Illegal and unethical pharma business practices- part 2

Illegal selling practices interference with competitors

Medical representatives may illegally interfere with competitors by

 • Trying to get a customer by damaging the reputation of a competitor.

• Tampering with a competitor’s product.

• Confusing a competitor’s market research by buying medicines from stores.

Restrictions on resellers

Numerous laws govern the relationship between manufacturers and resellers—wholesalers and retailers. At one time it was illegal for companies to establish a minimum price below which their distributors or retailers could not resell their products. Today this practice, called resale price maintenance, is legal in some situations. Manufacturers do not have to sell their medicines to any reseller that wants to buy them. Sellers can use their judgment to select resellers as long as they announce their selection criteria in advance. One sales practice considered unfair is providing special incentives to get a reseller’s salespeople to push products. For example, salespeople for a cosmetics company may give a department store’s cosmetics salespeople prizes based on the sales of the company’s product. These special incentives, called spiffs (or push money), are legal only if the reseller knows and approves of the incentive and it is offered to all of the reseller’s salespeople.

Price discrimination

The Robinson-Patman Act became law because independent wholesalers and retailers wanted additional protection from the aggressive marketing tactics of large pharmaceutical companies(in general business also). Principally, the act forbids price discrimination in interstate commerce. Court decisions related to the Robinson-Patman Act define price discrimination as a seller giving unjustified special prices, discounts, or services to some customers(wholesalers and retailers in pharma business) and not to others. To justify a special price or discount, the seller must prove that it results from :

 (1) differences in the cost of manufacture, sale, or delivery;

(2) differences in the quality or nature of the drug delivered; or

(3) an attempt to meet prices offered by competitors in a market.

Thus a seller must treat all customers equally. If a seller offers a price discount or special service to one customer, the seller must offer the same price or service to all customers.

I tried to discuss some of the illegal and unethical business practices prevailing in pharmceutical business or selling.These practices are common for other business fields. Prevention of these black practices will cause healthy competition between the pharma companies which will ultimately benefit the patients, the final consumers.