Hmm: Docs Choose Pricy Drugs, Get Pharma Fees

Here is another reason U.S. taxpayers may want to know why some doctors prescribe some drugs. Medicare Part D, as you know, helps cover the cost of many medicines for many people. But what if a physician is paid speaking or consulting fees by a drugmaker and then prescribes its medicine, even if there is no added benefit compared with cheaper alternatives? This could raise the bill for taxpayers.

This sort of inflated expense is a side effect of what some call extreme prescribing – a trend in which some physicians write prescriptions for a particular drug at an outsized pace that may or may not have a reasonable explanation. The phenomenon is not new, of course, and in fact was the subject of a U.S. Senate Finance Committee probe into prescribing patterns for antipsychotics around the country (covered in earlier Pharma news).

As a result, there is growing interest in prescribing patterns and, for the first time, a link has been established between doctors who write large numbers of prescriptions that are covered by Medicare Part D and the fees these same physicians receive from drugmakers. Not surprisingly, the results are causing concern about undue influence on medical practice and taxpayer budgets.

When there is no evidence that one drug is better than another, "you have to question: Why are doctors prescribing this?" Bernard Lo, president of the Greenwall Foundation, a nonprofit that funds bioethics research, tells ProPublica, which investigated the issue. "What your evidence suggests is that there is a financial incentive for doctors who receive payments from drug companies" for pitching their products.

As an example, ProPublica pointed to Bystolic, a blood pressure pill that was approved in 2008 and is sold by Forest Laboratories (FRX). Last year, the drug notched $348 million in sales, almost double its total from two years earlier. In part, the success is attributed to ties between doctors and the drugmaker - at least 17 of the top 20 Bystolic prescribers in Medicare Part D in 2010 were paid speaking fees by Forest (ProPublica’s data trove here).

As YCharts has reported: Forest Labs (FRX) has launched several new products in the past two years – yet has demonstrated limited success in filling the earnings void created by the patent expiry for Lexapro, its erstwhile blockbuster antidepressant. The company has an iffy pipeline and could be a takeover candidate.

FRX Revenue TTM Chart

FRX Revenue TTM data by YCharts

In 2012, those doctors received $283,450 for speeches and more than $20,000 in meals, according to data compiled by the news site. And nearly all those same doctors were again among the highest prescribers in 2011, the most recent year for which Medicare data are available. Among the 17 top prescribers, speaking fees ranged from $1,250 to $85,750, and seven doctors also received at least $1,000 in meals.

To read the remainder of this article, go to Pharmalot.

Ed Silverman, a contributing editor of YCharts, is the founder and editor of Pharmalot. He previously reported on the pharmaceutical industry and other business topics for the Star-Ledger of New Jersey, New York Newsday and Investor’s Business Daily. He can be reached at editor@ycharts.com. You can also request a demonstration of YCharts Platinum.

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