The Pharmaceutical Industry And Doctor Nexus – Poor Consumers!

A Times of India report (Sep 16th, 2009) says in “what seems a case of giving the fox the job of guarding the henhouse”, the Govt. of India decided to curb the practice of bribing doctors for promoting drugs by allowing pharmaceutical companies to self-regulate rather than have a legislation to tackle the ‘menace’.

The onus of regulating industry practices is already on the apex body, Organization of Pharmaceutical Producers of India (OPPI) which routinely reins in undesirable practices of member companies. OPPI members account for 70% of the Indian pharmaceutical market and the body therefore, wields significant influence over the entire industry. However, the argument is that of the 53 pharma members of the OPPI, most members are subsidiaries of MNCs. While many of these companies also have their own stringent ethical guidelines applicable globally regarding interactions with health professionals, over 25% have figured in bribery cases in the US. Hence, “the fox guarding the henhouse!” These stringent guidelines are voluntarily adopted by these companies, often rendering them on a ‘not-so-levelled playing field’ against local generic companies that are not OPPI members. This leaves them outside the body’s sphere of influence and in a position to freely to what they please. The fact that OPPI member companies volunteer this information in the public domain seems to be held against them in the report.

Licensed to Heal or Kill?
“I WILL FOLLOW that system of regimen which, according to my ability and judgment, I consider for the benefit of my patients, and abstain from whatever is deleterious and mischievous. I will give no deadly medicine to any one if asked, nor suggest any such counsel;…” The Hippocratic Oath
While the practice must not be condoned in any manner, one must pragmatically examine whether doctors being bribed by pharmaceutical companies is the central issue that impacts your life and mine. The crux is that when a doctor prescribes medicines that help manage or cure your ailment, the brand that [s]he chooses to prescribe is determined by the incentive that the company offers. This means that the doctor sells out to the highest bidder. Apart from crude avarice which means that the doctor and company makes a few bucks at your and my expense, how does this really affect you? Does the medicine kill you? No! With 24X7 media, no doctor is stupid enough to risk getting into that sort of trouble. After all, [s]he has his/her entire practice, credibility and reputation to protect! Does the medicine make you better? Sure! It may lighten your pocket a bit, or not have the effect its meant to have, but it gets you up and about. Did this happen as a result of a bribe offered and taken? Maybe! Then isn’t the doctor equally to blame in this case?

So this is not about your life being at risk due to counterfeit medicines but entirely about the ‘unholy nexus’ between big, bad pharmaceutical companies and greedy doctors to push certain brands over others. The cold truth is that this is not a fraction as grave an issue as being prescribed or sold fake medicines (counterfeit drugs). The U.S. based Center for Medicines in Public Interest predicts that counterfeit drug sales will reach $75 billion globally in 2010, an increase of more than 90 percent from 2005. The problem of fake drugs has plagued our community for many years. Few crimes can be more horrendous than this one. Indirectly, this is murder in cold blood. But, despite being a serious health hazard, there has never been any concerted effort from stakeholders to counter this hazard that could save millions of innocent lives. Regulations here anyone? Nah! Companies bribing corrupt doctors is the place to focus on!

Health & Wealth
To view this in a different perspective, lets draw a parallel from another event that was much more life changing to the common man in its impact. The global financial crisis. The timing is co-incidental and drives the analogy. Exactly a year ago the collapse of Lehman Brothers Holdings Inc. heralded the underlying problems of the global financial system and the resultant global credit crunch. This massive upheaval led to millions of people losing their lives’ savings. Worse, they also lost jobs and therefore, opportunities to steady income and recovery of household savings.
Why did this happen? Primarily due to the “irrational exuberance” – a term that was famously used by Alan Greenspan to describe the heightened state of speculative fervor – of the biggest and most respected financial institutions in the world. Revered names such as Lehman Bros, Citigroup, Barclays, AIG and Merrill Lynch amongst many others. These big banks, the wisest in the world, made humongous asset-backed investments on the basis of their credibility and not hard cash. When these investments (mostly in US-based housing mortgages) lost value following the market crash, the banks and their customers went bankrupt. Instantly, bankers became the villains. Never mind the fact that these same men and women had helped millions of ordinary folks multiply their hard earned cash during the preceding years of economic boom. Overnight, they turned into scheming, greedy, frothing-at-the mouth maniacs whose only aim in their lives seemed to be to swindle hard working people of their nest eggs! Were they guilty? Of course they were! But does this absolve investors and the lay public of all fault? Sounds similar?

Should We Know Better?
Why are ordinary people like you and me so gullible? Can you be so naïve as to entrust your lives’ savings to some glib-talking gent who promises to “double it in 6 months?” The sad fact is – yes we can! We can, when we don’t know better. Most of us don’t. How many of us understand personal finance and economics? Do you know how compound interest works? Do you know what generates more money – a stock or a bond? Do you know the difference in a company pension plan and the Public Provident Fund (PPF) offered by the Govt.? Those of us who understand the way this affects our savings are still left with a lot of it. However, isn’t it ironical that people who are most knowledgeable, and experienced, people who make money from handling other people’s money – retail and institutional investors, investment bankers and other financial service professionals – were the worst hit by the crisis? Did they all go nuts at the same time? No. It was pure greed!

Knowledge, Greed and Regulation
This tells us two important things. One, basic knowledge helps protect what is dear to us by helping us make informed decisions. Two, knowing too much helps one see loopholes in a system and tempts one to make an easy buck or two. The need for regulation arises from a lack of awareness. The onus of protecting what’s dear to you lies on who else, but you? Can government regulations help protect you? Not if you don’t know what to expect. There are hundreds of laws that are already there to protect you. Do they? Only if you have a good lawyer.

Most of the healthcare system is more opaque than the financial one (healthcare policy is probably lesser known than the financial and banking policy). This means fewer and fewer people know more and more. Such a phenomenon creates opportunities for the few who know a lot to find loopholes and exploit the system. This creates the need for regulation. Hence, focus is better applied on creating awareness amongst the lay man on broader issues concerning personal health and well-being rather than planting seeds of suspicion about services provided by good doctors. In this case, a few rotten apples don’t spoil the entire basket! In case it sounds like I am making a case of removing all regulations, I am not. All I am saying is focus on the right issues that require regulation. Companies bribing doctors to promote one brand over another is certainly not one of those issues.

Lack of awareness and information can be dangerous in matters of wealth and health. Greedy bankers did it for their fat bonuses and promotions. Investors did it because they wanted easy money. Both were equally guilty. The banks created risky financial products because investors were willing to buy them. Banks knew about the risks involved – investors didn’t – and didn’t bother to ask or find out. When a person, who is most likely to value wealth over health, does not concern himself to ensure that a financial product is unlikely to rob him of his savings, what are the chances that he would be concerned about the medicine his doctor prescribes? Should the banks have informed customers of every single risk involved in their products? Yes, they should have.

Similarly, it is the ethical duty of pharmaceutical companies to not hide information pertaining to drugs that they market and ensure that doctors get the best possible information about their products. And they do! Companies develop marketing programs that are most likely to appeal to doctors. They also make serious efforts to discuss the science underlying the products through their sales, medical and marketing teams. A more feasible way to provide scientific information to doctors is at conferences where companies can reach out to large groups at one time. These conferences are of two kinds. The first type are conferences organized by companies. These are purely promotional in nature. Doctors know this and these conferences are in highest demand. Of course, at times, companies outdo themselves. Such as when they send physicians on exotic vacations in exchange for listening to lectures about their drugs for a few hours of the day, while the rest of the day is quite literally a day at the beach (or the golf course). OPPI members, mostly MNCs, as also in their individual capacities, are obliged to report this type of spending. Spending is also segregated to account for money spent on government officials and doctors who can influence govt. This is all available in the public domain. The point to be noted here is that only Big Pharma does it. That part of the industry that is most accused of bribery! The smaller companies who accuse Big Pharma of charging high profits do nothing but complain and pretend to be holier-than-thou. The second type of conferences are annual meetings of the various medical bodies. Pharmaceutical companies are held hostage to financially support these conferences. You may all be aware of this and may feel disgusted. But, if these meetings are so disgusting then why do doctors flock to these “incentive meetings” in droves? Doctors choose venues, insist on families accompanying them, select airlines on which they accumulate mileage points, feel insulted when offered anything but business class, expect air-conditioned transport to be at their command around the clock. In short, they treat such meetings as their annual vacation. Anything but a serious forum where they come to upgrade their knowledge, skills and networks. You must watch the shock on their faces when they are asked to pay for drinks and food that they order on room service. This, despite the fact that companies take care of all meals and refreshments. A doctor does not spend one single penny out-of-pocket when he attends these meetings. Ideally, as an independent consultant, he must pay to upgrade his knowledge. What’s your take on the number of doctors who would attend a meeting arranged at Rang Sharda Hall (minus alcohol) at Bandra in Mumbai versus a meeting at Taj Exotica at Goa? So much for these ‘intelligent knowledge-based professionals’.

How do doctors get away with not knowing much and not bothering to get better? Because, as lay people, we don’t care! The moot question is, how many of us are sure that the doctors who we entrust with our families’ lives even know what they are doing. How many of our doctors (at least in India) have last appeared for an examination to test their knowledge and skills? Regulations here anyone? Lets make sure that doctors’ need to keep abreast of latest medical developments so that you and I receive the best possible treatment? Nah! But of course, the companies are the villains here, aren’t they? Lets regulate them!

The Broader Issue
The issue about companies bribing doctors to promote their medicines is not about the usage of wrong drugs that can cause you harm. It is about doctors selling out to the highest bidder. Impact on you and me? We end up buying brands that may not be the best, buying medicines that we may not really need (e.g., vitamin supplements, cholesterol reducers etc.) and help the doctor [and the company] make his cut. How many of us protest? How many of us bother to ask the doctor about the prescription? If we don’t, do we have the moral obligation to complain? Are we interested? If we don’t become aware who is going to stop doctors from getting bribed? Some regulation?

To briefly go back to the analogy, wasn’t the global financial crisis the most unsettling event of this century? Shouldn’t governments across the world rein in their banks and control capital to protect its people? After all wasn’t the crisis aided and abetted by a very lax regulatory system except in Asia? Strong regulatory control exercised by Asian Central Banks protected millions of Indian investors from the risk of the global crisis reinforcing the theory that more the regulations, safer the banks. Yet, it was this very strong state-directed lending that led to plenty of bad loans in Indian banks and required re-capitalization through the liberalization policy of Dr. Manmohan Singh in 1991. Remember those dark days when India had to literally sell its family silver? A combination of greed and ignorance was the root cause of the financial crisis. A solution to address that cause is not by strictly regulating the functioning of banks and financial institutions since it does not address the root cause. While broad regulations are necessary to ensure that bankers don’t become greedy and consumers become more aware of risk, it is equally important to allow these banks to function in the way they think best. Allow them to self-regulate. This requires extraordinary intervention from governments across the world. Yet the fact that the world seems to be recovering from the crisis in just a year seems proof that the henhouse is best guarded by the fox! In the words of Tom Junod, ““A lot of people think government action saved capitalism. It didn’t. Capitalism saved capitalism…”.

The same applies to the pharmaceutical industry as well. Regulations also stifle competition. In competitive markets, high profits serve an important social purpose: encouraging capital to flow to the production of a service not adequately supplied. Regulations make the industry dependent on government to shovel ever-greater resources into health care with one hand, while restricting competition with the other. In India, on one hand the Govt. invests less than 1% of GDP into healthcare services and on the other restricts opening up the sector to privatization. One of the biggest problems plaguing the American healthcare system is that the net effect of the endless layers of health-care regulation is to stifle competition in the classic economic sense. The effect of high regulations has created a non-competitive system where services and reimbursement are negotiated above consumers’ heads by large private and government institutions. And the primary goal of any large non-competitive institution is not cost control or product innovation or better customer service: it’s maintenance of the status quo.

Driving Profit or Driving Change
It is a well known fact that pharmaceutical companies are cash rich. However, the fact that they give back to society is not that well known and speculation is rife about what happens to the oodles of cash that companies make. OPPI/IDMA and other powerful industry lobbies must make concerted effort to work with medical bodies such as IMA, government and non-governmental bodies and citizen groups to create health programs that positively impact community at large.

The TOI report further says that “…the huge profit margins on drugs allow companies to effectively bribe doctors. Small-scale manufacturers of drugs have maintained that the prices of drugs can easily be brought down by 50%. Can big pharma do that? The question is, why should it? The world around us is undergoing transformational change. This change has the potential to impact people everywhere. Isn’t it sad that after 62 years of Independence, more than 70% of India’s population has little or no access to modern medicine? The World Development Report 2009 focuses on the role that geography plays on economic development. What this means is that the government’s role is to focus on economic development alone. To try to spread it out is to discourage it–to fight prosperity, not poverty. Does this mean that all economic activity will converge in cities only and people in villages will continue to die for lack of basic healthcare services? Of course not! Development can still be inclusive. For growth to be rapid and shared, governments must promote economic integration through avenues such as Public Private Partnerships (PPP). These are areas where the cash rich industry has a focused role to play.

Many patient assistance programs run by OPPI member companies focus on bringing in change through all or some of these initiatives.
a) Micro-financing projects to create wealth (jobs/income)
b) Percolate awareness on basic healthcare. In his article Health Insurance for the Poor: Myths and Realities, Economic and Political Weekly November 4, 2006, David M. Dror showed that rural India has a solvent population and the poor prioritize access to some healthcare. Hence while access to healthcare is not a big issue, awareness of facilities available is.
c) Utilizing technology to spread services to masses – penetrative technology such as mobile applications and tele-conferencing.
The pharmaceutical industry can drive initiatives with government to ensure that the infrastructure set up through National Rural Health Mission is utilized in the best possible way by creating
1. Awareness – people know about the facilities available
2. Access – people can afford those services
3. Availability – people get the services when they need them most
4. Applicability – people know how to reach the facilities/services and are not confused about which to use when.

Industry Needs Focus Not Distractions
Healthcare regulations are justified as safety precautions. But, whatever their purpose, almost all regulations are best shaped over time by the powerful institutions that dominate the health-care landscape. This allows the industry to often look to deliver best value to customers and make maximum profit while doing so. It is in consumers’ best interests that they be allowed to continue. The industry needs focus and can do without distractions. In the words of Mr. Ranjit Shahani, President of OPPI, “… I am confident that given a constructive environment, the Pharmaceutical Industry in India is poised to play a leading role in providing affordable and qualitative healthcare to India’s growing population.” Let it!

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