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The cornerstone for achieving this end is thought to lie in the establishment of a new quasi-governmental organization, tentatively called the National Drug Education Foundation (NDEF). In order to illustrate the scope of this concept, a proposed budget outlined in Table 1.

The educational programs and services provided by the Foundation should act as a powerful force to counteract the methods of persuasion mounted by leading drug firms. Moreover, gaps in our current system would be offset by coordinated inputs designated to furnish prescribers and ers with selective information relevant to their particular practice. These needs, of course, would be based upon scientific surveys that are designed to collect and evaluate the recommendations of practitioners including specialty societies. If prescription drug coverage should be authorized under some form of national health insurance, this source could furnish additional data to aid the Foundation in directing its resources toward professional requirements.

Since numerous surveys indicate that detailmen play a key role in prescriber communications, the chief budget allotment has been designated for the expense of maintaining 2,000 therapeutic consultants in the field. Their primary task would be to supply practitioners with objective, comparative information about pharmaceutical agents that are relevant for their type of practice. Further, these expert advisers would collect any drug experience data requiring transmittal to labelers or the FDA.

No complete model is known for predetermining either the precise number of therapeutic consultants that should be engaged or the particular backgrounds that should be sought in employing them. A successful staffing policy is likely to evolve if research studies can delineate accurately practitioner needs and the type of personnel necessary to meet these requirements.

While it seems imperative that a strong nucleus be composed of experts such as clinical pharmacologists and doctors of pharmacy, some two-thirds of the consultants hired initially are likely to be former detailmen (77 per cent have college degrees). [8] Since this latter group may generate as many as 12 applicants for each vacancy, it is not unreasonable to assume that discriminative procedures can be utilized to select only those individuals with superior strengths and training potential. Although attention should be given to defining an optimum balance of drug information specialists, the Foundation would commence operations with a staff that, on the average, possessed higher qualifications than found under the present scheme. Unique educational programs, however, should be developed to efficiently prepare individuals with the combined expertise of medicine and pharmacy. Within a decade, this source should be able to supply the appropriate number of candidates.

The second major budget item calls for a subsidy covering medical and scien. tific publications so that approved journals can continue serving health care professionals independent of advertising revenue. [14] Since some rationalization of these organs may be desired, guidelines to differentiate between essential and marginal publications should be prepared by various editorial staffs and boards as well as Foundation research analysts. The dissemination of news and information lacking a clear relationship to clinical performance, of course, should be ineligible for support.

A subsidy for professional schools has been included in order to provide these institutions with funds somewhat equivalent to the current level of financing re ceived from industry. The need for expenditures of this type also would seem to be consistent with the views of Dr. Thomas C. Chalmers who reported to Congress that “the Federal Government has got to become interested in this problem of continued education for physicians, that we cannot expect them to do it solely on their own." [2]

Additional Foundation functions—a drug compendium, a rationalized system of regional drug information centers, supportive services, and patient education –

? The possibility of realizing a synergistic effect through the prudent coordination of Foundation, FDA, and related information programs requires separate treatment.

8 It is assumed that the typical consultant could be assigned duties in the field for 48 weeks per year and that about 1,900 specialists would be available for this purpose. Under these conditions, the 415,000 prescribers could be seen, on the average, six times a year. It would be imprudent, of course, to deploy resources so that each prescriber received six, one-half hour visits every year.

• Patient education has been included among the Foundation functions because numerous inferences have suggested that client pressures often lead to irrational prescribing.

have been recommended to ensure the provision of supplemental materials necessary for the successful performance of a comprehensive and largely decentralized system. Moreover, important areas for research and coordination, including development of a formulary for voluntary implementation, are listed in the budget at a modest level. Foundation operations also would include feedback mechanisms in the form of pre- and postprogram reviews by representatives of professional groups. These procedures, coupled with those noted below, are intended to provide clinicians with significantly more authority over the provision of drug information services than they exercise currently. Given this possibility of helping to determine the nature of such materials, and the quasi-governmental status of the Foundation, it is possible that practitioner acceptance could become one of the major strengths of the new concept.

Management of the Foundation would be supervised by a board of directors consisting of 15 members with representation from professional schools (2), practitioners (5), scientific inquiry (1), pharmaceutical manufacturers (2), the Department of HEW (3), the American Public Health Association (1), and a consumer representative (1). Nominations would be made by the appropriate organization and selection would be undertaken by the Secretary of HEW. The chairman would be elected by the board from one of the three latter categories and subject to confirmation by the Senate. Periods of service for all members would be set at three or possibly four years. In addition to the traditional supervisory role, the board would be required to approve the hiring of the five highest-paid officials of the Foundation. These executives in turn would possess full authority to engage professional and supporting staff without reference to civil service regulations.

Under Model II, the annual budget of $167 million might be supplied by Congressional allocation from general revenues. Since educational activities related to the introduction of new pharmaceutical products may vary from year to year, a reserve fund should be established to accommodate periods when a large number of important new agents are certified. Foundation resources, of course, would not be utilized to promote products offering little therapeutic gain over existing preparations unless they also manifest economic advantages. Once a satisfactory level of operating effectiveness had been achieved, the Foundation might consider related programs such as sponsoring symposia and research studies pertaining to optimal instructional methods in clinical pharmacology and therapeutics.

Although the major thrust of Model II is directed toward the provision of drug information, techniques of furthering the rational prescribing and use of drugs that are external to Foundation responsibilities should not be neglected. For example, drug nomenclature could be simplified, [12] quality assurance programs, such as PSRO, could be strengthened, and practitioners could be provided with a comprehensive terminal/computer network to facilitate their monitoring of prescribing and dispensing practices. [10] While the features of a comprehensive Model II would appear to manifest significant advantages, certain limitations should become apparent as we discuss the components of an ideal system.


If the rationale for establishing a National Drug Education Foundation is found compelling, similar reasoning implies that promotional educational services furnished concurrently by commercial sources would be recognized as superfluous. It is also obvious to those familiar with the activities of detailmen that an inherent conflict of interest arises whenever they endeavor to carry out dual responsibilities, namely, to meet sales quotas and to supply practitioners with complete information concerning the appropriate use of pharmaceutical products. One constructive means of approaching this problem is found in the recent proposal to upgrade the qualifications of industry salesmen. The unlikely possibility that these incompatible assignments could be resolved simply by setting minimum performance and training standards for detailmen, however, is testimony to the naivete of legislators who advocate such controls and the strategy of manufacturers who publicly acknowledge that reforms of this nature may have merit. As always, if one asks the wrong question, the odds are very high that one will receive the wrong answer.

If we turn to the criterion of cost-effectiveness, it can be demonstrated that a commercially supported system of persuasion and information leads to a substantial dissipation of economic resources. It will be recalled that the proposed annual budget for the NDEF was placed at $167 million.10 This sum can be contrasted to a figure of more than $1.3 billion that represents industry expenditures covering persuasion and information (Appendix A). Since implementation of the NDEF model would permit pharmaceutical firms to employ salesmen who call upon direct accounts, we must reduce the gross savings to about $1.2 billion. No social justification is evident for tolerating outlays by manufacturers at this level when a more efficient mechanism can provide essential information to the professions for approximately one-seventh of the current cost. Moreover, this ratio underestimates social benefits by a large factor because it excludes indi. rect gains that can be anticipatod from increases in practitioner productivity and subsequent reductions in delivery costs resulting from better patient care.

Given the advantages that appear to be associated with the NDEF, public policy would seem to require that Congress enact enabling legislation to establish such an agency and also examine alternative ways of terminating commercial activities that would thwart the purpose of Foundation programs. [12] Unless the positive and negative dimensions of professional postgraduate education can be addressed simultaneously, one must anticipate that drug producers frequently will increase promotional outlays in order to counteract the dissemination of complete and objective information. Therefore, if the ideal system is to achieve its potential effectiveness, society must be willing to confer responsibility for the provision and coordination of drug information upon a single organization.

The possible impact of such a model on pharmaceutical producers deserves careful consideration. Although the role of contrived demand in holding the sale of many prescription products at artificial levels would be reduced and eventually overcome, other forces stemming from NDEF activities can be expected to introduce an offsetting effect. For example, implementation of Foundation programs should lead to an increase in the utilization of products with superior therapeutic properties as well as those previously prescribed in subclinical amounts. On balance, there is no a priori basis for anticipating that significant research and development efforts within the industry would be impaired nor would corporate profits generally fall sufficiently to jeopardize the availability of an adequate supply of quality pharmaceuticals. Moreover, the substantial decrease in marketing costs, especially if accompanied by external pressures, should enable firms to reduce product prices and/or raise expenditures for research purposes. The process of adjustment for certain firms whose product lines often reflect little therapeutic advantage, however, could be more severe.

The proposal to restrict promotion is designed to minimize economic returns unless the exercise of corporate power is likely to result in direct benefits to the consumer. In applying this same standard to a different problem, though, it seems reasonable to propose that pharmaceutical suppliers be granted a special extension in the duration of patent life whenever it can be demonstrated that a new agent yields a significant therapeutic improvement over existing alternatives. For example, products meeting such a test could be given protection for an additional five-year period. [13] The experience of 1950 to 1973, as interpreted by FDA, [3] found that 117 new single-entity products, or 14.3 per cent of 820 items marketed during that period, may have qualified under this procedure. Although the economic cost of such a provision cannot be appraised here, it is not thought to be very large relative to possible benefits.

In the meantime, however, the most urgent task for health care experts would seem to lie in expanding and completing the specifications of a model drug information system as sketched above. Since it is unlikely that legislative approval will be forthcoming promptly, the economic implications can be assessed

10 These funds could be raised by levying a Federal excise tax of nearly 4 per cent on all legend products. This rate should be compared with the current implicit tax of approximately 25 per cent collected by labelers primarily through the sale of trademarked items.

If genuine reform is considered, we should recognize that there is no logic in compelling patients utilizing drugs to support medical and scientific publications when a large proportion of such material does not pertain to prescription therapy. A justifiable alternative might require that at least one-half of the $40 million journal subsidy be allocated from general revenues.

The mere expenditure of $167 million, of course, is no guarantee that a NDEF will achieve anything. This concept has not been put forward for the purpose of transforming drug information services into a national boondoggle. However, it is far more economical for society to sanction one that is subject to the political process than endure an involuntary one superimposed by pharmaceutical manufacturers where the welfare loss is seven times greater.


after this more fundamental objective has been achieved. If optimum patient care is the legitimate goal of professional intervention, then the parameters of a model drug information system should reflect widespread interest on the part of physicians and pharmacists as well as government officials charged with the responsibility for national health policy. Appendix A.-Estimated Expenditures by Pharmaceutical Manufacturers for

Professional Persuasion-Education Activities, Ethical Drugs, 1974, USA Activities :

Millions Detailing—direct and indirect expenses (23,990 agents 1 times $33,000). $792 Sample distribution ?

112 Advertising-external costs: Audited ?

108 Unaudited

11 Direct mail ?.

64 Audio-visual presentations

19 Convention and exhibitions

16 Persuasion budget as R. & D. (7 per cent of $800 million).

56 Return goods allowances *

120 Other direct and indirect expenditures ($48 million reported)




5 $1,363

Total 1 PMA Newsletter 17 :4, June 16, 1975.

2 Calesa, E. F., and E. M. Saltzman: The marketing man's dilemma—1976. Med. Mark Media, 10:15, 1975.

3 Personal Communication April 25, 1972. (An industry expert has suggested that the appropriate figure should be 10 to 15 per cent. Since most of this diversion apparently occurs at the product development level, a conservative rate of 7 per cent was employed.) The existence of this practice is also corroborated by the testimony of the former Vice President of E. R. Squibb & Sons, Mr. G. S. Squibb, In Hearings Before the Subcommittee on Monopoly. Competitive Problems in the Drug Industry, Part 5, 1968; P. 1594. 4 Rucker, T. D. : Economic problems in drug distribution. Inquiry 9:47, 1972.

Excludes advertising, for prescribed over-the-counter products. If this expense is included the total should be increased by at least $36 million.

Note : Our objective is to define and measure the cost of corporate activities that tend to give a firm control over its demand curve. Because of the absence of a model accounting and national reporting system, this task is subject to error. While it is possible that several of the estimates furnished above are inflated slightly, it is more likely that incomplete measurement has resulted in an understatement by an amount exceeding $100 million.


1. Burack, R.: The New Handbook of Prescription Drugs, New York, Ballan

tine Books, 1970, p. 114. 2. Chalmers, T. C. : In Hearings Before the Senate Subcommittee on Monopoly.

Competitive Problems in the Drug Industry, Part 25, 1974, p. 10804. 3. F-D-C Reports 36 :B-6, Aug. 26, 1974. 4. Lennard, H. L., et al.: Mystification and Drug Misuse. San Francisco, Jossey

Bass, 1971. 5. Med. World News, April, 1972. Back Cover. 6. Pillard, R. C.: In Hearings Before the Senate Subcommittee on Monopoly.

Competitive Problems in the Drug Industry, Part 13, 1969, p. 5412. 7. PMA Newsletter 17:4, Feb. 4, 1975. 8. PMA Newsletter 17:4, June 16, 1975. 9. Rucker, T. D.: Basic methods for optimizing the prescribing of psychoactive

drugs. J. Drug. Issues 1:326, 1971. 10.

: Drug use : data, sources and limitations. JAMA 230:888, 1974. 11. : Public policy considerations in the pricing of prescription drugs in

the United States. Int. J. Health Services 4:171, 1974. 12.

: Public policy considerations in the use of psychotherapeutic drugs. Drugs in Health Care 1:5, 1974. 13. -: Role of the pharmaceutical industry in a dynamic health care system.

Drugs in Health Care 2:86, 1975. 14. Silverman, M., and P. R. Lee: Pills, Profits and Politics. Berkeley, University

of California Press, 1974, p. 312. 15. Simmons, H. E. : In Hearings Before the Senate Subcommittee on Monopoly.

Competitive Problems in the Drug Industry, Part 2, 1967, p. 461. 16. Smith, G. H., et al.: Physicians attitudes toward drug information sources.

Am. J. Hosp. Pharm. 32:21, 1975.

17. Trygstad, V.: Statement Before the Monopoly Subcommittee of the Senate

Select Committee on Small Business. March 20, 1975 (unpublished), p. 9. 18. Williams, H. L.: In Hearings Before the Senate Subcommittee on Monopoly.

Competitive Problems in the Drug Industry, Part 2, 1967, p. 461. 19. Wolfe, S.: The social responsibility of the physician in prescribing mind

affecting drugs. In R. Cooperstock, Ed., Social Aspects of the Medical Use of Psychotropic Drugs, Toronto, Addiction Research Foundation, 1974,

p. 58.

Dr. RUCKER. The second factor is manifest in the posture of casual empiricism exhibited by many practitioners in evaluating the results of their prescription orders. This propensity is prevalent in the area of psychoactive agents where “an excessive reliance on 'clinical judgment' seems to contribute to doctors' overestimation of the benefits and underestimation of the risks of drug use." In order that these subjective elements may be replaced with more objective techniques, the two recommendations put forward today are thought to be essential in achieving that end.

I will not turn to the third recommendation. The third factor is the lack of a coordinated, efficient means of record generation and retrieval pertaining to prescribing, dispensing, and consumption in general. Since a basic objective here is to furnish practitioners with a self-correcting mechanism for reviewing many prescribing decisions before the patient leaves the treatment setting, the role of an advanced, computerized record-network becomes a critical prerequisite for any program designed to improve drug use. In addition, this same system would serve as the foundation for carrying out more systematic quality assurance activities on a retrospective basis as required.

It should be of concern that many automobile junkyards, pecan parlors, and hamburger stands—among others—have established computerized data systems on a nationwide basis for controlling their inventory. This technology, however, has not been harnessed effectively in health care because both the professions and Federal Government construe the problem to be one of microincrementalism rather than one of macrodevelopment and macrocoordination. Given the major information gaps that characterize drug prescribing and use in our society, it should be apparent that professional schools of medicine, dentistry, podiatry, and pharmacy will continue to train practitioners without a full understanding of the limitations of their previous graduates. A model information network, though, could incorporate a feedback function that would enable interested students to test experience data against their academic training.

In conclusion, until the Nation and practitioners are willing to address fundamental methods for improving prescribing practices in general, such as sketched above, little progress is likely to be recorded. În considering holistic legislative programs, though, no intervention strategy should be adopted if it seems likely to perpetuate or aggravate the problem. This task, then, represents a challenge for us all.

Mr. NELLIS. Dr. Rucker, before I ask Mr. Pekkanen to make his statement, would you please address yourself to the third recommendation in terms of confidentiality problems and costs? I'm talking about the computerized system that you recommend.

Dr. RUCKER. The system that I referred to has been described in a very elementary way in a JAMA article that appeared on the 11th of November 1974, and also in an article dealing with the use of psycho

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