Rx Gift Ban: Just the Facts

Should consumers foot the bill for free lunches and other perks that drug companies give prescribers? AARP says no.

Under attack since inception in 2008, the state’s Rx Gift Ban law is once again at risk. As part of the Fiscal Year 2012 state budget debate , the Massachusetts House voted to repeal the Rx Gift Ban Law, which restricts drug company marketing practices. Meanwhile, another bill currently under consideration by the Joint Committee on Community Development and Small Business – Senate Bill 1849, An Act Relative to Restaurant Rejuvenation – would seriously weaken the law.

AARP strongly supports the Rx Gift Ban law as one way to help drive down spiraling prescription drug costs – and is fighting to protect consumers. Today, an undisclosed portion of the pharmaceutical industry’s budget goes towards drug marketing, to physicians, which can influence brand selection and prescription rates.

A recent survey in the New England Journal of Medicine found that 94 percent of physicians have received gifts or payments from the industry. AARP believes: We must protect the Rx Gift Ban law because voluntary industry codes have proved insufficient in curbing these trends – the costs of which are passed on to consumers.

What does the law say?

The Rx Gift Ban law covers health care practitioners, pharmaceutical or other medical device manufacturer agents, companies and marketers. It prohibits them from conducting certain marketing practices , including payments for prescribers’ meals that are:

• part of an entertainment or recreational event
• offered without an informational presentation
• are outside the office or hospital setting
• provided to spouses or guests

Drug and medical device companies must disclose information about meals, gifts or perks given to a prescriber, in excess of $50, to the Department of Public Health by July 1 each year.

The pharmaceutical industry spends more on marketing than any other entity. Marketing expenditure accounted for 18.2 percent of the sales dollar and is growing compared to research and development, which has slowed to 17 percent. More facts to consider:
 
Prescription drug spending is the fastest growing medical expenditure for consumers. The average growth is 6.3 percent per year, outpacing hospital services (6.1%) and physician and clinical services (5.4%).

On average, the pharmaceutical and medical device industries spend over $20,000 per doctor each year on marketing efforts.

As of March 18, 2011, there were more than 13,000 individual entries in the Department of Public Health’s public database of payments made to prescribers by drug and medical device companies.

Many who oppose the law claim that the Massachusetts economy was negatively impacted by the restrictions. The facts prove otherwise.

Biotechnology Industry – Venture Capitalist investment in Massachusetts-based companies in 2010 was up 26 percent over 2009 to $246 million on a trailing four-quarter average basis, outpacing and eclipsing Silicon Valley as the most active target for bio-focused venture capital in the nation.

Conventions – Pharmaceutical and medical industry events generated $166.55 million in revenue for Massachusetts in 2009: the most by any industry in 2009 and totaled more than the commercial, technology and education industries combined.

Employment – The number of jobs in the Massachusetts biotechnology and pharmaceutical industry reached an all-time high in 2009 at 46,553, which marks a 60 percent growth since 2000.

Restaurants – Revenues are up , trends point to growth, and the recent industry slowdown was a national trend caused by the economic downturn.

Bottom line: Prescription drugs can help keep people healthy, and out of more expensive care. But here in the Bay State, residents age 50 plus continue to be affected by prescription drug sticker shock , with the majority reporting major problems paying for their medication, according to a new AARP survey.

The latest AARP Rx Price Watch Report found that prices for drugs facing generic competition in 2010 climbed by an average of 13.7 percent in 2009, compared to 8.3 percent for all drugs studied. And, brand name Rx prices continue to increase after the introduction of generic competition, indicating that consumers who choose to continue taking a brand name product are not likely to experience any price relief once a generic is available.

Stay up to date on the latest developments at the State House. Check for our daily blog , where we post breaking news and up to the minute information about the Rx Gift Ban law, the state budget, SB 1849, The Restaurant Rejuvenation Act, and other issues important to our Bay State members and their families. You can also visit the AARP MA Facebook page and follow us on Twitter .