The Pharmaceutical Industry and Medical Students: The Facts

The issue of what the interaction should be between Australian medical students and
the pharmaceutical industry has been at the discussion table for many years now. In
that time no formal policy has been developed, either by the Australian Medical
Students’ Association (AMSA) or by most local medical student societies.

AMSA recognises that there are a range of ethical and economic issues involved with
any relationship that medical students and their societies engage in with the
pharmaceutical industry. AMSA believes that at the end of the day each student must
make up their own mind, but AMSA sees its role encompassing the provision of as
much objective information and education on the issue as possible. This document
aims to provide such information.

This document has been set out in two main sections. First, a large amount of
background information has been compiled to contextualise the issue, including
information on who and what the pharmaceutical industry is, the current interactions
between medical students, doctors and the industry, and the role and set-up of bodies
like the Therapeutic Goods Administration and Pharmaceutical Benefits Scheme. The
second section looks at the advantages and disadvantages of medical students
engaging in relationships with the industry.

Background Information

1. The function of the pharmaceutical industry in the provision of medical

care.

AMSA recognises that the provision of pharmaceutical products is integral to patient

care and the delivery of modern medicine. No matter which way you look at it, drugs
play a large part in many of the treatments provided to patients. Without the
pharmaceutical industry, the great majority of today’s medical care could not be
undertaken.

Pharmaceutical companies are the largest contributors by far to the research and
development of new medicines. In the United States between 1981 and 1990, the
Food and Drug Administration approved a total of 196 medicines. Of this figure,
92.4% of medicines were developed by the pharmaceutical industry, whilst academia
developed 3.6% and the government developed 1% (1). The creation of a new
medicine can cost up to $AUD1.5 billion and typically takes between 10 and 15 years
(1, 2, 3). The vast majority of new compounds don’t make it through development
and trial phases – only 1 in every 10000 compounds is successful. Of those that do
succeed, only 3 in 10 will recoup their own development costs (1).

The expenditures of the big companies on research and development are (in
alphabetical order):

AstraZeneca: Claim to spend “over $AUD20 million each working day on R&D”
(~$AUD5.2 billion), an annual investment of “over $AUD2.7 billion to improve the
quality and efficiency of our discovery process”, and “about $AUD7 million each
year for the past three years on clinical research” (4). They have 10,000 staff working
in R&D.

Bayer: In 2002 the Bayer Group recorded worldwide sales of EUR 29.6 billion
($AUD48.9 billion), and spent EUR 2.6 billion ($AUD4.3 billion) on research and
development, “with plans to invest a similar amount in 2003” (5).

GlaxoSmithKline: Claim to have “an annual [worldwide] R&D budget of around $7

billion” and “commit more than $25 million to Australian R&D every year” (2).

Merck Sharp & Dohme: Internationally, Merck Research Laboratories “has developed
and brought to doctors and patients 15 new medicines over 5 years. In 2000, $US2.34
billion ($AUD3.16 billion) was spent on R&D” (6).

Pfizer: Claim to commit “an estimated AUD$11.5 billion around the world” on R&D,
“has committed more than $AUD100 million across 25 collaborative ventures for
local research and development between 1999 and 2004, more than $AUD55 million
of which will be spent on local clinical research activities” (1).

Pfizer also claim that “the [pharmaceutical] industry channelled more than $AUD300
million into research and development in Australia in 1999-2000” (1). Medicines
Australia puts this figure at over $AUD450 million each year (3).

By contrast, Healthy Skepticism, “an international non-profit organisation for health

whose main aim is to improve health by reducing harm from misleading drug
promotion” (7), estimates that $1 billion to $1.5 billion was spent on drug promotion
in Australia in 2003 (8).

2. Pharmaceutical Companies and Education

Pharmaceutical companies also play an education role within the sphere of medical
care. There is some question as to the benefits of such ‘education’ given the biased
source from which it comes (i.e. a pharmaceutical company representative informing
the student or clinician of why the product s/he is selling works), and the ulterior
motive for encouraging the product’s prescription (increased market share and profits
for the company). Representatives will often highlight the advantages of a medication,
but the information they present still must be factually correct and be able to be
backed up by appropriate evidence. In this respect, the education provided by
companies can be very useful.

Companies often sponsor educational events for doctors, medical students and other
healthcare professionals. The most common and visible of such events are the
lunchtime grand rounds at many hospitals which are sponsored by an individual
company and have independent presentations by doctors on a chosen subject. Other
educational events include weekend forums where pharmaceutical companies often
pay for the venue hire and attendance fees (flights & accommodation) of the
participants. In terms of student focussed sponsorship, companies have paid for
educational forums for medical student societies in the past.
3. Medicines Australia and its Code of Conduct

Medicines Australia is an organisation which “represents research based

pharmaceutical companies who discover, develop and manufacture prescription
medicines” (3). The majority of pharmaceutical companies in Australia, including all
major companies, are members of Medicines Australia (9).

All members of Medicines Australia must comply with the Medicines Australia Code
of Conduct (10), which “sets the standards for the ethical marketing and promotion of
prescription pharmaceutical products in Australia. It complements the legislation
requirements of the Therapeutic Goods Regulations and the Therapeutic Goods Act.”

The Code of Conduct was established in 1960 and is revised on a regular basis in
order to “continue to reflect current community and professional standards and
current government legislation”.

The section of the Code relevant to Healthcare Professionals is section 10 (11).

Pharmaceutical companies are allowed to become involved with healthcare
professionals, and “such involvement, either by financial or other means, must be able
to successfully withstand public and professional scrutiny, and conform to
professional and community standards of ethics and of good taste.” It also states that
“Financial or material benefits must not be offered to healthcare professionals to
influence them in their prescribing or dispensing of pharmaceutical products.” (11).
Part of the problem that AMSA and medical students face in this area is that the
definition of a healthcare professional is very loose and does not specify clearly
whether medical students fall within it. The following definition is taken from the
Code of Conduct “Health care professions and healthcare professionals”
includes members of the medical, dental, pharmacy or nursing professions and any
other persons who in the course of their professional activities may prescribe, supply
or administer a medicine.
This definition is far from clear and open to interpretation.

With regard to entertainment, “interactions between Companies and health care

professionals must not include entertainment.” With regard to hospitality, “any
hospitality offered by Companies to health care professionals should be simple,
modest, secondary to the educational content and provided in an environment that
enhances education and learning.” For example, “The choice of venues in locations
emphasising leisure and sporting facilities is prohibited.” (11).

4. The current level of exposure of medical students to pharmaceutical

industry marketing.

The level of exposure that medical students receive varies depending on which
medical school students attend and what year of study they are in. Every medical
student is generally exposed to the pharmaceutical industry through giveaways of
pens, pads and other stationery items.
Students attending General Practice attachments are often exposed to the
pharmaceutical representatives who visit those practices. This exposure can be
anything from free pens to in depth written and verbal information about specific
products, free product samples and free lunch.

Clinical year students and other students attending hospitals are exposed to the
industry through visiting pharmaceutical representatives. The major interaction is at
hospital grand rounds where pharmaceutical representatives often attend to be on
hand for discussion and also provide product information and free giveaways. The
company usually also sponsors food and beverages for all attendees.

5. When do doctors start prescribing?

Medical students are obviously classified as non-prescribers since they are unable to
prescribe medications. In terms of doctors within the hospital system, prescriptions
for medications for inpatients must be within the pharmacopoeia of the hospital
pharmacy. In addition, doctors can write prescriptions for almost any medication for
patients to use when they are out of hospital.

As far as inpatients are concerned, most hospitals allow any doctor at any level to
prescribe anything within the hospital’s pharmacy. However, in reality this is seldom
practised. Interns generally prescribe a very limited number of medicines, usually
analgesics and anti-emetics. Resident Medical Officers (RMOs) are the likely doctors
to start an initial drug regime, which may include medications such as analgesics,
anti-emetics, anti-hypertensives, diuretics, anti-cholesterol agents, diabetes drugs, and
some antibiotics. More complex medications, such as specific cardiac and anti-cancer
drugs, are more likely to be prescribed by registrars and consultants. In addition,
registrars and consultants are the most likely doctors to fine-tune drug regimes for
patients and alter any initial prescriptions given by interns or residents.

Despite having the ability to prescribe many medications, anecdotal evidence suggests
that the great majority of young doctors take their advice for which drugs to prescribe
from the doctors above them in the medical hierarchy. In others words, within a
medical team the choice of pharmaceutical products that an intern or resident
prescribes is largely based on the advice or direction from registrars and consultants.

6. The role of the TGA, the PBS, and the PBAC.

Regulation of Therapeutic Goods in Australia (12, 13)

The Australian community expects that medicines and medical devices in the
marketplace are safe and of high quality, to a standard at least equal to that of
comparable countries. The objective of the Therapeutic Goods Act 1989, which came
into effect on 15 February 1991, is to provide a national framework for the regulation
of therapeutic goods in Australia and ensure their quality, safety and efficacy.

The regulatory framework is based on a risk management approach designed to

ensure public health and safety, while at the same time freeing industry from any
unnecessary regulatory burden.
Essentially, any product for which therapeutic claims are made must be entered in the
Australian Register of Therapeutic Goods (ARTG) before the product can be
supplied in Australia. The ARTG is a computer database of information about
therapeutic goods for human use approved for supply in, or exported from, Australia.

The Therapeutic Goods Act, Regulations and Orders set out the requirements for
inclusion of therapeutic goods in the ARTG, including advertising, labelling, product
appearance and appeal guidelines. Some provisions such as the scheduling of
substances and the safe storage of therapeutic goods are covered by the relevant State
or Territory legislation.

The Role Of The Therapeutic Goods Administration (TGA) (12, 13)

The TGA is a Division of the Federal Department of Health and Aged Care and is
responsible for administering the provisions of the Therapeutic Goods Act.

The TGA carries out a range of assessment and monitoring activities to ensure
therapeutic goods available in Australia are of an acceptable standard. At the same
time the TGA aims to ensure that the Australian community has access, within a
reasonable time, to therapeutic advances.

Overall control of the supply of therapeutic goods is exercised through three main
processes:
• pre-market assessment
• licensing of manufacturers
• post-market vigilance

These processes ensure that any indicated medicines that a patient is prescribed in
Australia are completely safe.

The Pharmaceutical Benefits Scheme (PBS) (14)

The PBS is a Commonwealth government-funded scheme aimed at ensuring that

Australian residents have access to necessary and lifesaving medicines at an
affordable price. PBS medicines are available to all Australian residents and visitors
from countries with which Australia has Reciprocal Health Care Agreements. If you
hold a current concession card issued by Centrelink, you are entitled to an additional
Government subsidy for PBS medicines.

Most medicines available on prescription are subsidised under the PBS. Most PBS-
listed medicines cost the consumer a maximum of $23.70 or $3.80 for relevant
concession card holders.

Individuals and families are protected from large overall expenses for PBS listed
medicines by safety nets. For general patients (non cardholders), once the eligible
expenditure of a person and/or their immediate family exceeds $726.80 in a calendar
year, the patient copayment per item decreases from $23.70 to the concessional
copayment rate of $3.80. For concessional and pensioner patients (cardholders), the
$3.80 copayment per prescription item is removed once their total eligible expenditure
exceeds $197.60 within a calendar year. All pensioners continue to receive a
pharmaceutical allowance to help defray their out-of-pocket pharmaceutical expenses.

Brand Price Premiums

Different brands of prescription medicines are available which contain the same
amount of the same drug (bio-equivalence). For example Panadol, Herron
Paracetamol and No Frills Paracetamol (among others) each have 500mg of
paracetamol. They are, however, priced differently. Similarly, bio-equivalent brands
of prescription medicines may sell at different prices. The government will only pay
the amount of the cheapest brand for you. The patient must pay the extra amount if
they choose to buy a more expensive brand of medicine – the extra cost is called the
Brand Price Premium.

Therapeutic Group Premiums

The government has classified a number of medicines into ‘clinically similar’ groups.
‘Clinically similar’ means that medicines contain different drugs, but that the drugs
work on the body in a similar way. Using simple analgesics again as an example,
Panadol contains paracetamol, Aspro contains aspirin, Nurafen contains ibuprofen,
and Naprogesic contains naproxen.

Again, like the different pain-relief tablets, the different medicines within a group
may be priced differently. The government will only pay the amount of the cheapest
medicine within a group. The patient must pay the extra amount if they have been
prescribed a more expensive medicine (but they can ask for a cheaper one), even if it
means that they pay more than the maximum. The extra cost is the Therapeutic
Group Premium.
Pharmaceutical Benefits Advisory Committee (PBAC) (15)

The Pharmaceutical Benefits Advisory Committee is an independent statutory body

established to make recommendations and give advice to the Health Minister
about which drugs and medicinal preparations should be made available as
pharmaceutical benefits. No new drug may be made available as a
pharmaceutical benefit unless the Committee has so recommended.

The Committee is required to consider the effectiveness and cost of a proposed

medicine compared to alternative therapies. In making its recommendations the
Committee, on the basis of community usage, recommends maximum quantities
and repeats and may also recommend restrictions as to the indications where PBS
subsidy is available. When recommending listings, the Committee provides
advice to the Pharmaceutical Benefits Pricing Authority (PBPA) regarding
comparison with alternatives or their cost effectiveness.

The PBAC assesses applications for listing of medicines on the PBS to ensure that all
products listed as benefits meet the criteria specified in the National Health Act.
The criteria for listing include efficacy and safety compared to other available
therapies (including non-drug treatments) and cost-effectiveness. In making its
recommendations, the PBAC may take into account advice from a number of
sources, including its Economics Sub-Committee and its Drug Utilisation Sub-
Committee.

The advantages and disadvantages of medical students engaging in

relationships with the pharmaceutical industry

The positives:

1) The majority of medical research in the world is covered by pharmaceutical

companies. No matter which way you look at it, pharmaceutical companies
spend billions of dollars per year advancing medical knowledge and
treatments through their research and development programs. Even if they
spend a huge amount of money on marketing and advertising, does this really
matter? Given that they are creating the drugs in the first place, and that
without sales of their products they will not engage in further R&D in the
future, their expenditure on marketing is simply a fact of business.
2) Pharmaceutical companies represent a massive resource for future education
and training of doctors. Without the sponsorship of pharmaceutical
companies, many educational forums, conferences and general practice
training events would not occur, robbing the medical profession of a useful
and informative tool in their advancement as doctors.
3) It is impossible to practise Western medicine without the pharmaceutical
industry. Cutting ties with the industry by neglecting education and
sponsorship would result in an uneasy relationship given that doctors will
continue to prescribe pharmaceutical products to their patients.
4) The pharmaceutical industry is highly regulated. Thus, no companies are
producing drugs which are dangerous for the market and patients. Many
 opponents of pharmaceutical company interaction with the medical profession
claim that such interaction leads to poorer patient outcomes. However,
companies aren’t promoting dangerous drugs – they are promoting drugs with
a proven safety and efficacy which cannot be argued against (otherwise the
product wouldn’t have been registered by the TGA). Also, in most clinical
situations it often isn’t clear which drug is the best for an indicated condition,
which means that pharmaceutical companies aren’t necessarily promoting the
worst drugs, but simply a pharmaceutical option for a given indication.
5) Pharmaceutical companies represent a massive resource to medical students.
The industry has the ability, capacity and willingness to sponsor medical
student initiatives such as educational forums, without requiring a great deal of
exposure or advertising in return. Of the sponsorship arrangements already
occurring on the medical student landscape, the medical student societies
involved have been able to ban individual product advertising and have
complete independence in running their educational event and choice of
speakers.
6) Medical students are non-prescribers, and will not have the true ability or
reason to prescribe the majority of medications until many years after
becoming a doctor. Thus, the argument that the future prescribing of students
is affected by pharmaceutical company sponsorship relies on them having a
long memory, when in actual fact they are more likely to remember that the
sponsored educational forum took place in the first place.
7) Sponsorship from pharmaceutical companies versus research and
development expenditure is not the choice that companies make. Like most
businesses, pharmaceutical companies have set budgets for individual areas of
expenditure, so any money which does not go towards medical student
education, for example, will simply go toward sponsorship of another event.

The negatives:

1) Opportunity cost to the healthcare system and Australian people. The

true extent of “harm” that pharmaceutical company marketing causes
people is by the fact that their practices encourage a higher level of overall
prescribing and prescription of more expensive drugs. These drugs are
paid for by the Australian health care budget. This budget only has so
much money within it and money spent on more expensive and perhaps
unnecessary drugs could potentially be spent on other areas of health that
would benefit Australians. The issue is one of opportunity cost.
2) Value of marketing to community. As noted earlier drug companies
spend vast amounts of money on advertising their product. Often it is not
just to make prescribers aware of a new drug with novel therapeutic
benefits but to promote so called “me-too” pharmaceuticals. These are so
named because they are simply copies of already available medications
with enough of a molecular tweak that they can be patented in their own
right. This then enables pharmaceutical companies to break in to lucrative
drug class areas e.g. ACE inhibitors. If medical students accept support
from pharmaceutical companies they are effectively accepting money
spent on marketing that may be spent better elsewhere e.g. in research or
lowering the price of drugs.
 3) Rational Prescribing? Pharmaceutical companies would not support
medical students unless they saw future benefits, in terms of increased
prescribing, for their investment. Studies have shown that medical students
who have not been exposed to pharmaceutical company drug-brand
marketing have better prescribing habits than those who have been.
Medical Schools and AMSA, who support best practice in education,
should promote educational experiences that lead to the best possible
outcomes in prescribing. The health needs of our patients should be in the
forefront of our mind when prescribing. Each patient needs to be assessed
on their own merits and offered the most evidenced-based treatment
options to provide the best outcome for their health and to avoid patient
harm. Exposing medical students to pharmaceutical company marketing,
linked to poor prescribing, would appear to go against this principle.
4) The responsibility of medical students as global citizens.
Pharmaceutical companies have a rather dubious track record in
developing countries, particularly in the area of providing access to life-
saving medications still under patent. They also have many critics who
argue that while they literally spend billions on research into treatments for
such relatively minor conditions such as male-pattern baldness, very little
is spent on cures for conditions that kill millions each year, for example
malaria. (16, 17, 18, 19) It is argued that by entering into a sponsorship
agreement with a pharmaceutical company that purportedly engages in
such practices you are indirectly condoning this behaviour.

Pharmaceutical industry sponsorship of medical students – a case study

The Adelaide Medical Students’ Society (AMSS) engaged in a sponsorship

arrangement with a prominent pharmaceutical company in 2003 after a great deal of
discussion among the AMSS committee and consultation with AMSS student
members. The contract negotiated comprised the following key points:

- The company would provide a sum of $10,000 per annum for an education
forum and associated expenses. Examples of expenses the money was used for
in 2003 include marketing and multimedia content, catering, and payment of
speakers at the educational forum, as well as a new computer and digital
camera for the AMSS.
- All speakers were completely outsourced, and chosen at the discretion of the
AMSS (i.e. no involvement of the pharmaceutical company).
- No specific marketing of individual pharmaceutical products was permitted,
only advertising of the company itself. However, small items such as pads and
pens with individual brand names were overlooked.
- The pharmaceutical company received recognition on all materials associated
with the AMSS, including society t-shirts, the AMSS letterhead, and the
website. They were also allowed to have an A3 folded insert in the AMSS
magazine, which comprised information about the company itself.
- The agreement was non-exclusive, meaning that the AMSS can engage in
other arrangements with other pharmaceutical companies if they wish.
By all accounts, the educational forum which the AMSS organised was a huge
success Eight sessions were held over eight weeks, with approximately 200 students
attending each lecture/event. The benefits of the forum, as identified by AMSS
committee members, was that such a forum could make up for shortfalls in faculty
content, provide a non-social event for the international student market and those
more academically minded, and provide interesting speakers not normally accessible
or available on a limited budget.

References

1. Pfizer Australia website, http://www.pfizer.com.au/ResearchDevelopment.aspx

2. GlaxoSmithKline website, http://www.glaxosmithkline.com.au/gskinternet/publishing.nsf/Content/rd
3. Medicines Australia website, http://www.medicinesaustralia.com.au
4. AstraZeneca website, http://www.astrazeneca.com.au/article/502020.aspx
5. Bayer Pharmaceuticals website, http://www.bayer.com.au/dir218/bayerweb.nsf/auaboutusmain?
OpenFrameset
6. Merck Sharp& Dohme website, http://www.msd-australia.com.au/research.html
7. Healthy Skepticism website, http://www.healthyskepticism.org/index.htm
8. Healthy Skepticism website, http://www.healthyskepticism.org/promotion/spending.htm
9. Medicines Australia membership list, http://www.medicinesaustralia.com.au/public/Membership
%20Dec%202003.pdf
10. Medicines Australia Code of Conduct, http://www.medicinesaustralia.com.au/public/Code%20of
%20Conduct%20Edition%2014%20-%20Jan%2003.pdf
11. Medicines Australia Code of Conduct, section 10,
http://www.medicinesaustralia.com.au/public/Relationship%20with%20Healthcare
%20Professionals.pdf
12. Therapeutic Goods Administration website, http://www.tga.gov.au/about/about.htm
13. Therapeutic Goods Administration website, http://www.tga.gov.au/docs/html/tga/tgaginfo.htm
14. Pharmaceutical Benefits Scheme webpage,
http://www.hic.gov.au/yourhealth/our_services/apbs.htm
15. Pharmaceutical Benefits Advisory Committee webpage,
http://www.health.gov.au/pbs/general/listing/committee.htm
16. Oxfam paper on Pfizer http://www.oxfam.ca/news/AIDS/downloads/Pf...ingPaperTwo.pdf
17. Oxfam response to Pfizer AIDS drugs. http://www.aidsportugal.com/article.php?sid=674
18. Newspaper article on pharmaceutical company involvement with the third world.
http://www.guardian.co.uk/print/0,3858,465...-103680,00.html
19. Intellectual property harms the third world. http://www.twnside.org.sg/title/twe289a.htm

Author:
Simon Zilko, UWA 5th year MBBS
UWA AMSA Representative