Paul Krugman: Drugs, Devices, and Doctors

Paul Krugman looks at the conflict of interest due to financial connections between medical companies, medical researchers, and health care providers:

Drugs, Devices and Doctors, by Paul Krugman, NY Times: Merck, the pharmaceutical giant, is under siege. ... Merck stands accused of playing down evidence that Vioxx, a best-selling painkiller until it was withdrawn..., increases the risk of heart attacks. The most recent accusation of obscuring the evidence came from The New England Journal of Medicine, which discovered that the authors of a Merck-supported paper ... had removed data unfavorable to Vioxx. ... Dr. Eric Topol, a famed cardiologist at the Cleveland Clinic, has been warning about the dangers of Vioxx since 2001. In videotaped testimony at a recent federal Vioxx trial ..., he accused Merck of scientific misconduct...

Two days after that testimony, according to Dr. Topol, he was told ...[his] position of chief academic officer ... had been abolished. A [Cleveland] clinic spokeswoman denied that the abrupt elimination of this post had any link to his Vioxx testimony. A few days later, The Wall Street Journal reported on a web of financial connections between the Cleveland Clinic, its chief executive and AtriCure, a company selling a medical device used in a surgical procedure promoted by the clinic. Dr. Topol ... was "among those who questioned the ties," the newspaper said.

O.K., it's sounding complicated. ... The past quarter-century has seen the emergence of a vast medical-industrial complex, in which doctors, hospitals and research institutions have deep financial links with drug companies and equipment makers. Conflicts of interest aren't the exception - they're the norm.

The economic logic of the medical-industrial complex is straightforward. Prescription drugs and high-technology medical devices account for a growing share of medical spending. Both are ... expensive to develop but relatively cheap to make. So the profit from each additional unit sold is large, giving their makers a strong incentive to ... persuade doctors and hospitals to choose their products. The tools of persuasion go beyond hiring cheerleaders as sales representatives. There are also financial inducements, sometimes disguised, sometimes blatant. A few months ago, Reed Abelson of The New York Times reported on a practice in which device makers give surgeons who are in a position to choose their products ... lucrative consulting contracts...

Above all, the line between medical researcher and medical entrepreneur has been blurred. In her book "The Truth About the Drug Companies," Marcia Angell, a former editor of The New England Journal of Medicine, writes that small companies founded by university researchers now "ring the major academic research institutions ... hoping for lucrative deals with big drug companies." Usually, she says, "both academic researchers and their institutions own equity" in these companies, giving them a strong incentive to make the big drug companies happy.

The ... whiff of corruption in our medical system isn't emanating from a few bad apples. The whole system of incentives encourages doctors and researchers to serve the interests of the medical industry. The good news is that things don't have to be that way. Economic trends gave rise to the medical-industrial complex, but only because those trends interacted with bad policies, which can be fixed. In future columns I'll talk about how serious health reform can reduce the conflicts of interest that taint our current system.

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[Update: Full column here.]