Drug companies’ free lunches have expensive side-effects

  • Home
  • Health
  • Drug companies’ free lunches have expensive side-effects

Last week, the Australian Competition and Consumer Commission (ACCC) re-authorised the Medicines Australia Code of Conduct [1], but with one important condition. The industry association now has to monitor and publish six-monthly reports of all drug company-sponsored meetings provided for healthcare professionals, including their cost. ACCC Chairman Mr. Graeme Samuel said “the condition will raise the level of transparency about functions sponsored by pharmaceutical companies”. [2]

Imposition of this condition has caused dismay and anger among pharmaceutical companies who fear it could lead to a media feeding frenzy each time the report is published. They are also concerned about the cost of compliance.

Roche Pharmaceuticals was recently in the news for providing cancer specialists with a $200-a-head meal at the Opera House Bennelong restaurant. Roche argued that this dinner was simple, modest and appropriate given that it followed an education conference the company had organised and sponsored. [3]

AMA President, Dr Mukesh Haikewal said drug company dinners “oiled the wheels” of medical education and that $200-a-head meals were appropriate, rather than doctors “slumming somewhere in a budget chain motel”. [4] He argued that company-sponsored events gave doctors an opportunity “to critically question the companies’ products” and that “no patient harm comes from this process”. He called the condition imposed by the ACCC “unreasonable” and said it would discourage company support for medical education.

Dr Haikewal’s views are clearly honestly held; they are also widespread among the medical profession. However, a large amount of research contradicts the view that no patient harm comes from such interactions between the medical profession and the pharmaceutical industry. Research shows that industry-doctor interaction correlates with doctors’ preferences for new products that hold no demonstrated advantage over existing ones, decreased prescribing of more cost-effective generic drugs and a rise in both and irrational and incautious prescribing. [5]

A theme issue of the British Medical Journal that explored this interaction had a cover depicting pigs and reptiles. The editor noted that this isn’t a Manichean battle between good and evil but the entwinement of individuals from different backgrounds and value sets who get to know, and often to like, each other and therefore want, as humans do, to reciprocate friendships and favours. “Food, flattery, and friendship are all powerful tools of persuasion” wrote Ray Moynihan in his two part article on such entanglements. [6] Which is why one web site set up to make the medical profession think more seriously about such matters is called “No Free Lunch”. [7] Another is called “Healthy Skepticism”. [8]

In Australia, under the umbrella of our Quality Use of Medicines Policy, a number of organizations provide unbiased, independent sources of information about medicinal drugs. The National Prescribing Service (NPS) conducts ongoing education and other activities. [9] They encourage GPs to use resources such as the Australian Medicines Handbook (an excellent source of drug information) [10] and Therapeutic Guidelines (information on cost-effective drugs of choice for common conditions) [11]. NPS educational events are well attended by GPs and have received excellent evaluation reports despite “slumming it in motels” and expending no more than $40 per head on room and equipment hire, a two course dinner, a glass of wine or juice and coffee or tea.

In short, the “condition” added by the ACCC to the re-authorisation of the Medicines Australia Code of Conduct is welcome. It should restrain some of the more flagrant abuses of hospitality that are often not reported because those who benefit have no desire to complain. However, the “condition” does nothing to address the many other concerns about the Medicines Australia Code that were made to the ACCC in public submissions. [12]


For example, concern was expressed about the recent infiltration of pharmaceutical promotion onto GP’s prescribing software because these advertisements can be viewed by patients despite legislative prohibition on advertising to consumers. [13] The ACCC agreed that (despite minor modifications to the Code) “there may still be screens that patients are likely to view during a consultation, regardless of whether they are designed to be viewed. As such, it is not clear that the sections as currently drafted will ensure full compliance”. [14]

Of even greater concern is the fact that many pharmaceutical companies repeatedly breach the Code, probably because the fines imposed are minuscule in comparison with the money gained from promotional excess (and Code breaches). The ACCC was “concerned that the Code and Appeals Committees do not appear to impose heavy sanctions in any circumstances”. It considered that this raises some doubt about the effectiveness of the Code. The ACCC was also concerned that “Code Annual Reports indicated that some companies were regularly breaching the Code and that the penalties imposed by the Code Committee do not appear to reflect this”.

The ACCC noted that, “when considering an application for authorisation, the ACCC is required under the Trade Practices Act to assess what the likely benefits and detriments of the arrangements before it. If it is not satisfied that the arrangements are likely to result in a net public benefit, it may impose conditions. However, its role is not designing a better code, nor considering whether other regulatory arrangements may be more or less appropriate.” Finally, the ACCC considered that the appropriateness of self-regulation of the pharmaceutical industry “is a matter for government policy and well beyond the scope of Code authorisation”. [14]

In the light of these comments by the ACCC the Australian Consumers’ Association (ACA) sent a letter to the Minister for Health, Tony Abbott MP, arguing that the focus of regulating the promotion of pharmaceutical products should shift from self-regulation to more direct regulation, as has occurred in a range of other sectors of the economy. The ACA believed this should be achieved through legislation enforced by the appropriate regulator such as the Therapeutic Goods Administration. Failing this preferred option, there should be a requirement that industry develop an effective Code of Conduct that met defined policy objectives established by legislation. [15] In response, the Minister noted that the government had confidence in the existing approach. That’s not surprising when the headquarters of many large pharmaceutical companies happen to be located in North Ryde, in the Prime Minister’s electorate of Bennelong.


1. http://www.medicinesaustralia.com.au/pages/page5.asp

2. http://www.accc.gov.au/content/index.phtml/itemId/755224/fromItemId/142

3. http://www.theaustralian.news.com.au/story/0,20867,19898069-23289,00.html

4. http://www.theaustralian.news.com.au/story/0,20867,19914938-23289,00.html

5. http://www.drugpromo.info/read-reviews.asp?id=4

6. http://bmj.bmjjournals.com/content/vol326/issue7400/cover.shtml

7. http://nofreelunch.org/

8. http://www.healthyskepticism.org/

9. http://www.nps.org.au/

10. http://www.amh.net.au/

11. http://www.tg.com.au/

12. http://www.accc.gov.au/content/index.phtml/itemId/744908/fromItemId/278039

13. http://www.mja.com.au/public/issues/183_02_180705/ruf10450_fm.html

14. http://www.accc.gov.au/content/index.phtml/itemId/744908/fromItemId/278039/display/acccDecision

15. http://www.choice.com.au/files/f123970.pdf

Leave a Comment