A ‘no’ to pharma freebies, a ‘yes’ for public good

Source: The post is based on an article “A ‘no’ to pharma freebies, a ‘yes’ for public good” published in the “The Hindu’ on 7^th July 2022.

Syllabus: GS2 Issues Relating to Development and Management of Social Sector/Services relating to Health, Education, Human Resources.

Relevance: Freebies in Pharma Sector

News: Recently, a bench of the Supreme Court has given a judgment on freebies given to doctors by the pharma companies.

About the M/s Apex Laboratories Pvt. Ltd. vs Deputy Commissioner of Income Tax, Large Tax Payer Unit-II Case,

The company was giving out freebies to doctors to create awareness about a health supplement it was manufacturing, which was called Zincovit.

The Judgment

The court held that the act of pharmaceutical companies giving freebies to doctors is clearly ‘prohibited by the law’.

Earlier, it was prohibited under the Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 framed under the Medical Council Act, 1956.

However, at present, the law has been repealed and substituted by the National Medical Commission Act, 2019.

Further, the freebies cannot be claimed as a deduction under Section 37(1) of the Income Tax Act, 1961.

Importance of the judgment

At present, the pharma products have become out of reach for the common man due to unethical and illegal practices in the pharma sector.  The judgment will go a long way to check it.

The pharmaceutical companies have misused a legislative gap. They have actively perpetuated the commission of an offence of giving freebies to doctors to promote their brands.

The court laid emphasis on the fiduciary relationship between doctor and patient. The patients consider the doctor’s prescription as the final word on medication. Therefore, it shouldn’t be manipulated by the lure of freebies. It drives up the prices of the medicines.

The judgment referred to a report issued by the United States Department of Health and Human Services Office. The report mentioned that the patients could save in out-of-pocket payments if they buy generic equivalent drugs instead of branded ones.

What are the other Issues in the Pharma sector?

Most of the medicines are sold at the Maximum Retail Price, or MRP in pharmacist shops.

Although India has the Drug Price Control Order and Drugs and Cosmetics Act. The agency hardly takes any action to keep the sale price of medicines under control, and keep the profit margins within a prescribed limit.

Way Forward

The Parliamentary Standing Committee on Health and Family Welfare also highlighted the same issues in its 45th report, dated August 4, 2010.

Therefore, the parliament should amend law in order to compel the drug manufacturer to sell their pharma products at the verified genuine cost. This should also factor in a reasonable profit margin for each product. There must be a uniform rate throughout the country.

Further, classified life-saving drugs should be sold at cost only or even at subsidised rates.

The government can use financial tools such as income-tax provisions for disallowing such expenditure etc.