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http://www.nytimes.com/2002/06/13/business/13DRUG.html

Vermont to Require Drug Makers to Disclose Payments to Doctors

By MELODY PETERSEN

mid rising concern about the cost of prescription drugs, Vermont is expected today to become the first state in the nation to require pharmaceutical companies to disclose their gifts and cash payments to doctors, hospitals and other health care providers.

"Drug companies are giving doctors free dinners and flying them to Florida for a vacation," said Vermont's governor, Howard Dean, a Democrat. He plans to sign the disclosure bill, which has been passed by both houses of the Legislature, in Montpelier, the state capital, today.

Governor Dean, a doctor who has talked of seeking the presidency on a health care platform, said he thought such gifts could influence physicians to prescribe certain drugs — often the most expensive ones. Vermont officials hope the disclosure requirement will force doctors and drug companies to change their behavior.

The legislation in Vermont is part of a growing effort by state and federal lawmakers to rein in drug companies' marketing practices. On May 31, Gov. Benjamin J. Cayetano of Hawaii signed a law that requires drug companies to report how much they are spending on marketing, including the cost of television advertisements broadcast in the state.

Legislators in other states, including New York, have proposed bills to prevent drug companies from deducting the cost of advertising on their state tax returns. In all, measures regulating pharmaceutical company marketing have been introduced in at least 15 states, according to the National Conference of State Legislatures.

In Congress, a recently introduced bill would block drug companies from deducting consumer advertising costs that exceed the amount they spend on research. Other federal legislation would allow the Food and Drug Administration to impose penalties as high as $10 million for advertising the agency found to be misleading.

"The patient needs to know whether the doctor is prescribing drugs based on good sound medical practice or whether he has been influenced by gratuities from the manufacturer," said Richard T. Moore, a Massachusetts state senator who has introduced legislation there to force doctors to disclose gifts from drug companies.

The drug industry spent $19 billion last year on advertising and promotion — more than double the $9.1 billion it spent five years ago, according to IMS Health, a consulting firm. About half that consists of the value of free drug samples given to doctors. The rest includes the cost of sales representatives, gifts to doctors and advertising.

The pharmaceutical companies say the sales visits and discussions with doctors are essential for transmitting the most recent scientific information on how medicines should be prescribed. Their consumer ads, they say, help prompt people who are suffering from undiagnosed medical problems to seek care and remind them to take their medicine.

Earlier this year, the Pharmaceutical Research and Manufacturers of America, the industry trade group, revised its ethics guidelines to make it clearer that certain gifts — particularly those related to entertainment rather than education — are inappropriate.

The industry has long had rules aimed at limiting such practices, but many companies appeared to ignore them, perhaps because the rules were too vague. The new guidelines go into effect on July 1.

"We now consider theater tickets and sporting events to be inappropriate," said Jeff Trewhitt, a spokesman for the trade group.

The issue has caught the attention of state legislators as they seek ways to slow the increasing cost of drugs paid for by Medicaid programs, which provide health care to the poor. At the same time, elected officials are hearing complaints from elderly constituents who lack drug coverage and say they cannot afford the medicines that their doctors have prescribed and that they see advertised on television.

Marjorie Powell, assistant general counsel at the pharmaceutical manufacturers' group, said the industry had not taken a position on the Vermont legislation. "We'll be interested to see how the state implements it," she said.

The Vermont law would require drug companies to disclose any gift or payment of $25 or more to doctors, hospitals, nursing homes, pharmacists or health insurers for the purpose of marketing their products. The companies would not have to disclose the value of free drug samples or medical student scholarships.

State officials said they planned to make the information available to the public, possibly via the Internet, so that patients can see what gifts their doctors have accepted.

The measure had broad support from both Republicans and Democrats and from the Vermont Medical Society. Yesterday, the American Medical Association said it supported the bill's intent. "The ideal circumstance is that no inappropriate gifts are offered or received," said Dr. Richard F. Corlin, the association's president.

The only state with a similar law is Minnesota, which in the mid-90's prohibited companies from giving gifts valued above $50 to doctors or other health care providers.

A Vermont Senate leader, Peter E. Shumlin, a Democrat who sponsored the bill, said drug companies appeared to have "a two-pronged marketing strategy."

"They get consumers to want the drugs and then make it pleasurable for the doctor to prescribe them," Mr. Shumlin said. "It is just getting more and more out of control."

The industry's guidelines would continue to allow drug companies to pay doctors for services like consulting or to give speeches about drugs before other physicians.

In a recent example, Shire Laboratories invited a group of psychiatrists to dinner at the Omni Berkshire Place Hotel in Manhattan on April 25. The doctors were paid $300 for their participation in an "advisory board meeting," according to the invitation, where they were asked to discuss how the company's drug Carbatrol could be used to treat bipolar disorder. Vermont's legislation would require disclosure of such cash payments. Carbatrol, an epilepsy medication, has not been approved by the F.D.A. to treat patients with bipolar disorder, but physicians are free to prescribe drugs as they see best.

A spokeswoman for Shire, Michele Roy, said the company had paid the doctors for their expert advice about the drug. "This was not a gift," she said. "The honorarium was compensation for the time they gave us."

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