Drug firm corruption
Within days, both a doctor and an employee of a foreign-owned, it was emphasized, pharmaceutical concern appeared in both print and TV media, testifying that they had witnessed illegal marketing practices on the local market. Journalists also turned to ex-health ministry officials for authoritative comment, duly obtaining pious expressions of regret and disapproval.
In other EU member states, though, the GSK scandal received little attention, even in business and financial publications. Much more interest was, and is, being paid to GSK's other legal travails in New York, which have potentially far more significant repercussions for both the industry and consumers. The state of New York has taken GSK to court in relation to its selective publication of clinical trial results, with the alleged aim of concealing the negative effects of anti-depressant drugs for children.
So why the local media hype about a three year-old scandal in Italy? Cynics point to the coincidence that the scandal involving innovative pharmaceutical companies hit the press shortly before the compilation of the latest government reimbursement list. Whether or not there is any significance in this serendipity, it can't be denied that a bad press for innovative companies can only be to the advantage of the health ministry, which, uniquely within the EU, has excluded new medicines from the list for six years now, despite the fact that such medicines can often mean the difference between a normal existence and hospitalization for thousands of citizens.
Which is not to say that the pharmaceutical industry in this country isn't corrupt. By all reports, it is. Last year, the FBI launched a probe into alleged bribery by U.S. pharmaceutical firms in Poland. Meanwhile, market insiders claim that at least one smallish foreign subsidiary on the local market, though it conducts genuine clinical trials elsewhere, also pays doctors to conduct extra sham clinical trials on the domestic market in order to both win over doctors and introduce its drugs to potential consumers. Industry insiders also suggest that, to put it delicately, the creative interpretation of the law on drug promotion is common practice throughout the domestic industry, among both locally- and foreign-owned concerns.
It's hardly surprising, then, that prestigious daily Rzeczpospolita ran a story in response to the Italian GSK scandal, proclaiming, "The pharmaceutical sector is sick." What is surprising, though, is that the paper could conclude, without a trace of irony, that "against the phenomenon, the state remains helpless."
The overwhelming majority of corruption scandals on the pharmaceutical market have involved government officials themselves. In May 2003, it was revealed that a Romanian concern had got a drug registered in the space of just three months on the basis of 'clinical trials' that had allegedly taken place on a small group of people conducted on property owned by a government official. A further 200 suspiciously speedy drug registrations by local and CEE generic companies under the health ministry of Łapiński remain - mysteriously - uninvestigated. Also in May last year, a government official was accused by a foreign corporation of attempting to extort an enormous bribe in return for placing drugs on the reimbursement list. His trial continues.
Pharmaceuticals is the one industry where the government, as well as regulating it, is also by far the most significant customer. Since funding health care is a problem for all government budgets, and apparently particularly difficult for Polish ones, governments have a powerful vested interest in securing the cheapest possible drugs that, unless checked, they're bound to abuse.
Legislation guiding decisions as to which medicines are included on the reimbursement list in this country is confusing. It is also constructed so that there's no effective process of appeal over reimbursement decisions before they become law, much less any effective channel of bringing the government to account afterwards. Meanwhile, since 2003, the minister responsible for reimbursement decisions also supervises the registration authority. This, say industry insiders, made the spate of suspicious registrations under Łapiński singularly easy to accomplish.
As lawyers and doctors - but, notably, rarely the media - report, the government habitually cheats thousands of this country's poorest and most helpless citizens by including on the reimbursement list generic copies that do not cure all the disorders cured by the originals that they are said to substitute. The list also includes drugs that are either not available or, because of patent infringement cases, should not be legally available, as well as drugs whose registration processes are in question.
This enables the government to pretend that spending on drugs is down, when all that is actually down is the budget's contribution. Those citizens who are sick and need drugs other than the ones they can get significantly subsidized in drugstores simply have to fork out from their own pockets. Yet despite the fact that they dramatically affect hundreds of thousands of citizens, the national media, say lawyers and doctors, have mostly shown a curious aversion to investigating these issues.
A recent article in Businessweek, for example, claimed that "the only difference between originals and generics is price." Though in some cases this may be true, in many crucial cases it is not.
These problems would be addressed, and shady practices would be harder for the government to keep hidden, if the government implemented EU transparency directive 89/105/EEC as it should have done long ago. However, the 'helpless' government has, as yet, shown no great eagerness to do so.
Agnieszka Deeg-Dąbrowska, partner at international lawyers Cameron McKenna, thinks the lack of a transparent policy directing government reimbursement decisions, together with the lack of any effective channels to dispute those decisions, creates a situation where being on the reimbursement list depends, to a great extent, on gaining the favor of relevant officials.
She suggests a second problem is one of, shall we say, less than comprehensive enforcement of the laws that do exist regarding drug registration and reimbursement.
"To my knowledge, none of the local companies involved in the spate of suspicious registrations under Łapiński has yet been called to account in the courts," she says.
"The government reimbursement lists offer at least two local generic drugs as equivalent therapies to originals when, for thousands of patients suffering from chronic illnesses, medically they are not equivalent as to efficacy or indications," says Paulina Kieszkowska, an international lawer at Baker & McKenzie. But the local media prefer to promote the patriotic myth that corruption within the industry is confined to foreign-owned, and particularly innovative, companies.
When local pharmaceutical concern Adamed was ordered by the chief pharmaceutical inspector (GIF) to stop advertising a drug as an equivalent for all the indications of a Novartis drug, the fact went unreported. And when Novartis, the Swiss giant, initiated legal proceedings against Adamed for continuing to market the drug in defiance of the ruling, the daily press didn't bother reporting that either. Then the GIF reframed its order and said that Adamed could market the drug, but only as a cure for those indications for which it actually has the medical credentials to cure. This, and only this last part of the saga, immediately hit the national papers, and in a curious form. Polish pharmaceutical company Adamed had begun court proceedings against foreign Novartis, the story ran, for unjustly blackening it's reputation among doctors.
The transparency directive, though, would be of little use in stopping pharmaceutical companies from either misinforming or bribing doctors through illegal promotion practices. Although more transparent reimbursement decisions would, indirectly, reduce the number of cases, such as the Adamed/Novartis one, how to ensure that patients don't find themselves coughing up for prices hiked up by illegal perks for doctors is another issue. Though un-doubtedly serious, it is one which, judging by the comments of some ex-ministers, shouldn't be left to politicians to settle, at least not at any time near the next elections.
Asked how to combat corruption, ex-minister Marek Balicki, for example, seemed to suggest that one way to prevent companies from forking out on bribes was simply to cut back their profit margins. The official drug price is the maximum price, which means companies can offer warehouses and drugstores discounts. The fact that pharmaceutical companies are able to offer, like most businesses, discounts on scale to distributors, Balicki appeared to say, means that companies are making too much money and ought bow to government demands to lower prices. He concluded that the official price of a drug should be inflexible. While completely irrelevant to the issue of corruption, his arguments are very relevant to the elderly vote in the upcoming polls.
"You have to remember that under communism there was a command economy and no drugs marketing. And all drugs - though often very bad drugs - were at least free," says Andrzej Trzeciakowski, general director of Hexal Polska, the local branch of the German generics producer.
"There is a tendency, encouraged by the government, to see pharmaceutical companies as obliged to guarantee access to modern treatment at their cost," says Kieszkowska. This despite the fact that it's clearly the government, not the businesses, that under the reimbursement scheme is obliged to co-pay with the patient.
There is also a strong body of opinion in this country that seems to think pharmaceutical companies shouldn't be able to market their products at all, or even to make any kind of profit, according to Treciakowski, who recently called for an ending of misinformed demagoguery against foreign pharmaceutical concerns in the press.
"We have been called bloodsuckers, thieves and any number of other things by the national press," he says. "But all we're doing is trying to make a profit in a competitive market. We have to compete for clients and justify performance to shareholders, just like any other business!"
Despite popular perceptions, the fact is that the problem is not that pharmaceutical firms market aggressively and offer lavish patronage, but the way in which they do it.
According to the Association of Foreign Pharmaceutical Representatives (SPFFwP), the distinctions between what is legal and what is not are very clear. The rules, says its spokesperson, are both "transparent and restrictive." The problem is, "traffic regulations don't ensure that drivers won't break the law," as he puts it.
Kieszkowska, however, is less sure that checks on the nature of pharmaceutical sponsorship are adequately instituted.
"A lot in the law is widely open to inter-pretation," she says. Pharmaceutical companies are allowed, for example, to sponsor medical congresses, a set-up intended to direct their funds towards enabling doctors to keep up with industry developments. But there is clearly a broad range as to the 'usefulness' of all the congresses convened.
While in some European countries pharmaceutical companies have to inform medical authorities in detail about congresses organized for doctors, in Poland they don't. Meanwhile, the GIF has so far shown little interest in examining congresses. And, on its past record, the GIF can't necessarily be relied on not to control the issue very selectively.
A lack of adequate, objective enforcement affects other areas of the pharmaceutical law on drug promotion as well. According to an ex-doctor quoted in the national press, one dodgy promotion technique involves companies accessing drugstore data systems that keep records of which doctor has prescribed which drugs. This makes it possible, she says, for pharmaceutical companies to reward doctors who prescribe their drugs with an alarming degree of accuracy.
One proposal mooted is to create a national database amassed from the aforementioned pharmacy records so as to enable law enforcers to tot up exactly who's prescribing what. Accompanying this should be a reference guide, compiled free from government meddling, of the recommended therapies and therapeutic procedures for every known complaint. But even this would not be enough, insiders warn. There also needs to be some effective implementation system to secure against selective law enforcement. And also against the government using the information to put illegal pressure on doctors not to prescribe the more expensive choices on the reimbursement list, which, lawyers report, the government recently tried to do after a raid on pharmacy databases.
Such reforms may help nip government intrigues in the bud, and stop companies practicing local variations of the dodgy marketing practices unearthed in Italy. But there remains the worldwide issue of the vulnerability of patients to manipulation by interested parties and of drug information raised by the GSK case in New York.
Increasingly, the wisdom of a global convention wherein pharmaceutical com-panies are allowed to pay doctors to conduct what are meant to be objective clinical trials and control trial result publication is being questioned.
In other EU member states, though, the GSK scandal received little attention, even in business and financial publications. Much more interest was, and is, being paid to GSK's other legal travails in New York, which have potentially far more significant repercussions for both the industry and consumers. The state of New York has taken GSK to court in relation to its selective publication of clinical trial results, with the alleged aim of concealing the negative effects of anti-depressant drugs for children.
So why the local media hype about a three year-old scandal in Italy? Cynics point to the coincidence that the scandal involving innovative pharmaceutical companies hit the press shortly before the compilation of the latest government reimbursement list. Whether or not there is any significance in this serendipity, it can't be denied that a bad press for innovative companies can only be to the advantage of the health ministry, which, uniquely within the EU, has excluded new medicines from the list for six years now, despite the fact that such medicines can often mean the difference between a normal existence and hospitalization for thousands of citizens.
Which is not to say that the pharmaceutical industry in this country isn't corrupt. By all reports, it is. Last year, the FBI launched a probe into alleged bribery by U.S. pharmaceutical firms in Poland. Meanwhile, market insiders claim that at least one smallish foreign subsidiary on the local market, though it conducts genuine clinical trials elsewhere, also pays doctors to conduct extra sham clinical trials on the domestic market in order to both win over doctors and introduce its drugs to potential consumers. Industry insiders also suggest that, to put it delicately, the creative interpretation of the law on drug promotion is common practice throughout the domestic industry, among both locally- and foreign-owned concerns.
It's hardly surprising, then, that prestigious daily Rzeczpospolita ran a story in response to the Italian GSK scandal, proclaiming, "The pharmaceutical sector is sick." What is surprising, though, is that the paper could conclude, without a trace of irony, that "against the phenomenon, the state remains helpless."
The overwhelming majority of corruption scandals on the pharmaceutical market have involved government officials themselves. In May 2003, it was revealed that a Romanian concern had got a drug registered in the space of just three months on the basis of 'clinical trials' that had allegedly taken place on a small group of people conducted on property owned by a government official. A further 200 suspiciously speedy drug registrations by local and CEE generic companies under the health ministry of Łapiński remain - mysteriously - uninvestigated. Also in May last year, a government official was accused by a foreign corporation of attempting to extort an enormous bribe in return for placing drugs on the reimbursement list. His trial continues.
Pharmaceuticals is the one industry where the government, as well as regulating it, is also by far the most significant customer. Since funding health care is a problem for all government budgets, and apparently particularly difficult for Polish ones, governments have a powerful vested interest in securing the cheapest possible drugs that, unless checked, they're bound to abuse.
Legislation guiding decisions as to which medicines are included on the reimbursement list in this country is confusing. It is also constructed so that there's no effective process of appeal over reimbursement decisions before they become law, much less any effective channel of bringing the government to account afterwards. Meanwhile, since 2003, the minister responsible for reimbursement decisions also supervises the registration authority. This, say industry insiders, made the spate of suspicious registrations under Łapiński singularly easy to accomplish.
As lawyers and doctors - but, notably, rarely the media - report, the government habitually cheats thousands of this country's poorest and most helpless citizens by including on the reimbursement list generic copies that do not cure all the disorders cured by the originals that they are said to substitute. The list also includes drugs that are either not available or, because of patent infringement cases, should not be legally available, as well as drugs whose registration processes are in question.
This enables the government to pretend that spending on drugs is down, when all that is actually down is the budget's contribution. Those citizens who are sick and need drugs other than the ones they can get significantly subsidized in drugstores simply have to fork out from their own pockets. Yet despite the fact that they dramatically affect hundreds of thousands of citizens, the national media, say lawyers and doctors, have mostly shown a curious aversion to investigating these issues.
A recent article in Businessweek, for example, claimed that "the only difference between originals and generics is price." Though in some cases this may be true, in many crucial cases it is not.
These problems would be addressed, and shady practices would be harder for the government to keep hidden, if the government implemented EU transparency directive 89/105/EEC as it should have done long ago. However, the 'helpless' government has, as yet, shown no great eagerness to do so.
Agnieszka Deeg-Dąbrowska, partner at international lawyers Cameron McKenna, thinks the lack of a transparent policy directing government reimbursement decisions, together with the lack of any effective channels to dispute those decisions, creates a situation where being on the reimbursement list depends, to a great extent, on gaining the favor of relevant officials.
She suggests a second problem is one of, shall we say, less than comprehensive enforcement of the laws that do exist regarding drug registration and reimbursement.
"To my knowledge, none of the local companies involved in the spate of suspicious registrations under Łapiński has yet been called to account in the courts," she says.
"The government reimbursement lists offer at least two local generic drugs as equivalent therapies to originals when, for thousands of patients suffering from chronic illnesses, medically they are not equivalent as to efficacy or indications," says Paulina Kieszkowska, an international lawer at Baker & McKenzie. But the local media prefer to promote the patriotic myth that corruption within the industry is confined to foreign-owned, and particularly innovative, companies.
When local pharmaceutical concern Adamed was ordered by the chief pharmaceutical inspector (GIF) to stop advertising a drug as an equivalent for all the indications of a Novartis drug, the fact went unreported. And when Novartis, the Swiss giant, initiated legal proceedings against Adamed for continuing to market the drug in defiance of the ruling, the daily press didn't bother reporting that either. Then the GIF reframed its order and said that Adamed could market the drug, but only as a cure for those indications for which it actually has the medical credentials to cure. This, and only this last part of the saga, immediately hit the national papers, and in a curious form. Polish pharmaceutical company Adamed had begun court proceedings against foreign Novartis, the story ran, for unjustly blackening it's reputation among doctors.
The transparency directive, though, would be of little use in stopping pharmaceutical companies from either misinforming or bribing doctors through illegal promotion practices. Although more transparent reimbursement decisions would, indirectly, reduce the number of cases, such as the Adamed/Novartis one, how to ensure that patients don't find themselves coughing up for prices hiked up by illegal perks for doctors is another issue. Though un-doubtedly serious, it is one which, judging by the comments of some ex-ministers, shouldn't be left to politicians to settle, at least not at any time near the next elections.
Asked how to combat corruption, ex-minister Marek Balicki, for example, seemed to suggest that one way to prevent companies from forking out on bribes was simply to cut back their profit margins. The official drug price is the maximum price, which means companies can offer warehouses and drugstores discounts. The fact that pharmaceutical companies are able to offer, like most businesses, discounts on scale to distributors, Balicki appeared to say, means that companies are making too much money and ought bow to government demands to lower prices. He concluded that the official price of a drug should be inflexible. While completely irrelevant to the issue of corruption, his arguments are very relevant to the elderly vote in the upcoming polls.
"You have to remember that under communism there was a command economy and no drugs marketing. And all drugs - though often very bad drugs - were at least free," says Andrzej Trzeciakowski, general director of Hexal Polska, the local branch of the German generics producer.
"There is a tendency, encouraged by the government, to see pharmaceutical companies as obliged to guarantee access to modern treatment at their cost," says Kieszkowska. This despite the fact that it's clearly the government, not the businesses, that under the reimbursement scheme is obliged to co-pay with the patient.
There is also a strong body of opinion in this country that seems to think pharmaceutical companies shouldn't be able to market their products at all, or even to make any kind of profit, according to Treciakowski, who recently called for an ending of misinformed demagoguery against foreign pharmaceutical concerns in the press.
"We have been called bloodsuckers, thieves and any number of other things by the national press," he says. "But all we're doing is trying to make a profit in a competitive market. We have to compete for clients and justify performance to shareholders, just like any other business!"
Despite popular perceptions, the fact is that the problem is not that pharmaceutical firms market aggressively and offer lavish patronage, but the way in which they do it.
According to the Association of Foreign Pharmaceutical Representatives (SPFFwP), the distinctions between what is legal and what is not are very clear. The rules, says its spokesperson, are both "transparent and restrictive." The problem is, "traffic regulations don't ensure that drivers won't break the law," as he puts it.
Kieszkowska, however, is less sure that checks on the nature of pharmaceutical sponsorship are adequately instituted.
"A lot in the law is widely open to inter-pretation," she says. Pharmaceutical companies are allowed, for example, to sponsor medical congresses, a set-up intended to direct their funds towards enabling doctors to keep up with industry developments. But there is clearly a broad range as to the 'usefulness' of all the congresses convened.
While in some European countries pharmaceutical companies have to inform medical authorities in detail about congresses organized for doctors, in Poland they don't. Meanwhile, the GIF has so far shown little interest in examining congresses. And, on its past record, the GIF can't necessarily be relied on not to control the issue very selectively.
A lack of adequate, objective enforcement affects other areas of the pharmaceutical law on drug promotion as well. According to an ex-doctor quoted in the national press, one dodgy promotion technique involves companies accessing drugstore data systems that keep records of which doctor has prescribed which drugs. This makes it possible, she says, for pharmaceutical companies to reward doctors who prescribe their drugs with an alarming degree of accuracy.
One proposal mooted is to create a national database amassed from the aforementioned pharmacy records so as to enable law enforcers to tot up exactly who's prescribing what. Accompanying this should be a reference guide, compiled free from government meddling, of the recommended therapies and therapeutic procedures for every known complaint. But even this would not be enough, insiders warn. There also needs to be some effective implementation system to secure against selective law enforcement. And also against the government using the information to put illegal pressure on doctors not to prescribe the more expensive choices on the reimbursement list, which, lawyers report, the government recently tried to do after a raid on pharmacy databases.
Such reforms may help nip government intrigues in the bud, and stop companies practicing local variations of the dodgy marketing practices unearthed in Italy. But there remains the worldwide issue of the vulnerability of patients to manipulation by interested parties and of drug information raised by the GSK case in New York.
Increasingly, the wisdom of a global convention wherein pharmaceutical com-panies are allowed to pay doctors to conduct what are meant to be objective clinical trials and control trial result publication is being questioned.
