Examining the Dolo scandal

Source: The post is based on an article “Examining the Dolo scandal” published in The Hindu on 15^th September 2022.

Syllabus: GS 2 – Government policies for various sectors

News: Recently, a controversy came up regarding the marketing strategies of Micro Labs which is a Bengaluru-based pharmaceutical company.

Micro Labs is the maker of Dolo-650. It was charged of having bribed medical doctors with freebies worth ₹1,000 crore in one year to promote Dolo-650.

Dolo is a paracetamol tablet to help with fever and mild pain.

What are the problems with paracetamol markets In India?

The paracetamol API is mostly imported from China. There has been an upward pricing pressure because of the difficulty of ensuring regular supply from China.

Paracetamols markets in India are full of competitors.

Therefore, The Drugs (Prices Control) Order (DPCO) has established ceiling prices for over 850 medicines which include the brands of paracetamol.

It makes it difficult for pharma companies to offer freebies to doctors in paracetamol marketing.

Still, Micro Labs took this challenge of offering Rs 1000 crore for the promotion of Dolo.

What could be the reason for offering freebies for the marketing of Dolo?

There may be two reasons for offering freebies –

1. To increase higher sales at low margins in order to make the valuation look better.
2. For building their brands by higher over-the-counter sales.

However, there might be other reasons for giving freebies as well.

What steps have been taken by the government to stop freebies for doctors?

The Uniform Code of Pharmaceuticals Marketing Practices of 2015 prohibits gifts, payments and hospitality benefits to doctors by the medical representatives. However, this code has been fully voluntary since 2015 and there is no enforcement mechanism.

The Indian Pharmaceutical Alliance is meant to enforce the code has also given a clean chit to Micro Labs.

Further, the Income Tax Act, 1961 disallows deductions for payments to doctors and the tax deducted at source (TDS) is applicable for all payments made to doctors.

The Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002 also prohibits the disbursement of gifts. It may also lead to cancellation of license if found guilty.

What can be the further course of action?

First, prescriptions should be written without brand names. It should be made the normal practice.

Doctors will then have no incentive to promote particular brands. Pharmaceutical companies also will have no incentive to give freebies to doctors.

Second, there should be a flat dispensing fee in place of incentives for pharmacists. It will prevent pharmacists from recommending a brand name.