Pharmaceutical Companies and Non-Profits: A New Frontier of Pharmaceutical Marketing

Pharmaceutical companies which face tightening restrictions on their ability to market their products are evading these restrictions by using non-profit and charitable organizations.  The January 31, 2012 New York Times reports on NPS Pharmaceuticals’ use of non-profit organization of patients to promote its product:

Over the last two years, NPS has carefully tended its relationship with Mr. Jablonski, helping to finance his nonprofit, the Short Bowel Syndrome Foundation, and flying company leaders to visit him in Lincoln. On Jan. 15, he met with the chief executive and strategized with marketing employees about how to promote [NPS’ product] Gattex to his social network of 1,000 patients and caregivers.

“It’s a nice, close relationship,” Mr. Jablonski said. “I’m an asset to them, as they are an asset to me.”

NPS hopes that Gattex will ultimately bring in hundreds of millions of dollars in annual sales and help establish the company in the increasingly hot orphan drug market, where companies can charge premium prices to treat overlooked diseases with little or no competition. NPS expects to charge about $300,000 a year for Gattex, a breathtaking price tag that is nonetheless on par with other ultra-orphan drugs on the market. 

Pharmaceutical and medical device companies have paid billions of dollars to settle False Claims Act cases over the last ten years.  Many settlements, as well as changes in federal law, have required companies to stop a variety of marketing practices, in efforts to curtail off-label marketing, kickbacks, price fraud, and other fraudulent activities.  Because, as for NPS, “hundreds of millions of dollars in annual sales” – or more – are at stake, pharmaceutical and medical device companies, however, are developing ways around these restrictions and use of non-profit organizations is one such method.

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