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A recent report by a public health group on pharmaceutical marketing practices has revealed widespread use of bribes and inducement by Pharma companies to the doctors in order to increase the sale of their products. For doctors the Medical Council of India has a code of ethics which bars them from accepting any gifts, cash, travel facilities or hospitality from Pharma companies. However for the pharmaceutical companies there is a voluntary code known as Uniform Code of Pharmaceutical marketing practices or UCPMP which experts says is a not a very effective mechanism to check the prevailing malpractices.


Key Facts:

  • India is the largest provider of generic drugs globally with the Indian generics accounting for 20 per cent of global exports in terms of volume. Of late, consolidation has become an important characteristic of the Indian pharmaceutical market as the industry is highly fragmented.
  • India enjoys an important position in the global pharmaceuticals sector. The country also has a large pool of scientists and engineers who have the potential to steer the industry ahead to an even higher level.
  • Presently over 80 per cent of the antiretroviral drugs used globally to combat AIDS (Acquired Immuno Deficiency Syndrome) are supplied by Indian pharmaceutical firms.
  • India’s cost of production is nearly 33 per cent lower than that of the US
  • Labour costs are 50–55 per cent cheaper than in Western countries. The cost of setting up a production plant in India is 40 per cent lower than in Western countries
  • Cost-efficiency continues to create opportunities for Indian companies in emerging markets & Africa
  • India has a skilled workforce as well as high managerial & technical competence in comparison to its peers in Asia
  • India has the 2nd largest number of USFDA-approved manufacturing plants outside the US
  • The Indian pharmaceutical market size is expected to grow to US$ 100 billion by 2025, driven by increasing consumer spending, rapid urbanisation, and raising healthcare insurance among others. Pharma sector’s revenues are expected to grow by 9 per cent year-on-year through fiscal 2020.
  • India has 2,633 FDA-approved drug products. India has over 546 USFDA-approved company sites, the highest number outside the US


Code of Medical Conduct- MCI (wrt to the topic):

MCI has come up with code of ethics for a doctor which was last updated in 2002. They are legally enforceable group of laws. The rules define a perfect doctor.

  • A practicing physician can not act as models in advertisements.
  • A medical doctor should not give, solicit, or receive nor shall he offer to give solicit or receive, any gift, gratuity, commission or bonus in consideration of or return for the referring, recommending or procuring of any patient for medical, surgical or other treatment.


Unhealthy alliance between doctors and Pharmaceuticals firms:

  • It’s a clear case of self-regulation gone wrong.
  • Actually the medical representatives are sent to educate the doctors about the new developments which is in the benefit of the patients only.
  • That some pharmaceutical companies give expensive gifts, distribute cash and pay for extravagant pleasure trips of doctors willing to push their products.
  • Alarming is that there is no law to punish those guilty of the unethical practice; and the government refuses to blink.
  • Result: patients are forced to buy costly medicines.
  • Companies ramp up drug prices to recover the amount spent on promotion.
  • The Department of Pharmaceuticals (DoP) has received some complaints against some pharmaceutical companies on unethical marketing practices.
  • In 2015, the government had notified the Uniform Code for Pharmaceutical Marketing Practices (UCPMP), crucial for an industry that until now had nothing to regulate it—neither a law nor any guidelines.
  • RTI revealed names of 20 firms charged with “bribing doctors, medical shopkeepers and unauthorised medical practitioners to sell their pharmaceutical products” in 2016.


Red Flags and Fraudulent Schemes:

  • The Indian pharmaceutical industry is faced with a number of challenges from a compliance point of view.
  • The most prevalent fraudulent schemes in the industry relate to year-end targets, sales returns, etc., which are used as a veil to effectuate concerns around channel stuffing, free of cost products, free samples, fraud.
  • These schemes are deeply entrenched into the system and are mingled into the day-to-day operations and accounting practices employed in the industry.
  • Owing to the complex manner in which these schemes operate, they remain concealed unless the substance of the activity is specifically analysed.
  • As an auditor and as an industry expert, one should be adequately aware of these red flags and should develop a focused audit plan and procedures to detect any misconduct.


Why not to prescribe medicines in generic forms?

  • Prime Minister Modi has created a momentum across the country for this industry.
  • It has tremendous advantage in turns of economy, rational prescribing, cut down of unnecessary usage of drugs.
  • But the major hindrance in public to accept generic medicines is the confidence in quality.


Way forward:

  • Pharmaceutical companies should focus more on research and development activities rather than only marketing aspect.
  • Doctors should strictly adhere to the code of ethics.
  • There should be appropriate discourage punishment.
  • Code for pharmaceutical firms should be made mandatory.
  • The law is necessary to curb the malpractices.
  • Huge infrastructure for quality testing of generic drugs.

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