Questionable industry practices regarding Pharma Business ethics in marketing and pricing policies.

The phrase “BIG PHARMA” typically isn’t used in a positive context. While this wasn’t always the case—Johnson & Johnson’s response during the Tylenol tampering crisis in 1982 is often upheld as the epitome of crisis management and a demonstration of excellent ethical corporate behavior—consumers’ attitudes toward the industry today are dominated by a sense of mistrust.

IFPMA and pharma business ethics:

The pharmaceutical industry has begun to take steps in recent years to address this negative perception and instil a greater awareness of ethical behaviour. For example, the International Federation of Pharmaceutical Manufacturers & Associations (IFPMA) adopted a new code of conduct in 2012 that provides guiding principles on ethical conduct and promotion. And the United Kingdom adopted a Code of Practice for the Pharmaceutical Industry effective January 1, 2016.

USA and pharma business ethics:

In the United States, the Pharmaceutical Research & Manufacturers of America (PhRMA) adopted in 2009 a new Principles on Interactions with Health Care Professionals (see “Pharma Ethics Code Isn’t Working” in Strategic Finance, February 2011). Aspects of the new code and a new law requiring disclosure of payments to physicians seem to be having some beneficial effects.

In pharma business marketing is still an issue:

A publication house advises that “drug companies have dramatically scaled back payments to doctors for promotional talks.”

Since the spring of 2014, all drug and medical device companies have been required to report payments to doctors under the terms of the Physician Payments Sunshine Act. 

Yet this act fails to cover nurse practitioners and physician’s assistants, who also receive payments for promotional talks, consulting, meals, and other activities.

This organizations analysis of drug marketing costs signals that profits rather than patient needs have been the primary motivation for high marketing costs. 

The most heavily promoted products typically aren’t cures, breakthroughs, or top sellers but rather “me-too” drugs. “They seem to have some unique niche in the market, but they are fairly redundant with other therapies that are already available.

Pharma business ethics and commercial advertisements:

Expensive television commercials directed to patients add considerably to the cost of marketing prescription drugs. The American Medical Association (AMA), the organization of physicians, states that only the U.S. and New Zealand allow this practice. In the last two years, these ads have increased by 30%, totalling $4.5 billion, which represents only one-tenth of the ad budgets of pharmaceutical companies. An AMA report noted.

Pharma business ethics and high cost of drugs:

Manufacturers of pharmaceutical products blame high drug prices on the need to support expensive and complex research, lengthy governmental regulations for new drug approvals, and Wall Street expectations of large, ever-growing profitability. 

Perhaps a simpler and more important answer, according to a January 15, 2015, New York Times article is the fact that in the U.S., insurance companies by law must include essentially all new and expensive drugs in their benefit packages. The philosophy is that all care must be provided for everyone, regardless of how much treatment costs or how little it helps.

The result of these factors is that prescription drugs in the U.S. not only cost far more than elsewhere, but they continue to rise, according to Medscape Medical News in “Why Are Drug Costs So High in the U.S.?” 

The article asserts that the major reason for the large difference in prices is that various insurance companies with limited bargaining power negotiate drug prices individually with the manufacturer.

The U.S. lacks any sort of central or universal healthcare system or agency that regulates across-the-board cost. In many other countries, negotiations of drug prices between governments and pharmaceutical companies are routine. Some countries also have drug formularies and advisory boards that put restrictions on the use of new and expensive medications, actions which aren’t allowed in the U.S. Perhaps Pharma should consider adoption of self-regulatory protocols in the U.S. to accomplish patient cost savings.

Another systemic flaw is the U.S. Food and Drug Administration’s (FDA) drug approval process, which only requires clinical demonstration of a drug’s safety and effectiveness, not any therapeutic benefit compared to an already existing drug. “For the longest time drug companies had a dual mission,” has been reported many times. They wanted to help patients and at the same time make a reasonable profit too.

“The U.S. makes most of the discoveries, the taxpayer funds 85% of the basic research, yet at the end of the day when a drug is FDA-approved—for cancer as well as for other indications—we as Americans are paying at least twice the price as those outside the U.S.”.

Pharma business and ethics standards are required more than ever:

The pharmaceutical industry should consider adopting more ethical business strategies that benefit patients rather than Wall Street. In many countries healthcare reforms and regulations take a lot of time to get implemented on the ground level and as treating someone requires dealing with intense regulations, it is often viewed by pharma companies that they are entitled to higher profits in such recurring commodities.

It is my strong belief that one time selling commodities such as furnitures can have high profit margins and still there won’t be any ethics in making a large profit from such commodities, however medicines are regulated and perishable items which save life’s and improves longevity of a patient and no amount of money can equal to a human life, hence companies that work on ethics in coming years are likely to be successful than those who are only in marketing.

By

Ruchi Khanna