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America’s Healthcare Fraud, Confessions of a Drug Rep

Politics / US Politics Jan 09, 2010 - 02:27 PM GMT

By: Mike_Stathis


Best Financial Markets Analysis ArticleIf America ever expects to fix its broken healthcare system, all of the problems must first be identified. Only then can a solution be engineered.

While Obama's plan certainly provides no real solution, the current system is clearly broken and needs a radical overhaul.

Perhaps you’ve been brainwashed by the talking heads, Washington liars and other hacks that have been paid off by the industry to make you think the healthcare system is just fine. If you already have not already figured it out, you can’t trust ANYTHING from the media, especially CNBC and FOX. 

Do I need to name names? Virtually everyone in the media, from the talking head neo-cons (Limbaugh, Hannity, Levine, Savage, etc.) to the clowns on televised networks and those they interview – fall into one of these categories: they're either lying or they're ignorant when it comes to healthcare. 

Either way, listening to their propaganda will only hurt you in the end. 

How can I make such a broad assumption?

You need to understand that the healthcare industry spends BILLIONS of dollars in ads and commercials in the media each year, so the media is going to focus on interviewing hacks who support their agenda.

Even Peter Schiff realizes that his brainwashed his sheep audience will blindly accept anything he says. When you have such a terrible track record, without facing any scrutiny for your blunder, it points to a significant part of the problem in America. The masses are largely unintelligent, impulsive beings, who anxiously await further brainwashing. This largely explains why America is pretty much finished.

As a manner by which to remain consistent with his extremist viewpoints, Schiff has also misrepresented the problems with healthcare. 

Before passing judgment on whether he’s simply clueless or he has hidden agendas, I’d like to see how much money the healthcare industry will contribute to his campaign. That should paint a pretty good picture.

And because he obviously lacks a full understanding of this very complex industry, he certainly has no real viable solutions. Yet, this has not stopped him from using his media club status to position himself as a healthcare expert, as he seeks a seat in the Senate. 

But Schiff's solution could be even more damaging than Obama's healthcare reform. 

Of course, I really shouldn’t even call it Obama’s reform, because he has basically let the various members of Congress (most of which who have been paid off by healthcare lobbyists) write the bill, without having any idea what’s in it. In fact, most of Congress has no idea what’s in the bill. Those who know best what’s in “Obama’s healthcare reform” should go to the authors – healthcare lobbyists.  

And then there’s Ron Paul, who thinks America’s derailed free market system is the best way to deliver healthcare. 

Paul is either clueless or else he does not have the backbone to challenge the most powerful lobbyist group in Washington (other than AIPAC).  I’d like to know how much money Paul has received from the healthcare industry.

Instead of spending time researching or confirming what they read and hear by America’s propaganda machine, most Americans swallow what they have been fed by this very dangerous industry. 

Many of these liars claim America’s healthcare system is “great” and it’s “the best healthcare system in the world.” However, I have previous demonstrated how this is simply not true by any stretch of imagination.

As you can imagine, the list is quite long. Unfortunately, ObamaCare will do nothing to address America’s healthcare crisis.  In fact, it is very likely to make it much worse.

Most people don’t realize that the American Medical Association is actually part of the problem.

Let’s take a look at the front lines of drug makers - the drug reps; these are the guys and gals who get physicians to write as many prescriptions of their company’s drugs as possible.

One might assume drug reps have at least a general science undergraduate degree. After all, many physicians rely on drug reps to educate them on the latest drug therapies and mechanisms of action. In reality, it is very rare for reps to have any science background prior to becoming a drug rep.

Why might this be?   

Perhaps Upton Sinclair said it best.

“It is difficult to get a man to understand something when his job depends on not understanding it.”

Drug reps need sales skills more than an understanding of science and medicine. Drug companies teach their reps only what they want them to know. This helps them become more passionate salesmen since they only learn the most favorable side of the picture.

If drug reps had a basic science background, they might be able to decipher biased research and realize the harmful effects of the drugs they pitch. That certainly wouldn’t contribute to sales.

Even for reps that might have some kind of science background or might be clever enough to see past the smoke-and-mirrors, they will tend to focus on the benefits while ignoring the risks because selling drugs puts food on their table.

As opposed to having a basic science background, the most qualified candidates for drug rep positions are attractive and well-spoken.

Most female reps are hired based primarily upon their physical appeal.

The male reps are persuasive and likable.

Regardless of their sex, if drug reps use their charm well, the rewards for success can be quite generous.

Seasoned drug reps can make six figures if they’re really good; good at schmoozing with physicians; or in the case of female reps, being easy on the eyes.

The starting salary isn’t too bad either. If you happen to land a job as a drug rep with a major drug company you can expect to start out with a base salary of about $50,000. That’s around the same as the average starting salary of a Ph.D. college biology professor (public universities, although salaries do vary).

But this is just the beginning. They also get a company car with auto insurance, a great pension plan with spectacular healthcare coverage.

They’re also eligible for quarterly and annual bonuses along with lavish vacations if they meet sales targets.

To help achieve their sales quotas, they are provided with a large annual expense account to buy the loyalty of physicians in the form of gifts, vacations, five-star dinner seminars and other perks.

But this is not the end. Some physicians are paid for speaking events, research, and other activities that provide rewards for drug endorsements. These funds come from an entirely different and much larger expense account. 

When reps hold “educational meetings” they’re usually in fine dining restaurants with physicians free to order as much food and drinks as they wish.

And when drug companies hold conferences, it’s really party time. Physicians are provided with unlimited access to the finest cognac, wines, cigars and meals money can buy.

Drug companies spare no expense when it comes to wining and dining physicians. After all, physicians ultimately control up to 100% of drug company revenues.

A former drug rep testified before Congress that “pharmaceutical companies hire former cheerleaders and ex-models to wine and dine doctors, exaggerate the drug’s benefits and underplay their side-effects.”

He also explained that he was taught “how to exceed spending limits for important clients by using friendships and personal gifts,” and to “exploit sexual tension.”

Let’s have a look at some of the testimony by a former drug rep.

“I was recruited fresh from college with an eager desire to employ my degree in molecular biology and biochemistry. Shortly after my hiring, it became clearly apparent that a drug sale had much more to do with establishing personal relationships than it did with understanding the latest science. However, any doubts I held regarding the effectiveness of such methods were dispelled by the results of my persuasiveness and the financial rewards I received for my efforts. The latter also helped me rationalize the many ethically dubious situations I routinely encountered in my work.

Our intent as sales reps is to provide a skewed perspective; one where our product is presented in the best possible light while we shine a spotlight on the shortcoming of our competitors’ products. The end effect is a skewed understanding of the pharmacology, poor prescribing practices, and compromised medical professionalism. Crucial to this process is the persuasiveness, enthusiasm and charisma necessary to overcome the natural misgivings of physicians.

The majority of drug reps entering the work force today are young and attractive. The ranks of reps are replete with sexual icons: former cheerleaders, ex-military, models, athletes. Of course, as a sales job, the reps must be eloquent and convincing. Depending on the population, certain ethnicities are preferred either to make the rep distinct among other reps or to provide them with a cultural advantage in connecting with their clients.

Noticeably lacking among most new reps is any significant scientific understanding. While it's certainly a bonus to have a scientifically educated representative, it is far from a primary recruitment criterion. Youth is a much higher criterion for the sales position. Youth is equated with attractiveness and enthusiasm but also younger reps are more likely to believe unequivocally in their products superiority against competitors. This combination of charisma and zealotry makes the rep a compelling personality.

Most reps are taught a modicum of science pertinent to their product. They learn the basics of the disease their product is intended to treat but still lack a significant scientific education to place their knowledge into context. Essential to their ‘scientific education’ is learning how to discuss critical talking points about drugs in their product's class. Reps memorize facts and statistics to support market-tested positive perceptions of their products. Reps also memorize negative facts and statistics about their competitors. Hours a day are spent learning how to weave the perceived benefits of their product into a concise, seemingly un-rehearsed message.

The ability to deliver the message is further refined by learning how to handle common objections. A typical tactic is to rebut the negative medical experience of the concerned physician with positive data from the company that addresses their concern. ‘Doctor, that may be you’re experience but the data, drawn from a much larger population, suggests otherwise …’ An equally typical tactic is to rebut the negative data a concerned physician may have with positive anecdotes of their colleagues’ experiences and how their vicarious understanding should outweigh the concerns that the data may cause. ‘Sure, doctor, the paper may suggest that the side-effect commonly occurs, but how often have you seen it with your patients?’ The use of these tactics is not mutually exclusive.

Among the more dubious ‘unofficial’ lessons a new rep learns are: how to manipulate an expense report to exceed the spending limit for important clients, how to use free samples to leverage sales, how to use friendship to foster an implied "quid pro quo" relationship, the importance of sexual tension, and how to maneuver yourself to becoming a necessity to an office or clinic.

A very common if informal part of training is learning to classify your clients’ personalities into categories defined by psychological tests such as Myers-Briggs. Once recognized, reps are expected to tailor their approach to best achieve a response from their clients.

Drug reps themselves are given long and complex psychological exams to assess their personalities. One reason is to provide better management and career direction for the rep but another reason is to provide rough guidelines on the personalities the with which drug rep is compatible.

Drug reps are often paired. These pairs are responsible for the same group of clients, however the pairing often occurs with the intent to increase the likelihood that a client will have something in common with one of the reps…Quite simply put: some doctors prefer the company of men and some the company of women.

Among the gifts with which drug reps ply their clients, samples are the most routinely used to defend the need for pharmaceutical sales representatives. Doctors claim to use the samples to help indigent patients. While this may be the case, it is difficult to believe that the legions of reps with exorbitant salaries and expense budgets are the most effective means of disseminating bottles containing only 14 pills each. Pharmaceutical companies are not charities, and the delivery of samples is merely another means to promote business ... again at the expense of the public and potentially at the expense of the patient.

Drug reps are taught to use samples in myriad ways. As a gift, samples win the gratitude of doctors, who in turn win the gratitude of their patients when they offer a week's supply of free medications. Unfortunately, few patients with chronic diseases immediately realize that this "free gift" is for a drug that they will be taking for a long, long time.

Compounding this tragedy is that for many drugs a generic alternative is available that is cheaper and usually just as effective, but once a medication has been started, doctors are reluctant to change their prescription. Reps cleverly limit the number of samples they allocate to each clinic or office to make their return in 2 weeks a necessity. Reps are also instructed to parley "extra" samples left on the physicians desk as a gift to be used exclusively for new patients.

In essence, the rep is using tactics similar to those employed by illegal narcotics dealers: the first drug is free and then you’re hooked and you have to pay. Doctors who continue to insist that samples help sustain the therapies of poor patients need only be informed that drug reps do not visit every doctor in their territory - they only visit the ones that are most likely to give them a good return on their investment of time, money, food, gifts, samples and friendship.

Helping drug reps triage which clients to see, prescriber data identifies which doctors in a given region write the most scripts (i.e., prescriptions). The data scores physicians on a scale of 1 to 10, with 10 being the greatest writers and 1 indicating a writer of very few prescriptions. 10-ranked physicians are known by all the drug reps in a territory. They are given the most attention and the most lavish gifts. Doctors who are 5-ranked, on the other hand, rarely see the drug reps.

The argument for the use of these data is to allow drug reps to determine which physicians most crucially need their ‘scientific expertise.’ It defies logic to believe that a well-paid, gift-bearing, charismatic, twenty-four year old, liberal arts college graduate is the most efficient vehicle to disseminate up-to-the minute scientific information to doctors.

As a drug representative, I found myself in constant conflict with the values imprinted upon me by my family of medical practitioners – the doctor is in service to the patient above all other concerns. I was troubled that I could walk into an office filled with waiting patients but know that I would be seen first by the doctor by virtue of our friendship. I was bothered to know that doctors who denied my products’ medical effectiveness would prescribe copious amounts of it after a friendly (but expensive) dinner in Manhattan.

I was angered that the exorbitant expense budgets used for meals and gifts could instead be used to help the many patients who couldn’t afford our products. It made me wonder, what I would think of my doctor if he prescribed me a medication that was made by the company that bought him dinner the night before. There is nothing wrong with profit but there is something wrong when that profit comes at the expense of medical professionalism, broken trust between physicians and patients and the public’s health.”

Once you have transformed medicine into a business, watch out because it will be subject to the same dirty tricks seen in other industries. And accountability will be held to political agendas and profits as opposed to legal and moral standards.

 America’s Healthcare Solution

If you want to learn the truth about America’s healthcare system; if you want to know the solution to America’s healthcare crisis, order your copy of my latest book, America’s Healthcare Solution today.


By Mike Stathis

Copyright © 2009. All Rights Reserved. Mike Stathis.

Mike Stathis is the Managing Principal of Apex Venture Advisors , a business and investment intelligence firm serving the needs of venture firms, corporations and hedge funds on a variety of projects. Mike's work in the private markets includes valuation analysis, deal structuring, and business strategy. In the public markets he has assisted hedge funds with investment strategy, valuation analysis, market forecasting, risk management, and distressed securities analysis. Prior to Apex Advisors, Mike worked at UBS and Bear Stearns, focusing on asset management and merchant banking.

The accuracy of his predictions and insights detailed in the 2006 release of America's Financial Apocalypse and Cashing in on the Real Estate Bubble have positioned him as one of America's most insightful and creative financial minds. These books serve as proof that he remains well ahead of the curve, as he continues to position his clients with a unique competitive advantage. His first book, The Startup Company Bible for Entrepreneurs has become required reading for high-tech entrepreneurs, and is used in several business schools as a required text for completion of the MBA program.

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