Dolo controversy revives demand for regulating pharma marketing practices

Recent raids revealed the extent of gifts given by a company to doctors.

A 24x7 fever clinic in Coimbatore, a file picture. The sales of the antipyretic drug Dolo increased during the COVID pandemic. Its manufacturer, Micro Labs, denied any attempt to push its sale and said the drug was under price control.  | Photo Credit: PERIASAMY M

The Hippocratic Oath aside, there are laws in place to check unethical doctors. However, that is not the case with the marketing practices of the pharmaceutical industry, which are governed only by a voluntary code of conduct. The demand for a statutory code has been a long-standing one and was made again recently after the Central Board of Direct Taxes (CBDT) issued a press release on July 13 regarding raids it carried out on a Bengaluru-based group “engaged in the business of manufacturing and marketing of pharmaceutical products and Active Pharmaceutical Ingredients”. The search operations were spread across nine States and 36 locations of the group, which has a presence in over 50 countries. The press release pointed to the group’s use of unethical practices to promote its brands.

The charge against the company was that it had in its books expenses for the distribution of freebies to medical professionals under the heads “promotion and propaganda”, “seminars and symposiums”, and medical advisories. The freebies were worth Rs.1,000 crore and included travel expenses, perquisites, and gifts to doctors and medical professionals.

Pharma marketing is governed by the Uniform Code for Pharmaceutical Marketing Practices (UCPMP), which is voluntary and has been in force since 2015. The Federation of Medical and Sales Representatives’ Associations of India (FMRAI) has been demanding that it be made a legal requirement. (See “Faulty Prescriptions”, Frontline, April 2016.) On August 18, at the hearing of a public interest litigation petition that the federation and the Jan Swasthya Abhiyaan, an NGO, filed last year, the petitioners shared the CBDT press release and media reports with the Supreme Court. During the proceedings it became known that the company in question was the Bengaluru-based Micro Labs Limited, which manufactures the antipyretic Dolo 650.

Dolo, available for Rs.30 for a pack of 15, was in huge demand during COVID and was recommended by doctors. According to market estimates, the company sold 350 crore tablets, earning it Rs.400 crore in revenue during that period.

Micro Labs did not refute the CBDT’s seizures but was emphatic that it had nothing to do with promoting Dolo 650. The company did not respond to Frontline’s request for an official response.

According to the company, the medicine was under price control and did not need promotion. On January 22, Dilip Surana, chairman and CEO of Micro Labs, was quoted in the media as saying that the brand’s popularity was unexpected. <FZ,1,0,24>On February 4, a report in a business daily described how Dolo “turned into a hit with the right dose of perception and prescription”.

Government’s response

On the issue of pharmaceutical companies providing freebies to doctors, the National Medical Commission (the body that replaced the Medical Council of India) wrote to the Income Tax Department on August 3 seeking details of doctors who are said to have received freebies. The conduct of doctors is covered by the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002, under the Indian Medical Council Act, 1956. Any complaint of professional misconduct by a medical practitioner is addressed by State Medical Councils.

In a written reply to the Lok Sabha on August 5, Bhagwanth Khuba, Minister of State for Chemicals and Fertilizers, stated that the UCPMP had been in operation since January 1, 2015. He said it had been adopted by all the major associations of pharmaceutical companies. He stated that complaints about code violations had been forwarded to the associations concerned for action.

The Minister also said the Department of Pharmaceuticals had not received “any representation in the recent past from civil societies and patents groups to make the UCPMP code mandatory and that the writ petition by the FMRAI was under the consideration of the Supreme Court of India”.

The FMRAI had made numerous requests to the government since 2005 to implement a statutory code for pharma marketing. When the UCPMP was introduced in 2015, the FMRAI had criticised its voluntary nature. Besides, in a reply to an RTI application by the FMRAI in 2017, a Deputy Director (Policy) of the Department of Pharmaceuticals had written that the Ministry of Law was looking into making the UCPMP statutory.

According to Khuba’s statement, the code was sufficient to address the concerns raised as it covered various aspects pertaining to medical representatives, textual and audiovisual promotional materials, samples, gifts, and so on. The code outlined the need to form ethics committees for complaints about marketing practices, an apex ethics committee for their review, and other complaint-handling procedures as well as penalty provisions.

He also listed out provisions of the Income Tax Act, the Drugs and Cosmetics Act, the Prevention of Corruption Act, and the Indian Medical Council Professional Conduct (Etiquette and Ethics) Regulations, 2002, as a sufficient and enforceable legal regime to counter, control, and disincentivise unethical marketing practices.

The Drugs and Cosmetics Act of 1940 and its accompanying rules govern the manufacture, sale, and distribution of drugs. Direct-to-consumer advertising is prohibited. However, there is no law to regulate the promotion of pharmaceutical products to health care professionals, which is the main contention of the FMRAI’s petition.

High-level committee

On September 12, the Department of Pharmaceuticals issued an office memorandum announcing the constitution of a five-member High-Level Committee “to consider various issues pertaining to the UCPMP and examine the requirement for a legally enforceable mechanism for regulating marketing practices by pharma companies”. The committee, with NITI Aayog member V.K. Paul as chair, includes the CBDT chairman, the Secretaries of Health and Family Welfare and the Department of Pharmaceuticals, and the Joint Secretary (Policy) in that department officiating as member secretary.

The Department of Pharmaceuticals has constituted a high-level committee to examine the provisions concerning pharmaceutical marketing practices and to make and implement interventions among health care providers and the industry. | Photo Credit: RAO G.N.

The committee will examine, one, the provisions with regard to pharmaceutical marketing practices and align the interventions for effective implementation among health care providers and industry, and, two, the need for a legally enforceable mechanism for regulating marketing practices, including a study of such practices across the globe. The committee has to submit its recommendations within 90 days.

The setting up of the committee coincides with the hearings on the UCPMP in the Supreme Court, which is still to receive the counter-affidavit it asked the government to file within 10 days of the last hearing on August 18.

‘Investment in doctors’

Micro Labs might not have needed to promote Dolo 650 by investing a lot of money, but it is possible that it did reach out to medical professionals.

According to an industry insider who left the industry after 2010 because the marketing style had become “difficult to digest”, nobody would spend money on Dolo to promote it. Dolo as a brand had a turnover of Rs.30-35 crore, which increased to Rs.500 crore because of the circumstances created by the pandemic. It now accounts for nearly 40 per cent of Micro Labs’ total sales.

However, he explained that in the medicine industry there was the chronic segment—hypertension, diabetes, cardiac conditions, neuro-psychiatry, skin and skin structure, and so on, which required long-term treatment—and the non-chronic segment. “Investments in doctors” made financial sense in the former segment, he said.

“Investment” in doctors happened in various ways. For instance, companies would sponsor a physician for a conference and sponsor travel and cost of stay for the physician’s family as well. Then there were personal forms of investment in doctors. For a long-term business relationship with a customer (the doctor) in the chronic segment, there would be a 10-15 per cent investment, and the contract would run for about a year. Micro Labs was said to be among the pioneers in segmented speciality-driven marketing.

Changed atmosphere

The nature of marketing in the industry has changed over time. Earlier, every company had only one division, but in the last one and a half decades, multiple divisions emerged, diversifying on the basis of speciality. From one banner of products, there were now multiple ones. Focussed marketing was the catchword.

Doctors also realised the value of their prescriptions. For example, a drug prescribed for a patient with cardiovascular disease was expected to be used at least for a year until a replacement arrived. The investment model suited both. Sales representatives who relied on knowledge-based marketing found themselves at sea as doctors increasingly turned to the Internet for information about a drug. There was little new that marketing executives could tell them.

A medical representative was evaluated on the basis of how much he could sell. Industries earmarked marketing expenses and made investments on the basis of territory and productivity of the medical representative. Those who brought in, say, a business of Rs.25 lakh a month would have their marketing expenses shored up accordingly. “If it was the doctor who was targeted for a period of seven days, the next seven days it would be the chemist,” explained the insider.

However, a minuscule percentage of doctors refuse to succumb to such incentives and will go to great lengths to ensure that their products are of high quality and that the patient benefited.

Pharmas go scot-free

While doctors’ licences are revoked for violating the code outlined in the IMC Regulations 2002, there is nothing to hold pharmaceutical companies accountable for the largesse doctors receive. There are numerous examples around the world of pharmaceutical companies being subject to stringent laws that prohibit and penalise unethical marketing practices.

According to the FMRAI petition, sales promotion expenses account for nearly 20 per cent of the cost of medicines. Unethical drug promotion may result in overprescription in terms of higher doses and longer durations, as well as prescriptions for irrational drug combinations, the petition says.

Despite the fact that several drugs were banned between 1983 and 2013, studies say that combination drugs accounted for 47 per cent of the pharmaceutical market. Experts such as Malini Aisola of the All India Drug Action Network estimate that unsafe Fixed Dose Combinations account for 25 per cent of the pharmaceutical market by sales value even today.

In order to control unethical pharmaceutical practices, in 2009 the then United Progressive Alliance government at the Centre called a meeting with stakeholders. Six years later, the UCPMP was established. Since then the FMRAI has sent several suggestions to strengthen the code, including making it statutory.

The 59th Report of the Parliamentary Standing Committee on the Functioning of the Central Drugs Standard Control Organisation, published in 2012, notes a link between drug manufacturers and medical professionals.

In November 2015, 10 months after the UCPMP came into being, the government admitted that the voluntary code was ineffective and that a statutory framework was necessary. In 2016, the FMRAI submitted the draft of an Ethical Code for Pharmaceutical Marketing and Practices to the Department of Pharmaceuticals. But nothing came of it.

A Comptroller and Auditor General report in 2016 found that there were 36 cases across seven States with a tax impact of Rs.55.10 crore in connection with freebies/gifts to medical professionals. In 2017, the Ministry of Chemicals and Fertilizers proposed a draft Drugs Control (Marketing) Order under Section 3 of the Essential Commodities Act, 1955, to the Ministry of Law. Nothing came of it too.

The issue is not whether an antipyretic drug manufacturer pushed for the drug’s promotion. The point is that even if it did there is, at present, little the government can do by way of prosecuting such a manufacturer.

The Crux

• Pharma marketing is governed by the Uniform Code for Pharmaceutical Marketing Practices (UCPMP), which is voluntary and has been in force since 2015. 
• The demand for a statutory code for the marketing practices of pharmaceuticals resurfaced with the Central Board of Direct Taxes raids on a Bengaluru-based pharmaceutical group. The group was reportedly using unethical practices to promote its brands. 
• The Federation of Medical and Sales Representatives’ Associations of India (FMRAI) has been demanding that it be made a legal requirement.
• On September 12, the Department of Pharmaceuticals issued an office memorandum announcing the constitution of a five-member High-Level Committee “to consider various issues pertaining to the UCPMP and examine the requirement for a legally enforceable mechanism for regulating marketing practices by pharma companies”.