Regulating the industry-doctor relationship

The much expected Uniform Code for Pharma Marketing Practices (UCPMP) was finally released by the Department of Pharmaceuticals (DoP) on June 2nd, 2011. It seeks to curb any kind of gifts to doctors, restricts hospitality and meetings, prescribes guidelines around promotional material including drug samples and expects detailed accounting of expenditures on all marketing related activities. Currently the implementation would be monitored through empowered committees at each association. Being rolled out as a code of conduct for the first six months, what is much needed is eventual evolvement it into a law which will not just regulate marketing practices but will also lay down parameters for a healthy relationship between the pharmaceutical companies and the physician community.

Resistance is expected for any such regulation clamping down on the way the pharma companies attract business, considering that the challenges faced by the industry are many fold. Firstly, the industry is fragmented with around 3000 drug manufacturers and at least 200 mainstream companies - both big and small and with different marketing strategies. The marketing budgets would differ and also their perspective when it comes to building relationship with doctors. Secondly, the Drug Price Control Order (DPCO) covers roughly 20 per cent of all the drugs sold in the country. This leaves the consumers vulnerable to expensive brands pushed through doctors as a result of aggressive marketing by a few companies. Thirdly, with Indian companies going global, it is required that the ethical practices of the industry match up to international standards. For example in the US, the Department of Health and Human Service serves as a watchdog for any unfair or illegitimate practices. Moreover, there is non-tolerance to any reported corrupt practice by the Securities and Exchanges Commission (SEC). Companies found guilty are forced to cough up hefty fines and their stocks take a beating on the Wall Street. It is interesting to note that until this day, there is no regulation on marketing practices of the pharma companies in India, a market that is globally the third largest in terms of volume of production. What existed were guidelines issued by Medical Council of India (MCI) which were binding on the physicians and threatened them with stiff consequences (like cancellation of registration if found guilty of non-compliance). It has also been observed that some physicians have started declining any gifts/benefits from the companies. Irony is in the fact that the beneficiary is liable for action, while the benefactor isn’t.

The companies, in their race to get a larger pie of ‘Rx’ were indulging in practices almost bordering the unethical, because of which the DoP took a firm stand and initiated a process to evolve a mechanism to prevent companies from ‘bribing’ doctors. Industry sources cite that many firms spend on expensive gifts, in certain cases even distribute cheques and cash, not just to the doctors but also their kin. Those with a financial muscle have splurged on foreign trips to exotic locales (along with families) under the pretext of CME events (Continuous Medical Education). Spends on doctors are huge, considering that creating awareness about your brand among the doctors is the one and only way to market them for a non-OTC industry of this nature.

Going forward, the Department of Pharmaceuticals would definitely be under pressure to legalize the regime. The industry will need to proactively embrace the provisions and work more innovatively towards designing their marketing strategies. At the same time they will need to strengthen internal controls for their promotional activities. Multinational companies generally have well drafted internal policies which are compliant to Foreign Corrupt Practices Act (FCPA) and Sarbanes Oxley (SOX) Act and operate in a relatively sound ethical environment. General feeling is that most companies tend to bow down to the high-handedness of their sales teams, naturally so, considering that the cash inflow is dependent on them. They would now need to focus on building a robust internal control system revolving around various compliances to the DoP’s guidelines which sooner or later will take shape of a law. Companies would need to re-look at their policies which would need significant alignment with the regulations subsequently introduced. They would need to define limits on the spends and lay down responsibilities of process owners involved in execution of promotional activities, procurement of materials and services required for them and also monitor compliance for all these activities. It will involve checks and balances to track how much, how well and how frequently the company spends on each physician and each marketing activity undertaken by multiple departments/specialities within the same organization and across different geographical locations. A sustainable framework needs to be structured and well designed reporting and monitoring mechanism to be developed to provide the management (and regulatory authorities if the need be) with reasonable assurance regarding the promotional practices of their company. Also a no-nonsense feedback and redressal mechanism with independent members would need to be set up to collect and handle any grievances or complaints that may prop up. An environment like this would also need good amount of support from the data systems which will need alignment to the risk control mechanisms as designed by the management. Most importantly, the sales teams would need training and sensitization to the risks of non-compliance.

All this would require a lot of intervention from the top management and the outcome surely will benefit the industry as a whole. Hopefully the multi-crore budgets for foreign holidays would be re-allocated to more fruitful but neglected endeavours like product innovation, drug discovery and patient safety.