Some Utilitarian Considerations
Regarding Discouraging
Pharmaceutical Incentivizing in
Emerging Markets:
Andrew Gustafson
Creighton University
Vincentian Conference, 2010
The Pharm Industry Worldwide
• $800 billion industry worldwide
• US: $200 billion a year on prescription drugs.
• Recently: The pharmaceutical companies are
targeting emerging markets hard as their mature
markets show a decline in market growth rates.
Thesis 1: Incentivizing in Emerging
Markets Beneficial and Acceptable
• From a Utilitarian standpoint seeking the
greater happiness for the most, it is the best
interest of the localized many, and so, ethical,
for pharmaceutical companies to use
incentivizing marketing methods in emerging
markets like Pakistan, India, China and
Venezuela which would be restricted in the
more economically developed countries.
Thesis 2: Inverse Relationship Between
Economic Maturity and
Appropriateness of Incentivizing
• As the economy of a country does emerge and
mature, the incentivizing marketing methods
which were at one point acceptable should
become restricted as they are developed
economies. In other words, the ethical
‘rightness’ of the incentivizing dissipates as
such actions become detrimental and less
beneficial to the greater good.
Thesis 3: Parallels Thesis:
Pollution & Copyrights
• Allowing for less restrictions in emerging
markets on pharmaceutical incentivizing is
analogous or parallel to the case for nonequal pollution regulations or lax
enforcement of copyright laws in emerging
markets in order to help catchup states to
catch up until their economies mature.
The Current
Situation in
Emerging Markets
Emerging Markets are On their Way:
Sales of prescription drugs in emerging
markets:
• $67.2 billion in 2003
• $152.7 billion in 2008
• $265 billion by 2013 (estimated)
(IMS Health Statistics)
Example: Pfizer Growth in China
Pfizer increasing sales representatives in China from
• 2,300 reps in 177 cities in 2009
to
• 3,200 reps in 252 cities by 2011
Lack of Regulation Worldwide
In 2004, the World Health Organization
established that less than one-sixth of
countries had a well-developed system of drug
regulation, and one-third had little to no
regulatory capacity. (DDD,6)
Consequences of Poor Marketing
Information:
It is estimated that up to 50% of
medicines in developing countries are
inappropriately prescribed, dispensed
or sold. (DDD)
Irrational Drugs
• In 2005, the Indian National Commission on
Macroeconomics and Health labeled 10 out of
25 top selling brands of medicines in the
country as being either “irrational or nonessential or hazardous.”(DDD,27)
Pressures on Pharm Companies
It is estimated that:
• More than 90% of the pharmaceutical industry’s total
pharmaceutical revenues came from medicines that have
been on the market for more than five years, i.e. not new
drugs.
• In 2009, a dozen of top 35 branded prescription drugs lost
patent protection.
• Expiring patents expose an estimated $157 billion worth of
sales (measured in 2005 terms) to generic erosion.
• The leading pharmaceutical companies will lose between 14%
and 41% of their existing revenues as a result of patent
expiries.
• The industry’s growth rate is now at 7% compared to 14.5%
1999.
Industry Growth Rate
Ethical Issues In Emerging Markets
#1 Problematic Drug Promotion
1. Increasing the perceived frequency and/or severity of
the indications.
2. Widening the indications to include more people.
3. Increasing the perceived likelihood and magnitude of
benefits.
4. Decreasing the perceived likelihood and magnitude of
harms.
5. Increasing the use of the drug for longer durations.
#2: Advertising with Incomplete
Information
• 2005 study of Psychobiology of the Paulista Medical School of
the Federal University of São Paulo Brazil
• Analysed 24 Brazilian advertisements for the same
psychoactive drugs as advertised in American and/or British
publications from the same period.
• Observed that “Brazilian advertisements omitted information
on usage restrictions, such as contraindications, adverse
reactions, interactions, warnings and precautions, and that
such information was present in American and British
advertisements.” (DDD)
#3: Pharmaceutical Gifts in Pakistan
• Low cost: pens/pads/diaries/calendars.
• Medium cost: stethoscope/books/briefcases.
• High cost: air conditioners/laptops/desktop
computers/club membership/ Continuing Ed Trips
abroad.
• The latest practice is: For writing 200 prescriptions
of the company’s high priced drug, a doctor is
rewarded with the down payment on a brand new
car.
The Incentivizing can be a conflict
of interest leading to
Doctors’ Biased Behavior
Evidence shows that biased doctors are more
likely to:
• Prescribe a drug if they had recently attended
a sponsored event by the manufacturer.
• Prescribe a drug that is not clinically indicated.
• Have a drug placed on a hospital formulary.
Utility of Incentives for Society
• Short Term:
– a. Drug availability
– b. education of doctors
– c. Drug market is initiated
• Long Term:
– a. Market Maturation
– b. More options, variety
– c. More consumer knowledge and price optimization
Restrictions in Mature Markets:
•
•
•
•
Government
Industry
Company
Medical Profession Guidelines
• When the pharmaceutical industry and
economy is in an emergent state, these
restrictions are by and large absent.
Accreditation Council on Graduate
Medical Education Guidelines:
• Benefits to patients result from services provided by
both doctors and drug companies. Closer scrutiny,
however.. .reveals an irreconcilable difference. The
relationship to its shareholders defines values and
influences behaviors held by industry.. .the
responsibility of the pharmaceutical industry must be
to act in the best interests of its shareholders by
maximizing their return on investment. In so doing,
much good is clearly accomplished for patients. In
contrast, however, the altruism expected of medical
professionals dictates that doctors put patients first..
.the good of the patient must be preeminent.7
Opposition to Gifts to Doctors:
•
•
•
•
•
Groups like
Public Citizen
Physicians for a National Health Program
American Medical Student Association
No Free Lunch
all oppose industry gift giving.
Alleged results of Gift-Giving
• a. physician preference for new products with
no demonstrated advantage over existing
ones,
• b. a decrease in prescribing generic drugs,
• c. rise in prescription expenditures and
• d. irrational and incautious prescribing.
(Katz)
Conflicts of Interest: $ vs. Patient care
A Defense of Gift-Giving
• 1. Market Incentives are common:Financial advisors or insurance
salesmen receive payment or bonuses based on what they sell to their
clients, yet these remuneration practices do not necessarily undermine
the agent's concern for their client.
• 2. Doctors and Pharmaceuticals are not Adversarial: the ACGME
document above seems to assume that doctors are not in business, but
that is a very naive view of medicine. It is simplistic to say pharmaceutical
companies are only concerned with money, and doctors are saintly
altruists. Doctors need to make money (while helping people), and
pharmaceutical companies are trying to make drugs to help people (and to
make money from that).
• 3. A non-Friedmanite Stakeholder theorist will argue that the purpose of
business is not merely to increase shareholder value, but also to help
stakeholders.
• 4. Even a Shareholder theorist wants the company to produce and sell
quality products which will not lead to lawsuits and which will lead to
customer loyalty.
The Benefits of the double-role
• The fact that pharmaceutical companies act as supplier and
educator is not in itself necessarily problematic for two reasons:
• First, a pragmatic utilitarian argument for the greater good: this is a
necessary conflict of interest— education by pharmaceutical
companies is better than no education, and in many of these
developing countries, there would be little or no ongoing
education for the doctors if it was not for the pharmaceutical
companies. The WHO cannot educate all medical doctors
worldwide, and local governments often are incapable both in
expertise and financial resources to achieve this end. To prohibit
CME by pharmaceutical companies takes away the only CME
currently available, in many circumstances. More good is done than
harm, and much more good is achieved by this practice than by
avoiding it.
I
Benefits of the Dual Role:
Path to Market Maturation
• Second, looking at the long term benefits of
such an initial conflict of interest: the only way
for the market to mature so that competition
is possible is for a realized demand to be
developed in the first place. The initial
pharmaceutical companies have an advantage
of course, but their work will grow the market,
and as a significant market develops it will
become a more viable market for other
companies to come into.
PHARMA’s View of Benefits of the
Pharm-Rep/Doctor relationship:
• a. to inform healthcare professionals about
the benefits and risks of products
• b. to provide scientific and educational
information
• c. to support medical research and education
• d. to obtain feedback and advice about their
products through consulting with physicians.
Total Ban isn’t Necessarily Appropriate:
Can’t Simply apply US rules Abroad
• Lack of other means of continuing education
in emerging markets
• Lack of internet access or resources for
doctors in EM
• Lack of consumer knowledge
• Lack of competition
• Money involved is small
Example of Maturation: India
• 1970s Foreign Drug firms were 80% of market
• By 2004 Indian firms were 77% of market
Example of Too-Strict, Too-Centralized
Code: Karachi Bioethics Group
• The Karachi Bioethics Group in Karachi,
Pakistan has recently come out with their
“Ethical Guidelines for Physician
Pharmaceutical Industry Interaction”. It is a
good initial model of guidelines for emerging
market countries. It is actually more rigorous
in some of its rules than those found in the
U.S. The document is divided into the
following sections/topics:
•
http://karachibioethicsgroup.org/PDFs/Karachi_Bioethics_Group_Ethical_Guidelines.pdf
Karachi Bioethics Group
•
• 1. Disclosure: Support from pharmaceuticals by institutions and
health care workers (physicians) must be declared on institutional
website or in a disclosure register.
• 2. Gifts/Drug samples: physicians should not accept gifts of any
kind. One-on-one contact is discouraged. Drug samples should be
given to a designated institutional committee, who would use such
samples to cater to the needs of poor patients. Books, travel
support and any other like financial support should be collected in a
special pool overseen by the designated transparent committee.
Such materials should not prominently show the drug or product
name.
• 3. Scholarships: all such funding should go to the institution, not
individuals. Doctors should not enter into contractual agreements
with pharmaceutical companies. Any support must be declared by
doctor.
KBG (continued)
• 4. Research: No direct payments to researcher, and everything
provided by pharmaceutical company should go through
institutional committee.
• 5. Pharm Industry funding for CME: All support should go to
common pool under authority of institution, under oversight of an
institutional committee. Drug information talks should be held in
hospitals and institutions, not hotels, and not include meals. No
advertising banners or posters should be in conference area.
Practice of flying in foreign experts should be discouraged since
they are paid by Pharmaceutical company.
• 6. Promotion: Doctors should not participate in product promotion
on TV etc.
• 7. Repeatedly the document mentions that “Educational and other
academic grants and support should ideally be provided by
academic institutions. However given the paucity of funds in
academic institutions, reliance on pharmaceutical support cannot
be entirely excluded.”
Goals of Kariachi Group Guidelines:
• No gifts to doctors of any sort, and no pharmaceuticaldoctor interaction.
• Doctors should have no contracts with pharmaceuticals
• Anonymizing the donations
• De-linking individuals to industry grants and creating
‘firewall’ between physicians and industry with specifically
created institutional committees to interact with industry
• Pooling all donations/grants/pharm-support in a central
fund institutional pool with transparent committee
oversight
• Influence-free disbursement of these grants by the
committee, with the industry having absolutely no say in
how the money is utilized, and which individuals within the
institution get funding.
•
(from Dr. Aamir Jafarey, Associate Professor at the Centre of Biomedical Ethics and Culture, SIUT (Sindh Institute of Urology and Transplantation) of Pakistan)
Possible Problems with KBG Rules:
Disinsentivizing by banning Incentives
• Why Sponsor without acknowledgement?
• Why give drugs anonymously?
• These restrictions would hamper market
maturation severely (customer samples lead to
sales)
• This would undermine CME and CME
scholarships, research, drug sample giveaways,
etc.
• Result of Legalism: Loss of Medical Field Support
Copyrights//Pharmaceutical
Developments
• What counts as a fair or just rule may vary from country to country, as
countries differ in their levels of economic maturity. As Lester C. Thurow
has pointed out in an article on intellectual property rights, "What
different countries want, need, and should have in a system of intellectual
property rights is very different, depending of their level of economic
development. " He distinguishes between "Catch Up States" (developing
countries) and "Keep-ahead states" and claims that copying to catch up
has historically been the only way to catch up. US did it to British textile
mills in 1800's. Japan did it to us in 60's and 70's. China has recently been
doing it to the US although we now some reform happening there as well.
In some way each of these countries did not have ideally just situations
until they became economically mature, and then the just rules were
enacted once there was competition and hence transparency. In other
words, at a lower level of economic maturity, we should expect rules and
expectations to differ much as we would have different expectations for
a novice and an expert.
Market Development Is Ultimate Goal:
Transparency as
Derived from
Competition
No Competition = No Incentive
• Competition and Transparency— are
reciprocal. If there is no competition, there is
no incentive to market oneself with
information. But when there is competition—
for example among the home improvement
supply stores in the US— when Home Depot
starts to highlight its green policies, Lowes and
Menards and other home stores feel obliged
to follow.
Conclusions: various ethical concerns
What is Clearly wrong:
• Pharmaceutical companies incentivizing by simply
rewarding doctors for prescribing medications seems
clearly wrong and creates an unnecessary conflict of
interest with little valuable effect for the patient.
• Payments for token consulting or gifts for attending
non-educational meeting are also of little valuable
effect, and they should likewise prohibited by
professional standards. These should be rejected in
developing countries as they have been already in the
developed countries.
Positive Conclusions:
•
Purpose and Value, not Size: When it comes to gifts doctors are given, the size is
not as important as its value to patients. The primary concern when judging the
acceptability of a gift should be its relative worth to the patients served by the
doctor. If an air conditioner is received, it should be for the clinic, but more
medically-useful gifts are more properly acceptable under this criteria.
•
Education: When pharmaceutical education is the primary source of education,
there is more justification for it—better pharmaceutical education than none at all.
(But there is added responsibility for pharmaceutical company when they are the
only game in town)
•
Feedback loop: Feedback from the doctors to the pharmaceutical company by
way of the reps, if it is to be serious, requires reps who are trained enough to
understand and convey this information. What pharmaceutical companies need to
constantly show is how that this information is used, and demonstrate that product
revisions or procedure changes have been made (even stoppages) in light of this
information feedback.
Effective Guidance with Teeth
•
Widespread effective training and explanation of this code to relevant parties on
both sides, with some sort of resources to support that training in educational
institutions and associations.
•
Institutional support, from academic institutions, hospitals, groups of doctors like
KBG, and government funding and fine schedules.
•
Authorized oversight
– Governmental: laws need to have teeth and be enforced
– Associational or institutional: power to disbar or otherwise cause repercussions
•
•
Regular monitoring: overall progress needs to be kept track of and benchmarked.
Ongoing reformation of the system as new issues arise, through responsive
corrections in the system process.
•
Guiding Principle: whether or not the greater good is served—the greater good
being the thousands of patients served by the few doctors and pharmaceutical
companies, whose purpose, ostensibly, is to serve the greater good.
Success: China’s Response
• A stark example comes from a leading industry
report that attributed China’s considerably
slowed growth rate in the sector (from 20.5%
in 2005 to 12.3% in 2006) to a government
anti-corruption campaign. The campaign was
introduced during the second quarter of 2006
to set limits on physician directed promotion,
and according to the report, served to
dampen sales in the region. (DDD,15)
*Governments’ Key Recommendations:
1. Implement, improve and monitor legislation in line with the
WHO Resolution on the Rational Use of Medicines and the
WHO Ethical Criteria for Medicinal Drug Promotion.
2. Support the provision of independent information on
drugs for consumers and health professionals.
3. Implement and enforce a ban on gifts to doctors.
4. Enforce strict sanctions that will deter poor corporate
practice in drug promotion.
5. Take measures to improve the transparency of drug
companies’ marketing activities and seriously address the
conflict of interest encountered in drug companies’ funding of
medical education.
**Key Recommendations at the Company Level:
1. Stop the practice of gifts to doctors
2. Implement rigorous policies on vetting of drug
promotion materials and adherence to existing codes
of conduct
3. Provide transparent and verifiable information
on the precise nature of relationships and associated
funding for all stakeholder groups, including health
professionals, pharmacists, students, journalists,
clinical research organisations and patient groups.
**Industry-Wide Level:
1. Ensure codes of conduct on drug promotion
extend to interactions with health professionals AND
consumers.
2. Invest in innovative partnerships with
government and civil society organisations so
that corporate funding of disease awareness
campaigns, and CME may be channelled via blind
trusts in line with specific health priorities of
consumers at a community or national level.
Bibliography
• Drugs, Doctors and Dinners: How drug
companies influence health in the developing
world
• Managed Care and the Morality of the
Marketplace
(NEJM, 333:50-52, 7/6, 1995)