May 27, 2011
In an industry first, drugmaker AstraZeneca (AZN.L) is scrapping payments for doctors to attend international medical congresses.
The move follows increased scrutiny of the $850 billion-a-year industry’s potentially undue influence on prescribers and could put pressure on rivals to follow suit.
AstraZeneca chief executive David Brennan announced the change of policy in low-key fashion at an industry conference in Istanbul earlier this month.
“We have decided that we will no longer pay for doctors to attend international scientific and medical congresses but will instead focus our educational efforts on local educational opportunities for healthcare professionals,” he said.
As healthcare costs rise worldwide, concern has grown about financial ties between doctors and drugmakers. That has already led to bans on lavish entertainment and the end to a range of free gifts from pens to mugs to computer accessories.
AstraZeneca’s decision to stop paying for medics to fly to international medical and scientific meetings has taken things to a new level.
European and U.S. congresses on topics like cancer, heart disease and diabetes typically see planeloads of specialist physicians flown in at Big Pharma’s expense to hear the latest research in their area.
“It is a dramatic change,” Richard Bergstrom, director general of the European Federation of Pharmaceutical Industries and Associations, said of the AstraZeneca move.
“It is another sign that industry is changing its scientific education practices and I am sure you will see more moves of a similar nature by other companies,” Bergstrom told Reuters.
Brennan said he took the step because AstraZeneca should not do anything that could be seen as an inducement to prescribers to use its products. “We start from the position that our products stand on their own merits.”
Although the move will save money, the decision was not taken on cost grounds and any savings would have no significant impact on the company’s bottom line, a company spokeswoman said. AstraZeneca had sales last year of $33.3 billion and made a core operating profit of $13.6 billion. Its action may carry additional weight because of Brennan’s role as president of the industry’s global lobby group, the International Federation of Pharmaceutical Manufacturers and Associations.
It came at time of unprecedented regulatory pressure on the drugs industry, which in the past five years has paid $15 billion penalties to the U.S. government alone for alleged violations of laws and regulations.
That scrutiny has been ramped up with a wave of investigations under the U.S. Foreign Corrupt Practices Act (FCPA) and the introduction of a new bribery act in Britain.
Bribery legislation is an issue for pharmaceutical companies because doctors can be seen as government officials in those countries where they work for state-funded health systems. So, payments to them could trigger questions over corruption.
Johnson & Johnson (JNJ.N) last month agreed to pay $78 million to settle British and U.S. charges it paid bribes and kickbacks to win business overseas, in the first settlement by a big drug company since the United States began scrutinising the industry under the FCPA more than a year ago.
AstraZeneca itself is being investigated by the U.S. Department of Justice and the Securities and Exchange Commission in connection with the FCPA. The company said last month it was looking into inappropriate conduct in countries including China.