Indian drug companies have racked up a string of successes in recent years, churning out high-quality, competitively priced, generic pharmaceuticals. At the same time, the country has emerged as a destination for so-called medical tourists—American and European patients who enter Indian hospitals for surgical procedures because costs are lower and quality of care is comparable to that in Western hospitals.
Unfortunately these success stories deflect attention from a parallel health-care reality that's far less glamorous: Drug companies in India operate in a murky regulatory environment where there's no single government agency charged with looking after patients' well-being.
Free from the scrutiny of regulators, companies sometimes engage in aggressive marketing tactics, including showering physicians, pharmacists, and wholesale distributors with expensive gifts. In return doctors may prescribe drugs based on company incentives rather than the needs of patients. "The drug regulator, producer, and prescriber are on one side, and the illiterate, poor patient is on the other," says Chandra Gulati, a health-care activist in New Delhi and publisher of the medical journal MIMS [Monthly Index of Medical Specialties India]. "It's an equation where the patient can never win."
Last April the Indian Journal of Medical Ethics put an embarrassing spotlight on the problem of aggressive drug marketing. To gain access to companies, hospitals, and doctors, the authors agreed to withhold the names of individuals in their case studies. Still, the detailed examples stoked concerns about aggressive marketing:
• Drug company representatives sometimes provide doctors and pharmacists with gifts ranging from jewelry and consumer electronics goods to automobiles.
• Pharma companies especially target influential doctors at teaching hospitals, paying for them and their spouses to travel to international conferences.
• Some drug companies have printed out "rate cards" for doctors they deal with in small towns and cities: prescribing 1,000 tablets per month of a particular medication gets the doctor a cell phone; 5,000 tabs confers an air-conditioner; 10,000 tabs is worth a motorcycle.
Multinational drug companies operating in India acknowledge that ethical lapses do occur. But Ranjit Shahani, chief executive of Novartis India Ltd., questions whether the behavior described in the report really is widespread. “What I can say with surety is that Novartis does not follow such practices,” Shahani says. “This is quite an old report.”
Yet BusinessWeek was able to confirm many such examples, speaking with doctors, pharmacists, and drug company executives in the Mumbai area. One dentist at a Mumbai hospital, who asked not to be identified, was solicited by a drug company to participate in a research project and offered a $500 "incentive" to produce research proving a positive outcome. (He refused.) And speaking off the record, a doctor described retainers of $400 a month that are paid by drug companies. In return the doctor is supposed to prescribe at least 100 bottles of the company's drugs. Reps check with the local pharmacists to make sure the desired number of prescriptions are filled.
A Gimme Mentality
The Indian drug industry recognizes the need to police itself more effectively. In January the Organisation of Pharmaceutical Producers of India (OPPI) published a voluntary "Code of Pharmaceutical Marketing Practices," which calls for maintaining strict ethical standards when conducting promotional activities. That means "no financial benefit or benefit-in-kind may be provided or offered to a health care professional…in a manner that would have an inappropriate influence on the professional's prescribing practices."
OPPI Director Homi Bhabha says the organization has received only two complaints about aggressive marketing practices in the past year—partly because doctors and patients are generally reluctant to speak out. Nevertheless, he says, the group would like to see the code turned into law.
Recently small bands of activists have begun pushing for change. One of them is Gopal Dabade, 51, a general practitioner in the small town of Dharwar in Karnataka, not far from Bangalore. He says the corruption of Indian doctors at the hands of pharma companies begins early in their careers. "It starts from the time you are an intern," he explains. "You are given a pen, a scale, a notebook. You see your teachers taking gifts."
Then, like smoking, it becomes a habit, and doctors become the instigators. On one occasion, he notes, interns in Dharwar's local medical college called for a boycott of a particular drugmaker because it had not given interns gifts or a party. "It has become more rampant now," he says. "It's a compounded and complex problem."
Profit Over Public Health
For some time the Indian government has recognized that ties between doctors, pharmacists, and drug companies may have a negative impact on public health. In 2005 India's Ministry of Health & Family Welfare issued an influential white paper titled the Report of the National Commission on Macroeconomics and Health.
It noted that there is a dire need "for standards and treatment protocols." The report complained of "a clear nexus between private medical practitioners and pharmacy shops," and "fee-splitting between diagnostic centres and referring doctors." This practice led to increasing costs, the commission said, as well as to "overprescription of drugs…and over-treatment." The commission blamed the private sector for focusing on profit maximization at the expense of public health.
But to many observers New Delhi's critique appears cynical. Activists argue that the regulatory framework for the pharma sector is lax and diffuse by the standards of Europe, America, and Japan. The petroleum and chemical ministries set drug policy, while prices of drugs are set by the Commerce Ministry. The Health Ministry has almost no role to play, notes activist Dabade of Dharwar.
The Consumer Education & Research Centre, an activist group in Ahmedabad, Gujarat, has urged New Delhi to strengthen its regulatory apparatus. The Indian drug industry consists of 20,000 companies—far more than in the U.S., notes C.J. Shishoo, a trustee of the center. Yet the number of full-time government employees overseeing this sprawling sector is far smaller than the number of specialized staff at the U.S. Food & Drug Administration.
This complaint is echoed by Chino Srinivasan, head of a nonprofit pharma company called LoCost in Baroda, Gujarat. "If we want to do something, we can," he says. "India can launch rockets." But at least so far, activists complain, the government has failed to weigh the needs of patients against the prerogatives of drugmakers.