(Subject Name: Applied Managerial Communication)

Subject Code: PG-06

Term- I

PGDM Batch 2022-24

Assignment – 01 Marks: 10 Submission Date: 10.09.22

Submitted by: Submitted to:

Name: Nupur Malhotra Ms. Bhawna Bhardwaj

Neha Singh

Jaydeep

Manish

Piyush Kumar

Section: C
 Title of the story – Pharma Company crosses the red line
The drug company landed in a legal tangle over sops. Marketing practices of pharma firms are
under scrutiny after tax officials searched the premises of a drug maker and an association of
medical representation moved to the Supreme court alleging unethical marketing practices by
drug makers. The Central Board of Direct Taxes (CBDT) accused the manufacturer of Dolo
tablets of distributing freebies and the National Medical Commission asked the Income Tax
Department for details of doctors who allegedly received freebies from 6 pharma companies,
including the Dolo 650.

Unethical marketing practices of drug makers –

The Consumers International report says drug companies use unscrupulous and unethical
marketing tactics not only to influence doctors to prescribe their products but also subtly to
persuade consumers that they need them. Consumers should be concerned because time and
again the companies violate their own industry's ethical marketing codes. Patients' health may
suffer if a drug such as Vioxx - a painkiller is later withdrawn because it was over-promoted.
Yet, according to Consumers, there is "a shocking lack of publicly available information about
the 60 billion spent annually by the industry on drug promotion.”
The unethical marketing practices by drug makers include-

 Drug companies are promoting their products through patient groups, students, and internet
chatrooms to bypass the ban on advertising except to doctors.
 They offer information to the public on "modern" lifestyle diseases, such as stress, to
encourage people to ask their doctors for medicines.
 They make inaccurate claims about the safety and efficacy of their drugs.
 Doctors are offered incentives to prescribe and promote drugs including kickbacks, gifts, free
samples, and consulting agreements.
 Many companies have been implicated in anti-competitive strategies, including cartels and
price hikes.
Drug companies are not permitted to advertise products to the public. But companies are
increasingly looking to influence consumers through funding patient groups and launching
"disease awareness campaigns", which do not name a product but are likely to encourage patients
to seek treatment.

Dolo controversy –
Dolo 650 has remained a household name when an individual has symptoms of fever or common
flu. The company reached its higher point during the Covid – 19 pandemic. Micro Labs Ltd,
which manufactures Dolo 650 tablets, had its profits go through the roof during the peak of the
Coronavirus outbreak so much so that the medicine became a meme on social media due to its
frequent use in Indian households. Now the company has found itself, in the middle of a
controversy after the federation of Medical and sales representative association of India has
alleged that its distribution of freebies worth Rs 1000 crores to doctors to push the drug.

According to the FMRAI vs Union of India case being heard in the Supreme Court, it has been
alleged that Micro Labs was giving doctors freebies that amounted up to over Rs 1000 crores
total to prescribe Dolo-650 as the go-to drug to all patients with flu symptoms.

A bench of Justice DY Chandrachud and AS Bopanna was told by senior advocate Sanjay Parikh
and advocate Aparna Bhat, appearing for petitioner 'Federation of Medical and Sales
Representatives Association of India', that the market price of any tablet up to 500mg is
regulated under price control mechanism of the government but the price of drug above 500mg
can be fixed by manufacturer Pharma Company.

He said that to ensure a higher profit margin, the company distributed freebies to doctors to
prescribe the Dolo drug of dosage 650mg capacity. The advocate further said that the Dolo-650
prescription for most of the patients was an “irrational dose combination”, after which Justice
Chandrachud remarked that the drug was exactly what he was given when he was suffering from
Covid-19.

The plea filed against the pharmaceutical company stated that even though they have termed this
practice as a sales promotion, several “unethical” benefits are offered to doctors to push the drug
such as gifts and entertainment, sponsored foreign trips, hospitality, and other benefits.

Unethical drug promotion can adversely influence doctors' prescription attitudes and harm
human health by over-use or over-prescription of drugs, prescription of higher doses of drugs
than necessary, prescription of drugs for a longer period than necessary, prescription of a higher
number of drugs than necessary and prescription of an irrational combination of drug.
Pharma a marketing-driven industry –

 A government doctor said no pharma firm can sustain itself without marketing its drug.
 It mostly happens when there is an outbreak if there is a great demand for a particular,
drug, or when a drug is being launched.
 Unlike in the case of other products, the decision to buy a drug is not made by the
consumers, but by the doctor. This makes pharma a marketing-driven industry.

Are hospitals getting involved?

Doctors at top private hospitals which treated a large number of Covid – 19 patients, said drug
giants do try to incentivize hospitals. The possibilities increase when a large corporate hospital
chain operating across the country buys a drug in bulk. A doctor at a corporate hospital does not
have any control over the drugs sold in the - house pharmacy of the hospital. Doctors running
small clinics see limited patients, and they do not have pharmacies, so the issue of
incentivization does not arise.

What flaws did the Income Tax department find?

 Pharma companies treat freebies as a marketing expense that is deducted while

computing their taxable income, getting the beneficiary of this spending to report it as his
income has been a challenge.
 In some cases, tax officials have denied promotional expenses as a deduction. Hence, the
government introduced a 10% tax to be deducted as a source (TDS).
 The tax deduction is important so that doctors and social media influencers report such
benefits in their tax returns and pay tax on what it is worth.