A role of pharmaceuticals

Pharmaceuticals play a very important role in health care and hence, pharmaceutical sales follow a set of ethics. These ethics are based on system compliance, culture and accountability. They are used from the point of developing a marketing and sale strategy for public and healthcare professionals to the point of implementing them.


The Pharmaceutical Industry

Business in the pharmaceutical industry is of a highly competitive nature and its success is dependent on the sales and marketing of each drug. According to health economists, drug development costs anywhere between US $ 1.3 billion to US $ 1.7 billion. Post discovery, the development phase involves various steps. The next step involves testing and clinical trials which come prior to getting approval by regulatory boards. After the approval, the drug is launched and the only way for the company to gain from this investment is ensuring that the sales generate revenues.

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Sales Practice
A pharmaceutical sales representative holds the key to making every sale possible. They take the responsibility of providing every piece of information about the drug including its benefits and side effects. The information is not confined to that. It also covers the correct choices while making a prescription for a patient. "Ethical promotion" is the term used to describe communication of ethical values from the sales representative's end for promoting their product to the physician.

U.S. Department of Health and Human Services
After PhRMA enacted its guidelines, the Office of Inspector General for the U.S. Department of Health and Human Services issued guidelines similar to PhRMA's code, except with more severe penalties. Companies that fail to follow the department's rules could face a federal investigation that could lead to civil penalties.

Rules and Guidelines

The European Federation of Pharmaceutical Industries and Associations (EFPIA) believes in recognizing and acknowledging the need to act with responsibility towards society and the communities it operates in. It stipulates this as a Corporate Social Responsibility for the pharmaceutical industry.

The EFPIA also has a code of practice on the promotion of medicine, which includes hospitality that can be extended by a pharmaceutical company and the events that can be organized for awareness or other appropriate purposes. The hospitality comes up in forms of gifts and inducements which have to be inexpensive and yet provide value to the practice of medicine or pharmacy. Adequate training must be provided to all medical sales representatives. They must also possess the scientific knowledge required to provide arelevant information and answer queries about products.

In 2002 the Pharmaceutical Research and Manufacturers of America (PhRMA), issued a set of guidelines regarding the relationship that existed between a doctor and a drug representative. It was mandatory for its member companies to follow. This significantly changed the manner of interaction between the two. Gifts were restricted and there was a limit to the number of consulting contracts a doctor could be offered.

Criticism from groups like Families USA and Public Citizen was PhRMA's inspiration to come up with the code. Although there was a set of guidelines for this topic, the board realized that prevention of any apperace of impropriety or any criticism could be achieved by a stricter code.

"The PhRMA guidelines are a major factor that contribute to a paradigm shift that has a direct impact on the way business is conducted in the industry.. Because of this, pharmaceutical sales personnel must learn /more compelling ways to create new customers and keep the existing customers satisfied, lest they will perish because physicians are no longer willing to listen to their usual approach," said Susan Torroella, CEO of Columbia MedCom Group.

PhRMA is opposed to state laws that regulate interaction between pharmaceutical sales representatives and health care providers. PhRMA officials said that state regulations may confuse doctors and sales representatives instead of preventing improper perks because of a patchwork of rules that conflict with each other across states. "We do have the comprehensive guidelines combined with the guidelines of the Office of Inspector General. State laws would be a nightmare since rules will start changing with every state." said Jeff Trewhitt, a spokesman for PhRMA.

Health Care Fraud

Insurers and sometimes, programs like Medicare face false claims from pharmaceutical companies for financial gain. These make up for pharmaceutical fraud. Defrauding the health care system is accomplished by several schemes particular to the pharmaceutical industry only. These include: Good Manufacturing Practice (GMP) Violations, Off Label Marketing, Best Price Fraud, CME Fraud, Medicaid Price Reporting, and Manufactured Compound Drugs. According to the FBI(Federal Bureau of Investigation) American taxpayers lose $60 billion a year because of health care frauds. Of this amount $2.5 billion was recovered through False Claims Act cases in FY 2010. The False Claim Act comes in handy while recovering damages from frauds. Individuals are rewarded for being "whistleblowers".

An annual revenue of $14.6 billion is generated by antipsychotic drugs in America. Every major company selling antipsychotic drugs —Bristol-Myers Squibb, Eli Lilly, Pfizer, AstraZeneca and Johnson & Johnson — is either under investigation for probable health care fraud or has paid settlement amounts of hundreds of millions to the government under the False Claims Act. There were charges of illegal marketing on two companies which set a records for the largest criminal fines paid by a corporation ever. They were Eli Lilly’s antipsychotic Zyprexa and Bextra. In the Bextra case, the government also charged Pfizer with illegally marketing another antipsychotic, Geodon; Pfizer settled that part of the claim for $301 million, without admitting any wrongdoing.

The largest health care fraud case in the U.S. ever was that of GlaxoSmithKline on 2nd July, 2012. The amount paid was $3 billion, which happens to be the largest ever paid by a drug company. The company was charged for illegally promoting prescription drugs, failing to report safety data, bribing doctors and to top it all promoting medicines for which they did not possess the license yet. The drugs involved were Paxil, Wellbutrin, Advair, Lamictal, and Zofran for off-label, non-covered uses. Those drugs along with Imitrex, Lotronex, Flovent, and Valtrex were a part of the kickback scheme.