The Troubling Business Practices of the American Medical Association
The Wonk Room's Lee Fang has a very troubling backgrounder on the American Medical Association's business practices. The story, put very simply, is that the AMA finds it impossible to live on membership dues alone. This is particularly true because a solid majority of its members are students or retirees, both of whom qualify for reduced rates.
So the group has turned to corporate sponsorship. Up until the 1950s, the tobacco industry was the AMA's largest advertiser. That relationship, happily, has since been terminated. But the revenue still needs to come from somewhere. And these days, that somewhere is drug companies:
AMA derives at least a fifth of its budget from drug companies through an arrangement known as “licensure.” The program consists of AMA selling drug companies its “Masterfile” of doctor profiles, spanning everything from detailed biographic information to an individual doctor’s prescription-writing history. The program is extremely controversial since drug companies in turn use the information to aggressively market their products to doctors. Controversial drugs Vioxx and Avandia, which have subsequently been found to pose significant risks to patients, have been marketed to doctors, in some cases, using information obtained from the AMA.
The AMA claims to have reformed some of these practices since 2007, but it's unclear by how much. Even so, the picture this all paints is pretty clearly of an organization that's deeply interested in, and pretty dependent on, the profits generated by selling health-care services, and that, along with its partners, will naturally find itself in opposition to any policies that would control costs and thus reduce revenue.
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