Social media and the "black box" of health industry relations

If its true in our social media age that "your brand is now the sum of conversations about it," as Marcel Labrun of Radian6 asserts, then pharmaceutical companies such as Genentech might want to reconsider their marketing practices. The word "brand" is likely interchangeable with "reputation" in Labrun's quote, and past experience suggests that a growing awareness of ethically marginal health practices may take hold in social media forums.

The specific issue at hand was first reported by the New York Times, and involves two drugs manufactured by Genentech, Lucentis and Avastin. We previously discussed new health evidence showing that both drugs are equally effective in treating the eye disease macular degeneration. The principle difference is the cost: Lucentis costs $2000 per shot while Avastin runs between $20 and $50 a dose.

The Times has now reported that Genentech is offering doctors cash incentives to increase their use of Lucentis. The incentives flow in the form of rebates that can run into the tens of thousands of dollars quarterly, so it's not strictly a "pay to prescribe" program. Medicare reimburses doctors at about 6% above the cost for a drug, so the Genentech program allows prescribers to maximize their Medicare reimbursements based on the full price of Lucentis, then get a kick-back at the end of the quarter if prescriptions have been sufficiently high.

One of the hallmarks of socially responsible business practices is transparency. What is especially ugly about this type of program is that it amounts to a back room deal between doctors and the health industry. The Genentech program was not publicized, and only came to light when documents were leaked to the Times.  Pharmaceutical companies spend some $20 billion a year trying to persuade doctors to prescribe the highest cost drugs with highest profit margins. Patients may suffer if prescribed a newer, higher priced product whose safety profile is less well known than a more standard option. Since third party payer, in the form of health insurance, Medicare or Medicaid, pick up the tab, neither the patient nor the prescriber may suffer economic consequences. A few states have instituted "sunshine" laws to try and publicize prescriber-industry links and the dollars that change hands, but it's slow going and blocked at every turn by both industry and the doctors who receive windfalls from their industry relationships.

To return to Labrun's quote, do these legal but ethically-challenged health industry practices threaten a brand's reputation? If social media is all a-twitter with outrage, does it matter to GEnentech's bottom line? Does this represent socially-irresponsible business practice?