Illegal and unethical pharma business practices -part 1

I want to stick to the topics ‘ethics’and 'legal aspects' for some more blogs as it seems possess mammoth importance in the case of pharmaceutical business or selling. Some countries like US has a good regulatory environment for pharmaceutical marketing. Any way, ethics in India is a nascent concept especially in pharma business which can be justified by the lack of a good regulatory mesh.

 In US different acts like, The Sherman Antitrust Act of 1890, the Clayton Act of 1914, the Federal Trade Commission Act of 1914, and the Robinson-Patman Act of 1934 prohibit unfair business practices that may lessen unhealthy competition (in business including pharma). The courts used these laws to create common law that defines the illegal business/selling practices which are prevailing globally. It is said that the existence of these bad practices are more prominent in pharmaceutical business. So, let me discuss about some of them in the following sections which are illegal ,thus unethical.

 Business defamation

Business defamation occurs when a medical representative makes unfair or untrue statements to customers i.e doctors about a competitor, its products, or its salespeople. These statements are illegal when they damage the competitor’s reputation or the reputation of its salespeople. Following are some examples of false statements that have been found to be illegal:

 • Company X broke the law when it offered you a free case of toilet paper for some prescriptions.

 • Company X is going bankrupt.

 • You shouldn’t prescribe the medicines of Company X. They are of really low quality.

You should avoid making negative comments about a competitor, its salespeople, or its products unless you have proof to support the statements.

Reciprocity

 Reciprocity is a special relationship in which two companies agree to buy products from each other. For example, a manufacturer of medicines agrees to use bulk drugs from another manufacturer if that manufacturer agrees to buy its medicines for marketing. Such interrelationships can lead to greater trust and cooperation between the firms. However, reciprocity agreements are illegal if one company forces another company to join in the agreement. Reciprocity is legal only when both parties consent to the agreement willingly.

 Tying agreements

In a tying agreement a buyer is required to purchase one product in order to get another product. For example, a customer who wants to buy insulin is required to buy syringes from the same company, or a distributor that wants to stock one product must stock the manufacturer’s entire product line. Because they reduce competition, tying agreements typically are illegal. They are legal only when the seller can show that the products must be used together, that is, that one product will not function properly unless the other product is used with it. This sort of issues are less in pharmaceutical selling.

Conspiracy and collusion

An agreement between competitors before they approach customers is a conspiracy, whereas collusion refers to competitors working together while the customer is making a prescribing decision. For example, competitors are conspiring when they get together and divide up a territory so that only one competitor will call on each doctor. Collusion occurs when competitors agree to charge the same price for a drug that a customer is considering. These examples of collusion and conspiracy are illegal and unethical because they reduce competition.

to be continued..