June 10,2005

Drug companies asked for more information about grant money awarded to promote particular medicines

WASHINGTON — Sens. Chuck Grassley and Max Baucus have asked a number of large drug makers to explain a marketing practice where the companies give money to state governments and other organizations in the form of grants. The drug companies call the awards “educational grants,” but the senators are concerned that the dollars are more focused on product promotion than education.

The senators said they want to know more about the practice to ensure that it’s not just a “backdoor way to funnelmoney to doctors and other individuals who can influenceprescribing and purchasing of particular prescription medicines,including off-label prescriptions.” They said their inquiry of thedrug manufacturers is based on reports that some companieshave awarded these grants to health care providers asinducements to those providers to prescribe medications thecompanies produce. In other cases, such grants to state agenciesmay have prompted those agencies to develop programs leadingto over-medication of patients at the expense of patient health orto unnecessary expense for taxpayers.

“We need to know how this behind-the-scenes funneling ofmoney is influencing decision makers,” Grassley said. “Thedecisions result in the government spending billions of dollarson drugs. The tactics look aggressive, and the response onbehalf of the public needs to be just as vigorous.”

“I support drug companies giving back to the communitythrough grants for educational programs used to educate stategovernments and health organizations about products that couldlead to improved health,” Baucus said. “However, I amconcerned that some grants may be for purposes other thaneducation. These grants need to be driven by good intentionsinstead of motivation for larger profits.”

Grassley is chairman and Baucus is ranking member of theSenate Committee on Finance, which has legislative andoversight responsibility for the Medicare and Medicaidprograms. The first-ever prescription drug program withinMedicare will begin in January, and federal expenditures onprescription drugs through both Medicare and Medicaid areestimated to reach $100 billion in 2006.

The text of their letter follows here. It was sent to thefollowing drug manufacturers: Pfizer, Inc., GlaxoSmithKline,Johnson & Johnson, Merck & Co., Inc., AstraZenecaPharmaceuticals LP, Bristol-Myers Squibb Company, NovartisPharmaceuticals Corporation, Amgen, Inc., WyethPharmaceuticals, Eli Lilly & Company, Sanofi Aventis, Eisai,Inc., Boehringer Ingelheim Pharmaceuticals, Inc., Schering-Plough Corporation, Hoffman-LaRoche, Inc., ForestPharmaceuticals, Inc., Abbott Laboratories, Genentech, Inc.,Biogen Idec Inc., Genzyme Corporation, Chiron Corporation,Serono, Inc., and TAP Pharmaceutical Products, Inc.

June 9, 2005

Dear _______________:The U.S. Senate Committee on Finance (Committee) hasjurisdiction over the Medicare and Medicaid programs, andaccordingly, a responsibility to oversee the properadministration of those programs which provide health carecoverage to more than 80 million Americans. During thislegislative session, the Committee will continue its review ofissues relating to these programs' coverage of prescription drugbenefits, including marketing practices that could have animpact on physicians' prescribing patterns. As Chairman andRanking Member of the Committee, we ask that ______cooperate with the Committee and provide it with informationregarding these matters as requested.

In recent years, the cost to Medicaid of reimbursement forprescription drugs has grown faster than any other area of theprogram. The Federal government will spend even more onprescription drugs with the addition of a prescription drugbenefit to the Medicare program. Marketing practices thatincrease the rates at which drugs are prescribed, particularly foroff-label uses, are of concern because they have the potential toincrease program costs and may encourage the use of typicallynewer, more expensive drugs that have not been proven superiorto existing treatments.

The Committee has identified the use of grants, particularlyeducational grants, as a practice with potential for abuse and hasgathered the following background information on this topic.The use of educational grants was an element in a recentsettlement involving off-label promotion of a prescription drug.Also, educational grants were identified by the Department ofHealth and Human Services Office of Inspector General (HHSOIG) as a key risk area in its OIG Compliance ProgramGuidance for Pharmaceutical Manufacturers (OIG Guidance),issued in 2003. In addition, existing Federal and industryguidance is not specific about what activities educational grantsmay be used to support or what kinds of organizations mayprovide those activities, and it appears that some manufacturersmay be using educational grants to fund activities primarily topromote their products.

Programs and materials performed and disseminated by drugcompanies are subject to the labeling and advertising provisionsof the Federal Food, Drug, and Cosmetic Act, and as such aresubject to regulation by the Food and Drug Administration(FDA). The FDA does not regulate truly independent and nonpromotionalactivities supported by industry. However, the linebetween activities performed by or on behalf of companies andactivities that are independent of their influence has becomeincreasingly blurred as the role of industry in supportingcontinuing education for healthcare professionals has grown.Consequently, in 1997, FDA issued Guidance for Industry,Industry-Supported Scientific and Educational Activities. TheFDA guidance lists 12 factors the Agency will consider whenevaluating activities and determining independence. Thesefactors relate primarily to the independence of the provider ofscientific and educational activities but do not explain how theAgency will determine whether an activity is educational or whoqualifies as a provider.

The OIG Guidance, likewise, does not define educationalactivity or provider but it does state that support for educationalactivities sponsored and organized by professional organizationsraise little risk as long as the grant is not restricted with respectto content or faculty. The OIG Guidance also advisesmanufacturers to separate their grant-making functions fromtheir sales and marketing functions and establish objectivecriteria for awarding grants that ensure that the funded activitiesare bona fide.

The Pharmaceutical Research and Manufacturers of America'sCode on Interactions with Healthcare Professionals (PhRMACode) also addresses third-party educational conferences andprofessional meetings. The PhRMA Code states that support fora conference or meeting, defined as an activity "where a) thegathering is primarily dedicated to promoting objectivescientific and educational activities and discourse (one or moreeducational presentations should be the highlight of thegathering), and b) the main incentive for bringing attendeestogether is to further their knowledge on the topic(s) beingpresented," is permissible. However, the PhRMA Code statesthat such support should not be given directly to healthcareprofessionals but should be given to a conference's sponsor, whoshould maintain control over the selection of content, faculty,educational methods, materials and venue.

The Committee seeks further information on this topic so that itcan assess how educational grants are used, in what contexts andfor what purposes, and who receives them. This will assist us indetermining whether and to what extent educational grants areused to support activities that are not sponsored or organized byprofessional organizations or do not involve formal educationalpresentations, and whether further guidance or legislation isneeded. Therefore, as Chairman and Ranking Member of theCommittee, we request that your company provide the followinginformation and data to the committee:

1. Identify the person(s) and/or agent(s) (including, name, titleand contact information) within or affiliated with your companywho is/are currently responsible for evaluating requests foreducational grants.

2. Identify the person(s) and/or agent(s) (including, name, titleand contact information) within or affiliated with your companywho is/are currently responsible for approving or awardingeducational grants.

3. State whether your company has a formal, written policyregarding the use of educational grants, or if your companyrelies on an unwritten policy. To the extent a written policyexists, attach copies, including all versions and revisions of thepolicy since its inception. To the extent an unwritten policyexists, describe it in detail, including but not limited todescribing any criteria used in evaluating, approving, awarding,authorizing, implementing and/or monitoring educational grants.

4. Describe the factors and circumstances your company takesinto account when determining whether or not to award aneducational grant.

5. State whether your company has offered or providededucational grants to organizations that are not accredited by theAccreditation Council for Continuing Medical Education(ACCME) since January 1, 2000. If so, please describe whatother types of organizations receive educational grants fromyour company and indicate whether they are accredited by anorganization other than ACCME.

6. State whether your company has offered or awarded aneducational or other grant to any state Medicaid agencies orother state agencies, or to one or more employee/agent of a stateMedicaid agency or other state agency since January 1, 2000. Ifso, please describe your company's policy for making suchgrants and the factors and circumstances your company takesinto account when determining whether to award an educationalor other grant to a state agency or an employee/agent of a stateagency. In addition, please describe your company's rationalefor this practice.

7. Identify the total number and dollar amount of educationalor other grants your company made to state agencies or stateagency employees/agents during its fiscal years 2003 and 2004.Of those amounts, identify the total number and dollar amountof educational or other grants awarded and list them by state, byagency, and by agency employee/agent.

8. State whether your company has offered or awarded aneducational or other grant(s) as a substitute or alternative forprice concessions since January 1, 2000. If so, please describeyour company's policy for making such grants and the factorsand circumstances your company takes into account whendetermining whether to award an educational or other grant as asubstitute for a price concession. In addition, please describeyour company's rationale for this practice.

9. Identify the total number and dollar amount of educationalgrants your company made in its fiscal years 2003 and 2004. Ofthose amounts, identify the total number and dollar amount ofeducational grants that were made to organizations accredited byACCME.

10. In accordance with your company's response to #9 above,indicate the source of the funds for educational grants in yourcompany's fiscal years 2003 and 2004. For example, if yourcompany budgets for educational grants by product line, pleaseindicate the dollar amount of educational grants funded by eachproduct line.

11. State whether your company has an annual budget foreducational grants. To the extent that your company budgets foreducational grants, please identify the dollar amount budgetedfor educational grants in fiscal year 2005 by funding source.

12. State whether your company has provided educationalgrants for programs or activities that may promote or discourageoff-label use of drugs since January 1, 2000. If so, pleasedescribe your company's policy for making such grants and thefactors and circumstances your company takes into accountwhen determining whether to award an educational grant for anactivity that may promote or discourage off-label use of drugs.Please provide the information and documents requested inquestions 1-12 by June 30, 2005. In complying with thisrequest, respond by repeating the enumerated request, followedby the accompanying response; attach and identify all relevantdocuments or data by title and the number(s) of the enumeratedrequest(s) to which they are responsive. Finally, in complyingwith this request, please refer to the attached definitionsconcerning the questions set forth in this letter.


Chuck Grassley of Iowa

United States Senator

Chairman, Senate Committee on Finance

Max Baucus of Montana

United States Senator

Ranking Member, Senate Committee on Finance