June 10,2005

Grassley, Baucus ask drug companies for more information about grant money awarded to promote particular medicines

WASHINGTON -- Sens. Chuck Grassley and Max Baucus have asked a number oflarge drug makers to explain a marketing practice where the companies give money to stategovernments 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 productpromotion than education.

The senators said they want to know more about the practice to ensure that it's not just a"backdoor way to funnel money to doctors and other individuals who can influence prescribingand purchasing of particular prescription medicines, including off-label prescriptions." Theysaid their inquiry of the drug manufacturers is based on reports that some companies haveawarded these grants to health care providers as inducements to those providers to prescribemedications the companies produce. In other cases, such grants to state agencies may haveprompted those agencies to develop programs leading to over-medication of patients at theexpense of patient health or to unnecessary expense for taxpayers.

"We need to know how this behind-the-scenes funneling of money is influencingdecision makers," Grassley said. AThe decisions result in the government spending billions ofdollars on drugs. The tactics look aggressive, and the response on behalf of the public needs tobe just as vigorous."

"I support drug companies giving back to the community through grants for educational programs used to educate state governments and health organizations about products that could lead to improved health," Baucus said. AHowever, I am concerned that some grants may be for purposes other than education. These grants need to be driven by good intentions instead of motivation for larger profits."

Grassley is chairman and Baucus is ranking member of the Senate Committee onFinance, which has legislative and oversight responsibility for the Medicare and Medicaidprograms. The first-ever prescription drug program within Medicare will begin in January, andfederal expenditures on prescription drugs through both Medicare and Medicaid are estimatedto reach $100 billion in 2006.

The text of their letter follows here. It was sent to the following drug manufacturers: Pfizer, Inc., GlaxoSmithKline, Johnson & Johnson, Merck & Co., Inc., AstraZeneca Pharmaceuticals LP, Bristol-Myers Squibb Company, Novartis Pharmaceuticals Corporation, Amgen, Inc., Wyeth Pharmaceuticals, Eli Lilly &Company, Sanofi Aventis, Eisai, Inc., Boehringer Ingelheim Pharmaceuticals, Inc., Schering-PloughCorporation, Hoffman-LaRoche, Inc., Forest Pharmaceuticals, Inc., Abbott Laboratories,Genentech, Inc., Biogen Idec Inc., Genzyme Corporation, Chiron Corporation, Serono, Inc., andTAP Pharmaceutical Products, Inc.

June 9, 2005

Dear _______________:

The U.S. Senate Committee on Finance (Committee) has jurisdiction over the Medicareand Medicaid programs, and accordingly, a responsibility to oversee the proper administrationof those programs which provide health care coverage to more than 80 million Americans.During this legislative session, the Committee will continue its review of issues relating to these programs' coverage of prescription drug benefits, including marketing practices that could have an impact on physicians' prescribing patterns. As Chairman and Ranking Member of the Committee, we ask that ______ cooperate with the Committee and provide it with information regarding these matters as requested.

In recent years, the cost to Medicaid of reimbursement for prescription drugs has grown faster than any other area of the program. The Federal government will spend even more on prescription drugs with the addition of a prescription drug benefit to the Medicare program. Marketing practices that increase the rates at which drugs are prescribed, particularly foroff-label uses, are of concern because they have the potential to increase program costs and mayencourage the use of typically newer, more expensive drugs that have not been proven superiorto existing treatments.

The Committee has identified the use of grants, particularly educational grants, as a practicewith potential for abuse and has gathered the following background information on this topic.The use of educational grants was an element in a recent settlement involving off-labelpromotion of a prescription drug. Also, educational grants were identified by the Department ofHealth and Human Services Office of Inspector General (HHS OIG) as a key risk area in itsOIG Compliance Program Guidance for Pharmaceutical Manufacturers (OIG Guidance), issuedin 2003. In addition, existing Federal and industry guidance is not specific about what activitieseducational grants may be used to support or what kinds of organizations may provide thoseactivities, and it appears that some manufacturers may be using educational grants to fundactivities primarily to promote their products.

Programs and materials performed and disseminated by drug companies are subject to thelabeling and advertising provisions of the Federal Food, Drug, and Cosmetic Act, and as suchare subject to regulation by the Food and Drug Administration (FDA). The FDA does notregulate truly independent and non-promotional activities supported by industry. However, theline between activities performed by or on behalf of companies and activities that areindependent of their influence has become increasingly blurred as the role of industry insupporting continuing education for healthcare professionals has grown. Consequently, in1997, FDA issued Guidance for Industry, Industry-Supported Scientific and EducationalActivities. The FDA guidance lists 12 factors the Agency will consider when evaluatingactivities and determining independence. These factors relate primarily to the independence ofthe provider of scientific and educational activities but do not explain how the Agency willdetermine whether an activity is educational or who qualifies as a provider.

The OIG Guidance, likewise, does not define educational activity or provider but it does statethat support for educational activities sponsored and organized by professional organizationsraise little risk as long as the grant is not restricted with respect to content or faculty. The OIGGuidance also advises manufacturers to separate their grant-making functions from their salesand marketing functions and establish objective criteria for awarding grants that ensure that thefunded activities are bona fide.

The Pharmaceutical Research and Manufacturers of America's Code on Interactions with Healthcare Professionals (PhRMA Code) also addresses third-party educational conferencesand professional meetings. The PhRMA Code states that support for a conference or meeting,defined as an activity "where a) the gathering is primarily dedicated to promoting objectivescientific and educational activities and discourse (one or more educational presentations shouldbe the highlight of the gathering), and b) the main incentive for bringing attendees together is tofurther their knowledge on the topic(s) being presented," is permissible. However, the PhRMACode states that such support should not be given directly to healthcare professionals but shouldbe given to a conference's sponsor, who should maintain control over the selection of content,faculty, educational methods, materials and venue.

The Committee seeks further information on this topic so that it can assess how educational grants are used, in what contexts and for what purposes, and who receives them. This willassist us in determining whether and to what extent educational grants are used to supportactivities that are not sponsored or organized by professional organizations or do not involveformal educational presentations, and whether further guidance or legislation is needed.Therefore, as Chairman and Ranking Member of the Committee, we request that your companyprovide the following information and data to the committee:

1. Identify the person(s) and/or agent(s) (including, name, title and contact information)within or affiliated with your company who is/are currently responsible for evaluating requestsfor educational grants.

2. Identify the person(s) and/or agent(s) (including, name, title and contact information)within or affiliated with your company who is/are currently responsible for approving orawarding educational grants.

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

4. Describe the factors and circumstances your company takes into account whendetermining whether or not to award an educational grant.

5. State whether your company has offered or provided educational grants to organizationsthat are not accredited by the Accreditation Council for Continuing Medical Education(ACCME) since January 1, 2000. If so, please describe what other types of organizationsreceive educational grants from your company and indicate whether they are accredited by anorganization other than ACCME.

6. State whether your company has offered or awarded an educational or other grant to anystate Medicaid agencies or other state agencies, or to one or more employee/agent of a stateMedicaid agency or other state agency since January 1, 2000. If so, please describe yourcompany's policy for making such grants and the factors and circumstances your company takesinto account when determining whether to award an educational or other grant to a state agencyor an employee/agent of a state agency. In addition, please describe your company's rationalefor this practice.

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

8. State whether your company has offered or awarded an educational or other grant(s) as asubstitute or alternative for price concessions since January 1, 2000. If so, please describe yourcompany's policy for making such grants and the factors and circumstances your company takesinto account when determining whether to award an educational or other grant as a substitutefor a price concession. In addition, please describe your company's rationale for this practice.9. Identify the total number and dollar amount of educational grants your company made inits fiscal years 2003 and 2004. Of those amounts, identify the total number and dollar amountof educational grants that were made to organizations accredited by ACCME.

10. In accordance with your company's response to #9 above, indicate the source of thefunds for educational grants in your company's fiscal years 2003 and 2004. For example, ifyour company budgets for educational grants by product line, please indicate the dollar amountof educational grants funded by each product line.

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

12. State whether your company has provided educational grants for programs or activitiesthat may promote or discourage off-label use of drugs since January 1, 2000. If so, pleasedescribe your company's policy for making such grants and the factors and circumstances yourcompany takes into account when 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 in questions 1-12 by June 30, 2005. Incomplying with this request, respond by repeating the enumerated request, followed by theaccompanying response; attach and identify all relevant documents or data by title and thenumber(s) of the enumerated request(s) to which they are responsive. Finally, in complyingwith this request, please refer to the attached definitions concerning the questions set forth inthis 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