The Sunshine Act For Indian Pharma Companies

The report published by the end of 2015 by Comptroller and Auditor General of India (CAG) titled “Assessment of Assessees in Pharmaceutical Sector” pointed a massive figure of projected tax foregone. In a further investigation, CAG stated that Income Tax Department (ITD) allowed Rs. 16443 Crores as a tax foregone, which comprised a massive component made up by freebies and payments to the doctors. CAG and ITD subsequently made a tax demand for almost all the cases. Going one step beyond, CAG also pointed out that most of the payments by the companies were an infringement of Medical Council Regulation- 2002.

The issue was also brought on the radar last week when a member of Rajya-Sabha wrote to the Minister of Chemicals and Fertilizers (who oversees pharmaceuticals portfolio) accusing 4 major Pharma companies for their payment to doctors. The member also claimed to have a list of companies and doctors who received these payments and freebies. The headlines are making quite a noise in the national capital as patient advocacy groups, public representatives are pushing for India’s own Sunshine Act.

Originally introduced in the USA as Physicians Payments Sunshine Act has been found effective in bringing transparency and curb unethical practices from both pharma companies and doctors alike. The Indian version of Sunshine Act may be just around the corner. The Sunshine Act in the USA resulted in the damage of Pharma Companies who relied on freebies, payments, trips and other incentives to doctors. Is Indian Pharma Industry ready for the same?

Why Pharma Companies Must Cut Back on Payments?

Many Pharma companies may not want to continue payments to doctors. But the practice is so much deep-rooted in the Pharma sector in India that pressure of competition often makes even the large multinational conglomerates to continue with this practice. Looking at the developments, it’s a high time that pharma must cut back on payments. The question arises, why this practice needs to be stopped immediately?

  • The threat of Legal Issues: As already mentioned, taxation irregularities, notices for tax evasion, legal notices for breach of regulatory code are the undesired possible consequences of payments to the doctors. Retrospective reassessment by ITD for freebies under government circular (CIRCULAR NO. 5/2012 [F. NO. 225/142/2012-ITA.II], DATED 1-8-2012) may also result in heavy fine to Pharma companies. Should pharma companies waste their time in courts battling endless cases? Of course not.
  • The threat to the Brand Value: The healthcare delivery in India is already under tremendous threat due to increasing gap in patients and doctors. The general public already has a strenuous relationship with doctors due to many reasons. Patients also have become more demanding and are now beginning to question prescriptions issued by the doctors. That means, every prescription for your drug may not actually realize and you also might be paying for alternatives of your brands. This threat is on a small scale. On the other hand, the paying company may well jeopardize its reputation on a global forum as it happened with GlaxoSmithKline with the settlement of $3 Billion dollar suit in the USA. Not only GSK was imposed a fine of $3 billion, the company also had to spend millions on managing public relations to contain the loss of reputation and trust. In this highly equity market driven times, can Pharma companies afford any negative sentiments?
  • Long Term Threat to Your Portfolio: Supporting something which is deemed illegal, unethical or even unpopular is detrimental to any company. Pharma companies are no exception for it. Even if you are remotely connected to unethical practices, you may still have to feel the heat. Do you remember the fiasco with Aamir Khan and Snapdeal? A single wrong statement by a brand ambassador caused huge revenue loss for the company. Are doctors indirectly not your brand ambassadors?  Is it not your responsibility to make sure they are not risking your image? Do you want your marketing to become harder than it is already?
  • Industry Self-regulation: After GSK lost its $3 Billion lawsuits, the company imposed worldwide self-regulation. A two-year strategic planning resulted in the halt of further loss of company’s image. In addition, it also provided GSK a unique opportunity for PR to project itself as the one of the first few to impose such self-regulation. Not only it is helping GSK worldwide but is also pressurizing others to fall in line. Should pharma companies wait for the government to make a new law? Or should they voluntarily adopt such initiatives? This is an excellent opportunity for Pharma companies who really wish to stand out in the crowd.

If Not Payments or Freebies, Then What?

Times have changed since social media hit the world. With the rise of social media, everyone suddenly started feeling conscious about their “image”. For the first time in many decades, ‘reputation’ earned its position back as biggest motivator for anyone. Doctors are human too and are not exceptions to this. Moreover, word of mouth or referrals are still key drivers for clinical practice. The whole scenario offers Pharma a right opportunity to get away from paying doctors for their marketing their products. This is how it should be done:

  • Help them increasing their practice: Monetary compensation will not help doctors, neither will it help pharma companies. The question of “how much you earn?” will become secondary to “how reputed you are?”. Reputation is set to become the new currency in this social media/communication technology dominated world. Help doctors to get different types of exposures that can be helpful for their practice. Help them achieve new skills, treatments by sharing your insights with them on an impartial channel. Make them feel that they are exclusive and their opinions are valued.
  • Help doctors in achieving their professional goals: Do not pay them but provide them an opportunity to learn by partnering with you. Imbibe the value and importance of partnership without payments. Help them understand how it improves their medical practice. Your success rate initially may be low.
  • Give them an opportunity to shine among their peers: Doctors’ reputation and practice is quite dependent on referrals from other doctors. Understand strong points of influential doctors. Help them establish as a digital KOLs by conducting webinars, online video interviews, and online courses among their peers.

How Docplexus Can Help?

Docplexus is India’s largest and fastest growing community of 2,00,000+ doctors from Modern Medicine. Since our inception, we have built our reputation as most trustworthy, impartial and objective platform that connects doctors from 89 different specialties. For the first time, doctors in India recognized that they must build their reputation beyond their own specialty. Not only it helps them in practice but also helps to build cooperation with other doctors for the issues which often pertain to the entire medical fraternity of India. Docplexus provides them this unique opportunity.

Doctors have recognized Docplexus as the most credible platform where they not only improve and share their skills but can also build a strong reputation based on their expertise. To make sure they get the opportunity to shine, we offer an array of options in which doctors and pharma can collaborate.

Webinars, online CMEs, and Infocenters are most effective modes by which Pharma companies can provide great value to doctors and emerge as a significant partner in improving their practice. They also provide a great opportunity for top KOLs to interact with doctors across the country.


Docplexus – Pharma’s Trusted Marketing Partner
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