December 12, 2007

The D.C. City Council, as my learned peer Ben Zycher pointed out earlier in the week, is lurching towards requiring licenses for pharmaceutical sales representatives, as well as banning drug companies from accessing information on what drugs doctors are prescribing.

The first move - licensing drug reps - is a silly idea, but probably entirely within their power. The second idea is equally silly, but less clearly legal.

For the moment, let's consider the drug licensing angle. One has to wonder exactly why the D.C. City Council is engaging in such petty ante politics. Drug costs are, overall, only about 10-12% of total health care costs; there is also some pretty good evidence that prescription drugs (including newer medicines) offset spending on more expensive kinds of health care (like hospital visits). Think, for instance, of AIDS drugs, which, while expensive, are tremendously cost effective.

Drug detailing is also helpful for doctors (it educates them on new treatments), patients (who benefit from such knowledge and free samples) and industry, who can distribute its unit costs over a larger volume of sales, which helps keep per-pill prices lower than they might otherwise be.

Generics are often very good bargains for patients and health plans - which is why insurers offer a number of incentives (think tiered copayments) for patients and doctors to prescribe them. But they aren't a cure-all, and sometimes the brand name drug is better.

Unless the D.C. city council intends on passing a mandatory generic substitution regime of some kind, it is unclear why making drug reps jump through a licensing process and sign a "code of ethics" would reduce the use of branded medicines.

It is also unclear why licensing is even necessary when the information reps convey has already been vetted by the FDA.

If fact, it is hard to see this legislation as anything more than bureaucratic grandstanding against a (momentarily) unpopular industry.

The Washington Post says that this move, if it succeeds, would be "a major blow to the prescription drug industry". This is a gross overstatement.

It would, however, be a major headache if companies had to train their reps to fit 50 (51, counting the hapless D.C. jurisdiction) different state licensing regimes, a nuisance which would only - wait for it - drive up drug prices.

Posted by Paul Howard at December 12, 2007 02:10 PM

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