Since the last three and a half decades, ‘Code of Pharmaceutical Marketing Practices’, prepared by various global pharma trade associations and most of the large global pharma companies individually, have come into existence for strictest voluntary adherence. These are being relentlessly propagated as panacea for all marketing malpractices in the drug industry.
Squeaky clean ‘pharma marketing codes for voluntary practices’ can be seen well placed in the websites of almost all large global pharma players and their trade associations.
Though its concept and intent are both commendable, following the regular flow of media reports on this topic, a relevant question surfaces: Do the votaries, sponsors and creators of these codes “walk the talk”?
If yes, why then mind boggling sums in billions of dollars are being paid as settlement fees by large number of global pharma companies for alleged colossal marketing malpractices in different countries of the world.
This scenario prompts a large number of stakeholders believe, though over-hyped by the global pharma industry, ‘Voluntary Practices’ alone of Pharma Marketing Code’, has never worked anywhere in the world.
In this article, I shall discuss this very point in the Indian context, following the recent decisions and developments related to ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’.
No more proof required:
Although no further proof is required to vindicate the point, just to put this particular deliberation into perspective, I would cite below no more than a couple of recent examples of comments and arguments on this subject, out of so many, as are being frequently reported by the international media:
A February 24, 2014 article highlights that in the last few years alone pharmaceutical companies have agreed to pay over US$13 billion to resolve only U.S. Department of Justice allegations of fraudulent marketing practices.
On November 6, 2014, BBC News deliberated and commented, “Imagine an industry that generates higher profit margins than any other and is no stranger to multi-billion dollar fines for malpractice.”
It is worth noting, all those pharma players paying hefty fines due to alleged humongous marketing misadventures, also prominently display their well-crafted codes of pharma marketing practices for strict voluntary adherence in their respective websites.
Why are such wrongdoers not brought to book in India?
Instances of serious marketing malpractices by several pharma companies in India are also being widely reported from time to time by both the international and national media, including television channels. Even a Standing Committee of Indian Parliament had expressed its grave concern on the subject and urged the Government to place stringent deterrent measures in this area, soon.
Concernedly, instances of levying massive fines or for that matter any other punitive measures taken by any competent authority for similar delinquency in the local drug industry have not been reported from India, just yet. This is only because, India doesn’t have in place any specific regulatory and legal framework as deterrent that would detect, investigate and decide on punitive measures against the erring pharma companies for such misconducts, wherever justifiable.
Government decided to implement a globally failed model:
Personally I have high regards on a large number of astute bureaucrats in India, whom I had occasions to interact with both one-on-one and in groups. Most of their minds are razor sharp and the analytical ability is of the highest order. I am reasonably confident that they know quite well what would work and what would not, to get the expected results in India. The chronicle of the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ in that sense is intriguing.
Be that as it may, the bottom-line is, totally ignoring the reality in this regard, the Department of Pharmaceutical (DoP) wanted to make a beginning with the failed model of ‘Voluntary Practices’ of the UCPMP in India.
Accordingly, on December 12, 2014, by a circular to Pharma Industry Associations, namely, IPA, OPPI, IDMA, CIPI, FOPE and SPIC, the DoP announced ‘The Uniform Code of Pharmaceuticals Marketing Practices (UCPMP)’. The communique said that the code would be voluntarily adopted and complied with by the Pharma Industry in India for a period of six months effective January 1, 2015.
The DoP also stated that the compliance to this code would be reviewed thereafter on the basis of the inputs received.
I discussed the key issues related to this DoP circular on voluntary implementation of UCPMP in my blog post of December 29, 2014 titled, “India’s Pharma Marketing Code (UCPMP): Is It Crafted Well Enough To Deliver The Deliverables?”
The time for review:
Thereafter, the clock started ticking to catch the 6-month deadline. As June 2015 took its place in the pages of history, it was about time to ascertain the quality, depth, breadth and seriousness level of implementation of the UCPMP during the past six-month period.
Meanwhile a media report of August 4, 2015 speculated that the Government is planning to make the UCPMP mandatory on the drug and medical devices industry, making it tighter and providing teeth to it.
Has voluntary implementation of UCPMP made any difference?
Stakeholders are now curious to know, what difference has the voluntary UCPMP made during January – June 2015, period?
The mechanism as enunciated by the DoP in its above circular prescribes a virtually unimplementable review process, making the whole exercise subjective and creating a ‘your perception versus my perception’ sort of situation.
This gets vindicated when a leading news daily of India quoting an industry person reported, “There are (only) 15-20% black sheep who are bringing bad name to the entire industry”. Come on…this is a totally subjective, baseless and no more than just an off the cuff comment.
Voluntary implementation requirements of UCPMP grossly impractical:
The ‘Mode of Operation’ of voluntary UCPMP was listed by the DoP under point 8 of its above circular, as follows:
- All the Indian Pharmaceutical Manufacturer associations will have UCMP uploaded on their website.
- All the associations will upload on their website the detail procedure (as stated in Para 10) of lodging complaints.
- All the associations will also have a provision on their website for uploading the details of complaints received i.e. the nature of complaint, the company against whom the complaint has been made, the action taken by the committees under the association including the present status in the complaint and such details of a complaint should remain uploaded in the website for three years. The details of proceedings in a complaint and decisions thereafter will be sent by the concerned Association on Quarterly basis, to National Pharmaceutical Pricing Authority, on following address: Member Secretary, NPPA, 3rd Floor, YMCA Cultural Centre Building, 1 Jai Singh Road, New Delhi.
The above UCPMP circular finally says:
“The Managing Director/CEO of the company is ultimately responsible for ensuring the adherence to the code and a self declaration, in the format given in annexure shall be submitted by the executive head of the company within two months of date of issue of UCPMP and thereafter within two months of end of every financial year to the Association for uploading the same on the website of the Association. The same must be uploaded on the website of the company also.”
Unrealistic review process:
I have two fundamental questions in this regard, as follows:
1. Do all pharma Trade Associations have websites?
It appeared from my Internet search that just one pharma trade association in India has a website. However, I could not gather the required details even from that particular association’s website.
The readers may also try to locate the very existence of other Indian pharma trade associations’ websites, if I have made any mistakes during my trip to the cyberspace, and attempt to get the relevant details on UCPMP as stated in the DoP circular.
2. Are all ‘voluntary compliance letters’ from the Managing Directors in place?
Are voluntary compliance letters on UCPMP from all Managing Directors of all the pharma companies are with the Department of Pharmaceuticals by now? If not, based on which information the above news item reported that only 15-20 percent of the pharma companies did not comply with the voluntary UCPMP?
Relying only on ‘Voluntary Practice of Code’ is a globally failed model:
A healthy ecosystem for ethical marketing practices should be created and propagated within the pharma organizations of all size and scale of operation. In that sense, voluntary code of pharmaceutical marketing practices prepared by individual pharma organizations or their trade associations such as IFPMA play a commendable role. However, only those are not just enough anywhere in the world, as enumerated above.
Encouragement for voluntary practice of pharma marketing codes by the stakeholders is desirable in India too, predominantly to catalyze a change in the decades old and overall fragile ‘Jugaad’ mindset in this important area of pharma business.
In that sense, just as a starter, DoP’s initial push with voluntary practice of UCPMP is conceptually understandable, though the Department appeared to have messed up totally in its critical operationalization area for the purpose of a diligent review after 6-months.
Many countries initially relied on ‘voluntary practice’ of Pharma Marketing Codes crafted by the pharma players and their global trade associations, mostly in line with the Gold Standard of IFPMA Code of Pharmaceutical Marketing Practices. However, later on, all these countries had to put in place other regulatory and legal checks and balances for the interest of patients.
Why ‘voluntary practice’ concept alone, is not enough?
Strong internal and external performance pressures, while navigating through turbulent business environment facing strong head winds, could temporarily unnerve even the seasoned persons with nerves made of steel, as it were. It has been happening all the time, now more frequently, for different reasons.
Thus, all-weather ‘voluntary practice of marketing code model’ in isolation, has globally failed in the pharma industry, almost everywhere.
Appropriate regulations and robust laws promising justice to all, would always demonstrate a commendable role as a tough deterrent in those trying situations, unless any person or a legal entity is a hardcore manipulator focusing just on profiteering.
Related laws and regulation in other countries:
Most developed nations, such as Europe, United States, Canada, Australia, Japan, to name a few, have robust laws and regulations in this area, which act as serious deterrents to pharma marketing malpractices.
These deterrents fall primarily into the following three areas:
Specific anti-corruption regulatory and legal agencies:
Many Governments, such as, the United States and the member countries of the European Union (EU), are strictly enforcing appropriate legal and regulatory measures through dedicated enforcement agencies constituted specially for this purpose. These agencies can investigate any wrongdoings in the pharma marketing area and initiate judicial proceedings.
Specific anti-bribery Acts covering even overseas activities:
Current anti-bribery and anti-corruption laws in many countries, such as, the United States Foreign Corrupt Practices Act or the Bribery Act of the United Kingdom have impacted several global pharma players pretty hard, as these laws affect them even beyond the shores of their respective countries for indulging in marketing malpractices.
Public disclosures:
One such example is ‘The Physician Payment Sunshine Act’ of the United States. This was a part of its healthcare reform bill that was adopted in March 2010 and was finally released in March 2013.
Under the Sunshine Act, data on payments and gifts made to physicians and teaching hospitals by medical device and pharmaceutical companies must be publicly available on a searchable federal database, starting in September 2014.
What may happen, if UCPMP is made mandatory:
If UCPMP is made mandatory, I would suggest at least the following three actions:
- Appropriate transparent rules, regulations and laws with adequate teeth to address this specific purpose either to be framed afresh or the existing anti-corruption and anti-bribery laws to be amended as required, besides others.
- A competent fully empowered authority within the Department of Pharmaceuticals (DoP) should be accountable for administration and implementation of the UCPMP effectively. The DoP may wish to revive its own idea of appointing an Ombudsman with quasi-judicial power for this purpose.
- State FDAs should play an important role as detecting, investigating and prosecuting agency also for pharma marketing malpractices.
- DoP website should provide comprehensive details of all punitive action taken against each erring company for this purpose.
- A compliance certificate from the Managing Directors of the respective companies to the Central Board of Direct Taxes (CBDT) stating that the all sales and marketing expenditures computed for Corporate tax payments are in total conformity with the the UCPMP. Any false declaration should attract serious and exemplary penal consequences.
What would the pharma companies gain?
I would expect at least the following to happen:
- From the sales and marketing perspective, this new ball game would help establish a level playing field for all the pharma players, to a great extent.
- Expenditure on sales and marketing would obviously come down sharply, improving product margins significantly, even if a part of this saving is passed on to patients in form of price reductions.
- Without the allurement of freebies, competitive and innovative brand marketing acumen of the pharma companies would get honed, which would ultimately emerge as the key differentiating factor for the balance of performance to tilt either towards success or failure.
- Consequently, quality, depth and dimension of marketing inputs for a decisive competitive edge would me more cerebral and distinct in nature, unlike the marketing cacophony in today’s era of freebies.
- With greater available resources, it would help the pharma players focusing more on talent, skill and technology development to attain sustainable business excellence.
- The key focus would necessarily shift from ‘buying prescriptions’ to ‘creating prescriptions’ with value based innovative communication of bundled products and services.
Conclusion:
Relying solely on voluntary compliance of ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’, in my view, would not work in India, just as it has not worked even in the developed countries of the world.
This is primarily because, India does not currently have any serious deterrents in this area, including specific legal and regulatory systems, to limit pharma marketing malpractices, unlike many other developed nations of the world.
If the media speculation of DoP’s making the UCPMP mandatory is right, I would reckon, despite its intriguing circular of December 12, 2014, it is a courageous step in the right direction.
Although coming in form of a bitter pill, it would help the Indian pharma players embracing a long awaited and mandatory course correction for not just doing things right, but more importantly doing right things.
I would expect its longer term effect to be ‘win-win’ for all – pharmaceutical industry in India, the Government and above all the patients…well…of course, barring the regular recipients of freebies of all types, forms, kinds, nature and value.
By: Tapan J. Ray
Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.