Drug Firms Spend Lavishly, Panel Told

Drug prices are being driven up by pharmaceutical companies that spend millions of dollars promoting their products to physicians with everything from lavish gifts to frequent-flier miles, witnesses told a Senate committee Tuesday.

“Drug companies have institutionalized deception,” David C. Jones, a former public relations official for Ciba-Geigy Corp. and Abbott Laboratories, told the Senate Labor and Human Resources Committee.

“The price of prescription drugs is determined by what the market will bear,” he said. “Pain, suffering and desperation will support a high price.”

Sen. Edward Kennedy (D-Mass.), committee chairman, said a study by his panel’s staff determined that the pharmaceutical industry spends more than $5 billion a year on promoting drug products in the United States.

Much of the spending is legitimate, but some is not and is contributing to the rise in drug prices that has outpaced inflation, he said.

Companies spent $85 million in 1988 on symposiums, which were often held in plush resorts, with expenses paid for both physician and spouse, Kennedy said. In some cases, the physician is paid honorariums for attending.

“Doctors who accept lavish industry gifts are jeopardizing their objectivity and compromising the trust of their patients,” Kennedy said.

Four drug companies were asked to testify but declined, he said. They are Abbott Laboratories, Hoffman-LaRoche, Wyeth-Ayerst and Ciba-Geigy.

Sen. Orrin Hatch of Utah, ranking Republican on the committee, said that while he was concerned about some drug company practices, much of what the industry does is legitimate medical education and research.

“You’re using isolated examples to tar an entire industry,” he said.

The hearing was to continue today.