Healthy Skepticism Library item: 2181

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Publication type: news

Pearl D.
Drug Firms' Incentives Fuel Abuse by Pharmacists in India
The Wall Street Journal 2001 Aug 16
http://online.wsj.com/article/SB997910373349012375.html?mod=googlewsj

Full text:

Pharmacy owner Ranjit Ranawat smiles as he recalls how he surprised his wife one day with a new, 29-inch color television, courtesy of GlaxoSmithKline PLC’s India unit.

How did he get it? He ordered 600 vials of Fortum, an antibiotic, and 100 boxes of Ceftum, a drug for urinary-tract and respiratory infections. That’s about 10 times as much as he normally would stock.

Incentives to buy large quantities of prescription drugs have become commonplace in India, where thousands of drug manufacturers compete for shelf space and the country’s half-million pharmacists wield an unusual amount of clout.

Pharmacists in the U.S. and other developed countries have little influence over the volume of prescription-drug sales. There, the marketing push usually targets doctors, the main legal conduit for prescription drugs. In India, many patients are too poor or too busy to see a doctor and often rely on local pharmacists for medical advice. As a result, powerful drugs are routinely, and illegally, sold over the counter.

Wide-Open Competition

The strange contours of India’s medicines market arise partly from the country’s success in fostering wide-open competition, which has lowered prices, made drugs widely available and served as a model for other developing countries. But the incentive system poses dangers for customers and raises ethical issues for drug makers and pharmacists. And with an estimated 20,000 pharmaceutical companies fighting over $3 billion in annual sales amid little regulation, the Indian model has taken competition to a questionable extreme.

“It’s a war out there. You have to get maximum business,” says Deepak Arora, group product manager for Bombay-based Glenmark Pharmaceuticals Ltd. and a former Glaxo salesman. The pharmacist, he adds, is “a powerful person in the decision chain.”

To boost prescription-drug sales, pharmaceutical companies — many of them local outfits making knockoffs of Western drugs — try to woo Indian pharmacists with gifts and other incentives. The most popular incentive, often called a “bonus scheme,’‘ offers a free foil-and-plastic strip of prescription pills for every, say, 10 strips a druggist orders.

Boosting Profit Margins

A study by the Bombay market-research firm Interlink Healthcare Consultancy found that all but one of the top 25 drug companies in India offer such discounting deals at least once a month. A recent letter to pharmacists from Blue Cross Laboratories Ltd., a Bombay company with no connection to Blue Cross & Blue Shield of the U.S., outlines a deal that offers druggists up to a 103% profit margin on a variety of prescription drugs.

For pharmaceutical companies, offering profit incentives to pharmacies serves a variety of purposes: to introduce a new brand, to liquidate a slow-moving batch of drugs, to book more sales at the end of a financial quarter, or to push competing brands off the shelves. The incentives change so often and there are so many new ones that just keeping track is a chore for drug wholesalers. Janak J. Kothari, director of R.J. Distributors Pvt. Ltd. near Bombay, created a special function for his computerized database to monitor the deals available.

Some of the prescription drugs being promoted by pharmaceutical companies are mild cough medications or skin creams. But many of the more lucrative incentive plans promote a powerful array of antibiotics, anti-inflammatories, sedatives and painkillers, some of which must be injected.

Serious Side Effects

Moreover, some of the medications have been banned in other countries because of potential serious side effects. One of Aventis SA’s Indian units, Hoechst Marion Roussel Ltd., has been promoting Baralgan-M (buy 19 packs, get one free) and Novalgin (buy 24, get one free). These are painkillers that contain metamizole (also known as dipyrone and Analgin), which has been banned in the U.S. and some other countries because it can cause a rare but fatal blood disorder. Aventis, based in Strasbourg, France, said in a statement, “We believe that the safety and efficacy of metamizole have been well-established in its more than 75 years of clinical use” and noted that the drug “is currently approved and marketed in more than 100 countries.”

Many companies also use bonus deals to market cough syrups containing phenylpropanolamine. Last fall, the U.S. Food and Drug Administration asked drug companies to discontinue marketing any drug products that contained the ingredient after a study showed it can increase the risk of stroke.

Health experts say the drug companies’ incentives have helped foster a marketplace in India rife with abuse, encouraging pharmacists to sell prescription drugs that may not be appropriate and to do so illegally. “It’s the tipping of the market toward the clinically irrational,” says Dr. Dennis Ross-Degnan, an associate professor at Harvard Medical School who specializes in health care in developing countries. To benefit from the discount deals, which are based on volume sales, pharmacies “have to push the product,” he says.

That can be dangerous. Hospitals say they get a steady flow of patients who suffer gastric bleeding and kidney complications shortly after taking prescription pain medications without a doctor’s supervision. One such patient is 34-year-old Vipul Shah, a Bombay businessman.

He says when he had leg pain, three different pharmacies in Bombay sold him Dicloran pills even though he had no prescription. He also says he was given no instructions on how the drug should be taken. Dicloran is an Indian brand name for diclofenac sodium, a prescription arthritis drug. It is marketed to druggists by Bombay-based J.B. Chemicals & Pharmaceuticals Ltd. under a buy-nine-get-one-free scheme.

After taking two tablets a day for a month, Mr. Shah started feeling lower-back pain and saw a doctor, Bharat Shah, at Bombay’s Hinduja Hospital. Dr. Shah (no relation to the patient) found permanent kidney damage and believes the drug aggravated an existing condition. Patients with serious kidney problems normally are advised to use diclofenac with great caution. J.B. Chemicals didn’t respond to repeated requests for comment.

The bonus deals worry health advocates for other reasons. By giving extra profits to the pharmacist instead of reducing the retail price, they say, manufacturers are keeping medicine prices higher than necessary for Indian patients. In addition, nearly half of all bonus deals feature antibiotics, which are overused and misused in India, according to health experts. “For any condition, a patient gets antibiotics over the counter,” says Sujeet K. Bhattacharya, director of the National Institute of Cholera and Enteric Diseases in Calcutta.

Frequently, those patients don’t complete the full course of treatment, he adds. That has led to a number of serious diseases in India, including cholera, typhoid and gonorrhea, growing resistant to common antibiotics in recent years.

Ethical Questions

The offers of televisions and other prizes to pharmacists would raise ethical questions in Western countries. Officials at two large U.S. drugstore chains, CVS Corp. and Walgreen Co., say their pharmacists are prohibited from accepting any gifts from vendors.

Local and foreign drug companies in India defend the incentives, and say they aren’t designed to boost sales without a prescription. They say the main purpose is to persuade pharmacists to substitute their brand over competing brands when a prescription is written — or “to defend our own prescriptions,” as Glaxo India’s director of pharmaceuticals, Kal Sundaram, puts it. He says that for every two Glaxo prescriptions written, only one Glaxo drug ends up being sold because druggists often substitute a competing medication. Glaxo, the world’s No. 2 drug maker after Pfizer Inc., says it decided to award TV sets to druggists buying high volumes of Ceftum and Fortum in late 1999 after a rash of substitutions of other brands. The company says trade promotions represent less than 1% of Glaxo’s sales in India, which totaled $198.5 million last year.

Aventis says it offers incentives on a “need basis only,” to make sure patients “get what they ask for.”

“For certain drugs, bonus schemes have to be given,” adds Rashmi Pai, a Bombay-based product manager with Wyeth Lederle Ltd., an Indian unit of American Home Products Corp., Madison, N.J. Some drugs in India are available in as many as 100 different brands, she says.

Pharmacists weren’t always so powerful in India. Until the 1970s, foreign companies such as Britain’s Glaxo and New York-based Pfizer dominated the market, and most drugs had only a single manufacturer, so pharmacists had little choice over what brands to stock. Some manufacturers gave retailers margins below 4% on certain drugs and refused to issue cash refunds on medicines that expired.

A New Patent Law

The balance of power started changing in 1972, when India passed a new patent law allowing companies to duplicate any foreign drug under patent as long as they altered the manufacturing process, even slightly. (International trade rules require India to enact a tough patent law by 2005.) Thousands of manufacturers sprang up, producing more than 60,000 brands of drugs. When Eli Lilly & Co. of Indianapolis introduced Prozac in 1986, nearly two dozen copycat products appeared within two years.

Marketing also changed. As in the U.S., pharmaceutical companies had long courted Indian doctors with gifts and junkets. But as the number of Indian companies proliferated and their representatives began descending on doctors’ offices in droves, they often were given scant time to promote their products. So the drug makers began paying more attention to pharmacists.

To increase their leverage over drug companies, pharmacy owners banded together into trade associations. The associations launched boycotts against drug companies to win higher profit margins. The associations also began demanding that drug companies obtain a “no-objection letter” from each state trade association before a new drug could be sold there. Otherwise it would be excluded from the pharmacists’ stock lists. For each new drug, the trade groups usually solicit a cash donation.

Dilip Mehta, president of the All India Organization of Chemists and Druggists, which represents 500,000 Indian pharmacists, boasts of how his association also has forced drug companies to sign “memorandums of understanding” in which they agree to increase profit margins to pharmacies.

‘A Parallel Government’

“They have to surrender,” Mr. Mehta says, speaking from his tiny office at the rear of a wholesale apparel center in Bombay. The chemists association, he says, is like “a parallel government.”

Mr. Mehta doesn’t dispute that his members often dispense medicines without prescriptions. He argues that they are performing a public service by doing so. “We cannot allow a person to die without medicine,” he says.

On a busy recent Sunday afternoon at the Shree Samarth Medical Store in the western India agricultural town of Dinduri, owner Bapusaheb Patil was openly selling prescription drugs without prescriptions, including anti-inflammatory pills, ulcer tablets and antituberculosis drugs. He used a notebook to keep track of his regular customers’ favorite medicines, in case they forgot the name or remembered only the color.

Mr. Patil also didn’t disguise his motivation for recommending certain brands. “The ultimate decision is based on what the margins are,” he said. For fevers, he usually recommended a generic version of the antibiotic ciprofloxacin; a recent incentive deal from an Indian manufacturer offered him a 250% profit margin and a chance to win a motorcycle. Mr. Patil said he needed the extra profit because many of his customers are poor villagers who buy on credit and sometimes fail to pay up.

He said he sells vials of injectable medicines to the area’s village doctors. As in much of rural India, few of them have formal training in Western medicine or are even licensed by the Indian government to practice conventional medicine. Mr. Patil also lets his customers return any unused pills. “I tell them to stop after a few pills if they have side effects,” said Mr. Patil, who has a degree in pharmacology. He said he won’t recommend drugs he believes are hazardous.

At least Mr. Patil’s customers get advice from someone with an education. Despite Indian regulations that require a licensed pharmacist to dispense all prescription drugs, untrained counter assistants often perform that role. And even when pharmacists are on hand, they often don’t provide printed information about a drug’s possible adverse reactions or explain the proper dosage.

‘Sell and Enjoy’

To overcome competition from multinationals, Indian companies usually offer the retailer significantly higher profit margins. India’s leading home-grown drug maker, New Delhi-based Ranbaxy Laboratories Ltd., recently offered pharmacy owners eight free vials of injectable ciprofloxacin for every seven they bought. Ranbaxy says most of those sales go to hospitals.

Some companies have become creative. German Remedies Ltd., an Indian company that manufactures products under license from GlaxoSmithKline’s SmithKline Beecham unit and Schering AG of Berlin, among others, recently offered a promotion dubbed “Mega Merchants: Sell and Enjoy.” In exchange for buying three boxes of Primolut-N, a Schering hormone prescribed for menstrual irregularities, and several other drugs, a retailer received a free box of the antibiotic amoxycillin, and a ticket for a drawing for 124 vacations in Germany, Nepal and several Indian destinations.

Makarand Deshpande, general manager of sales and marketing for German Remedies, says the four-month promotion was a “moderate success.” It boosted sales of some slow-selling drugs by $1 million, while the trips cost the company only about $100,000. He acknowledges that some of Primolut-N’s sales in general are over-the-counter, but he says the promotion wasn’t aimed at encouraging that.

Schering spokesman Oliver Renner says that because German Remedies is a licensee, “all the promotion they do for the product is their sole responsibility.”

Gynecologists say Indian women frequently buy Primolut-N without a prescription and use it to delay menstruation during religious holidays. The practice can increase chances of birth defects if the woman has just become pregnant, gynecologists warn.

Drawing the winning tickets for the “Mega Merchants” promotion was Mr. Mehta, the pharmacists’ association president and an unabashed fan of promotions. “Who doesn’t like schemes?” he asks.

Some multinational drug companies don’t. “It’s a mugger’s game,” says Vinod Topa, director of sales and marketing for the Indian subsidiary of Abbott Laboratories, of Abbott Park, Ill. He says when he joined the company in December, it was saddled with huge amounts of expired medicines returned by pharmacies that had bought them under incentive programs but failed to sell them. He notified distributors that there would be no more bonus plans after July 31, but he says pharmacies immediately responded by reducing purchases of Abbott drugs. “I am facing the music now,” he says.