because if drug companies churn out drugs that are too good, doctors will lose business.  Huber writes as follows:

Brilliant doctors often work closely with big drug companies, and they seem to like their corporate partners just fine. Too fine, say their vocal critics–no doctor can have objective views about Lipitor when he takes Pfizer‘s money to develop or test it. But when the critics are doctors themselves, as they quite often are, keep in mind that there’s a deeper conflict in play here that the critics never acknowledge or discuss. By working at the cutting edge of pharmacology in close collaboration with Big Pharma, top-tier doctors are taking over the whole medical show. It’s because of their work that so many of their less able colleagues are destined to provide doc-in-a-box services at Wal-Mart, at cut-rate prices prescribed by Big Insurance or Big Government. . . .

In the old way of looking at things, drugs are just extensions of the physician’s wise hands, like stethoscopes and sutures. But when Big Pharma’s products get good enough, they displace a whole lot of hands-on doctoring. A pregnancy test used to be an office visit and a lab analysis; now it’s a remarkably smart dipstick sold over the counter. Diagnosis used to be almost all doctor; now it’s almost all lab–and the lab technicians rely on higher-caliber dipsticks, assays and reagents developed and mass-produced by the same teams of top-tier doctors, research hospitals and big drug companies.

When drugs get good enough, they displace hours of ineffectual (but remunerative) human monitoring and palliative care. Drugs displace doctors, nurses and hospital beds because they really work and because they often work long before bad chemistry morphs into clots, plaques, lumps and other symptoms that require scalpels and beds. In the first half of the 20th century almost all medically supplied gains in health and life expectancy came from germ-killing vaccines and antibiotics. All the important gains since have come from arrays of drugs that target clogged arteries, strokes, cancer and other diseases rooted in our own human chemistry. Human eyes can’t see and human hands can’t handle most of the things that make us sick–bacteria, viruses, white blood cells, antibodies, proteins, enzymes, fats and genes.

At first glance the argument seems a bit ludicrous.  Isn’t there a doctor shortage in many places?  Aren’t we having to import doctors from overseas? Isn’t there talk about the fact that the baby boomers growing older means we need more doctors than medical schools are already churning out?  Why would doctors be concerned about losing work? Or at least work that is the most profitable?

But on further consideration, you have to admit that there may just  be a glimmer of truth in the argument.  Coming from a medical family myself, I know that the real money for a physician is in specialization–becoming board certified in a particular field.  This is not so different than in the legal field.  You specialize to become an expert on a particular field, since experts can stand out in the profession and potentially make more money. 

In the medical profession, patients go to specialists when they have an illness that seems to need the attention of an expert in that field.  However, if a miracle drug exists that eradicates the illness, would that patient ever need to go to the specialist?  The patient might never get past the primary care physician.  Or, if the the patient did go to the specialist, at the very least the physician wouldn’t see the patient very often. The patient would take the drug and not really need a specialist unless the drug stopped working, which in the case of the miracle drug perhaps wouldn’t happen.  Perhaps the specialty wouldn’t really be that profitable any more.

Sounds crazy?  Maybe.  But it does happen in the legal profession.  Specialties become unprofitable all the time.  Lawyers get asked to leave law firms, or they just gradually realize that they need to switch specialties if they intend to have a profitable practice.  Isn’t it just possible that the same could happen to specialist physicians?

I think the answer is yes: it can and probably will happen to some physician specialties.  Perhaps not as quickly as a legal specialty becomes unprofitable, but just like certain jobs are getting phased out due to technological advances, the same probably will happen to certain physician specialties over time as biotechnological advances make certain specialties unprofitable.  Look what is happening in the medical profession: the same consolidation that has happened in the legal industry is increasingly happening among medical practices.  With consolidation comes the reality that practices and specialties will be viewed through the eyes of the business on their overall profitability to that business.

So, back to the argument–is it just possible that there is a bias by some doctors against pharma due to a fear that  pharma may be doing its job too well?  Perhaps. I’ve certainly seen things written by lawyers worrying that technology will cause us to be able to do our job too efficiently.  Why wouldn’t doctors have similar worries?  Can’t those worries cause a conflict?  Of course, they could.  I would be concerned if the practice I had built was looking like it might not have a future–or at least a very profitable future. That’s only natural. 

How concerned should we the public really be about this?

Well, I think we should keep it all in perspective.

In the end, technological advances benefit society and our professions at large.  Doctors, like lawyers and other professionals, will inevitably develop new expertise as the need for various specialities changes with those advances–we all have to adapt in this world to survive.  So, any damage to a practice that might be caused by those advances will likely be temporary.  Savvy doctors will develop new expertise just like savvy lawyers and other professionals have to do to change with the times.  In my opinion, the majority of doctors will recognize this reality and not let fear get the better of them. 

Nevertheless, Huber makes some interesting points, which are definitely worth considering in parallel as Congress considers legislating that doctors disclose potential conflicts with drug companies.  Should we perhaps be taking another logical step and asking if Congress should really be legislating on doctor conflicts?  Or should we perhaps consider other possible doctor conflicts in tandem to what Congress has been proposing?   Is focusing in on doctor conflicts arising from receiving gifts from drug companies too narrow a focus for the legislation?  I think that these are all valid questions to consider as Congress moves forward and addresses this issue.

The Pharma Marketing Blog ran an interesting column today on the new proposed legislation, which would require doctors to disclose gifts received from drug companies. 

Introduced by Rep. Peter DeFazio (D-OR) and Ways and Means Health Subcommittee Chairman Pete Stark (D- CA), the new legislation is called The Physician Payment Sunshine Act  and is a companion bill to S. 2029, which was introduced by Senators Chuck Grassly (R-IA) and Herb Kohl (D-WI).  According the the press release issued by U.S. Congressman Peter DeFazio, the purpose of the bill is as follows:

The legislation builds on existing laws in Minnesota, Vermont, Maine and West Virginia to require prescription and medical device manufacturers to publicly report any gifts with a value of $25 dollars or more provided to doctors in connection with their marketing activities.  Under the new legislation, this information would be made widely available to the public. . . ."Americans are being gouged by pharmaceutical companies that spend more on marketing than they do research and development." DeFazio said.  "They enjoy generous subsidies from the government, but have no accountability when it comes to the billions of dollars they spend promoting high priced drugs.  I am proud to introduce this legislation which would shine a light on the marketing practices of drug companies and give patients the information they need to make an informed decision about their healthcare."

The question, of course, being debated is whether it is a good idea to enact The Physician Payment Sunshine Act.  The Pharma Marketing Blog argues that this legislation goes too far in attempting to curb the potential for conflicts of interest, stating:

This "sunshine" bill also has a few dark clouds associated with it. I have to agree with Bob Ehrlich of DTC Perspectives that "this bill seems overly onerous" and "is meant to discourage payments to doctors by outing them and the drug company on a public site". . . .
Do I agree with this? I hate to sound like a Clinton, but it all depends on what "large" means. Is "large" more than $100? This is the cutoff amount specified in PhRMA’s voluntary guidelines on gifts to physicians. Usually, these types of bills attempt to codify such voluntary guidelines and I’m not sure where the $25 limit came from other than the idea of setting the bar so low that it would put the pharma "tchochke" industry out of business.

What is our view at the California Biotech Law Blog on the proposed legislation?  In my opinion, there is a definitely a need for legislation to regulate potential conflicts of interest in the medical profession.  Lawyers certainly receive close scrutiny on potential conflicts of interest, and I see no reason why physicians should not receive the same treatment.  I certainly would think twice about taking any drug recommended by my physician if I knew that the physician making the recommendation had received compensation of any nature from the drug company, and as a lawyer, I would expect any doctor to disclose such an association.  I’m frankly surprised that rules are not already in effect to require this type of dislosure.

As far as the issue of whether the $25 limit is reasonable, this does sseem a bit ridiculous and arbitrary.  Is receiving $25 really a conflict of interest, when it is only a fraction of the doctor’s total earnings? The standard on legal malpractice applications for weeding out potential conflicts of interest is typically ownership of more than 5% of the company at issue.   Perhaps a more reasonable conflict of interest standard would be 5% of the doctor’s total earnings in the year.  Or even 3% of the doctor’s total earnings. But $25? 

What are your thoughts on the new legislation?  Please let us know your thoughts on the issue and we will share them with our readers.

Baybionotes provided a short update this month regarding the implementation of recent legislation expanding the obligations of clinical trial sponsors to submit information regarding their trials to the federal data bank. 

Author Robert Church of Hogan & Hartson LLP discussed the legislation as follows:

Title VIII of the Food and Drug Administration Amendments Act of 2007 expands the federal registry in several important ways. First, it is no longer limited to trials of drugs intended to treat serious or life-threatening diseases, but rather requires registration of all clinical trials other than Phase I and requires significantly more content. As of December 26, new data points for initial registration became required, even reaching back to include some clinical investigations that began before the law was passed.

The NIH has also been directed to expand ClinicalTrials.gov to include trial results. By this fall, sponsors will have to submit results information about approved products. Soon thereafter, adverse event data will be required on the site as well. Still more, the law requires the promulgation of regulations by September 2010, further expanding the results database “to provide more complete results information and to enhance patient access to and understanding of the results of clinical trials.”

What are the penalties for failure to comply with the new legislation?  According to Church, the penalities are as follows:

Not only will failure to submit the required information in a timely fashion be posted on ClinicalTrials.gov, but sponsors may also face civil fines up to $10,000 for all violations adjudicated in a single proceeding. If noncompliance continues thirty days after notice, the fine may be increased $10,000 each day until the matter is resolved.

Biogenerics legislation will likely be tabled until 2008, reported the Kaiser Daily Health Policy Report.

According to the Kaiser Daily Health Policy Report:

Rep. Henry Waxman (D-Calif.) in a speech before the Generic Pharmaceutical Association on Thursday said legislation (HR 1038) that would allow FDA to approve generic versions of biotechnology drugs is unlikely to reach the House floor this year. . . .

Waxman said that although “enormous strides” have been made since he introduced the measure in February, scheduling issues would prevent the bill from being included in House legislation (HR 2900) that would overhaul FDA and reauthorize prescription drug user fees. Waxman tried to attach the generic biotech measure to the FDA overhaul bill in July but was unsuccessful.

The biotech industry can breathe a sigh of relief.  With the battle over patent reform legislation looming ahead this fall, biogenerics is one fight that the industry will not have to take on this year.

California biotech companies are rallying behind proposed new state legislation, which would extend the time period that biotech companies have for claiming a tax deduction based on net operating losses.

The Mercury News reports:

The business leaders say their companies often labor for 15 years or more at a cost of hundreds of millions of dollars before they can get a drug approved for sale and generate enough revenue to climb out of the red. Yet under California law, they typically have only 10 years to claim a tax deduction based on their net operating losses.

Consequently, by the time they earn enough to pay state income taxes, many of them have lost the opportunity to claim the deduction. .  . .

That’s why [Assemblywoman Sally] Lieber has introduced a bill to double that deduction period, mirroring federal law. The measure, AB1370, which specifically gives biopharmaceutical businesses 20 years to claim their tax credits, was unanimously approved by the Assembly on June 6.

If it becomes law, it could give the biotech industry a big boost, according to Matthew Gardner, president of BayBio, an industry trade group based in South San Francisco.

While similar measures have failed twice before, supporters claim that this time is different, as there is more biotech support within assembly than existed in the past.  Three states–Florida, Illinois, and New York–already have a law on the books similar to this one being considered.

According to The Mercury News, this bills is not  the only way in which states are attempting to establish tax breaks for biotech companies:

Some[states] – including New Jersey and Hawaii – allow the firms to sell or trade their net operating loss credits to other businesses.

The article raises an interesting issue regarding tax deductions.  Is the bill a good idea for California’s taxpayers, or does it mean that we just have to bear more of the state’s tax burdens?