It's an open fact that many pharmaceutical companies spend a lot of money in bribing doctors to prescribe their particular brands. They have got a good return on their investment so far , because these gifts have been proven to influence the doctor's prescription behaviour ( even though many doctors continue to delude themselves that they are immune to these blandishments).
This nexus is harmful , because it increases medical costs. Doctors are tempted ( and many are blissfully unaware of the subtle influences which play on their unconscious mind ) prescribe needlessly expensive brands, and to over-prescribe.
There are three ways of solving this problem.
One is to get the medical councils involved , and to punish doctors who have taken bribes from pharmaceutical companies. This can serve as a powerful deterrent, but is a time-consuming and expensive process, because you have to go after a single doctor , one at a time.
The second option is to rely on pharma companies to regulate themselves. They have promised to mend their ways for many years, and the government has given them the liberty to do so. Unfortunately, voluntary regulation doesn't work well when some of the players refuses to abide by the guidelines laid down by the pharmaceutical association. Game theory explains that even if one company defects, then the other companies will also follow suit , because they feel that they are at an unfair disadvantage. This quickly becomes a race to the bottom, and they all end up breaking their own rules . Even worse, their behaviour becomes completely hypocritical. They pretend to abide by their rules, and higher management takes the moral high ground by turning a blind eye to what their field staff is doing at the ground level. After all, what you don't know can't hurt you !
Let's look at a more effective alternative.
The only reason pharma companies continue to bribe doctors is because they get a tangible financial return on their investment. They know that if they gift the doctor a foreign trip, the doctor is much more likely to prescribe their brand , because of the simple principle of reciprocity. Sadly, doctors continue to justify these free jaunts by claiming that they go to medical conferences only in order to educate themselves - and how does it hurt anyone if the conference happens to be in Paris ? They believe that they are upright medical professionals who prescribe a particular brand only because it's the best one. They continue to delude themselves that they are immune to the special treatment which is showered on them by the pharma companies. However, this is just a rationalization which doctors use to justify their behaviour. The truth is that all these favors given by pharmaceutical companies to doctors does change their behavior, and often in ways which are not in the patient's best interests.
This is why the most effective way of breaking the nexus is to make sure that pharma companies no longer get a good financial return on bribing doctors. Once this stops, then they will automatically stop wining and dining doctors, because it will no longer make business sense for them to do so .
Where does the money to bribe the doctors come from ? These expenses are disguised as marketing costs on the income statements of the pharma companies. They are cleverly camouflaged as payments to third parties who serve as conduits. The job of these marketing companies is to curry favor with the doctor by giving him whatever he demands. Since these are business expenses, they are deducted from their total revenue, which means that the government is subsidizing the bribes which the pharma companies are giving to the doctors.
The IT Dept has finally woken up , and is no longer going to allow companies to claim these as these business expenses, no matter how cleverly they're disguised. This has already happened in the case of Liva Healthcare, a small pharmaceutical company in Mumbai. Pharma companies will realize that spending this money on doctors is going to turn out to be very expensive for them , because once the IT officer goes after them, not only will these expenses be disallowed, they will have to end up paying a hefty penalty as well . It wouldn't be very hard for a diligent officer to follow the paper trail from the company to the doctor , because these payments are done by cheque - all they need to do is to follow the money to its source !
Once pharma management understands this, they will automatically stop engaging in this behaviour.
The senior management of most pharma companies consist of ethical people , and they will be happy when they are no longer forced to pay off doctors just because their competitors are doing so. They will then be able to focus on ethically marketing their medicines. I am sure none of them likes paying money under the table - this is a dirty game, and the sooner we stop playing it, the better for everyone.
This is a win-win situation for everyone. The company will be able to devote its income on research and development and ethical promotion, because it won't be wasted on bribing doctors; the government will earn more revenue ; doctors will no longer be tempted to prescribe drugs for the wrong reasons; and patients they will then have access to affordable drugs .
This is the option which the US government has adopted . They use a stick to make sure everyone plays by the rules , and have enforced these by passing a law ( the US Sunshine Act) and aggressively punishing pharma companies who flout this. It's time for the Indian government to follow suit !
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