Indian Pharma: Hooked on the Hard Sell

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OPPI Director Homi Bhabha says the organization has received only two complaints about aggressive marketing practices in the past year—partly because doctors and patients are generally reluctant to speak out. Nevertheless, he says, the group would like to see the code turned into law.

Recently small bands of activists have begun pushing for change. One of them is Gopal Dabade, 51, a general practitioner in the small town of Dharwar in Karnataka, not far from Bangalore. He says the corruption of Indian doctors at the hands of pharma companies begins early in their careers. "It starts from the time you are an intern," he explains. "You are given a pen, a scale, a notebook. You see your teachers taking gifts."

Then, like smoking, it becomes a habit, and doctors become the instigators. On one occasion, he notes, interns in Dharwar's local medical college called for a boycott of a particular drugmaker because it had not given interns gifts or a party. "It has become more rampant now," he says. "It's a compounded and complex problem."

Profit Over Public Health

For some time the Indian government has recognized that ties between doctors, pharmacists, and drug companies may have a negative impact on public health. In 2005 India's Ministry of Health & Family Welfare issued an influential white paper titled the Report of the National Commission on Macroeconomics and Health.

It noted that there is a dire need "for standards and treatment protocols." The report complained of "a clear nexus between private medical practitioners and pharmacy shops," and "fee-splitting between diagnostic centres and referring doctors." This practice led to increasing costs, the commission said, as well as to "overprescription of drugs…and over-treatment." The commission blamed the private sector for focusing on profit maximization at the expense of public health.

But to many observers New Delhi's critique appears cynical. Activists argue that the regulatory framework for the pharma sector is lax and diffuse by the standards of Europe, America, and Japan. The petroleum and chemical ministries set drug policy, while prices of drugs are set by the Commerce Ministry. The Health Ministry has almost no role to play, notes activist Dabade of Dharwar.

The Consumer Education & Research Centre, an activist group in Ahmedabad, Gujarat, has urged New Delhi to strengthen its regulatory apparatus. The Indian drug industry consists of 20,000 companies—far more than in the U.S., notes C.J. Shishoo, a trustee of the center. Yet the number of full-time government employees overseeing this sprawling sector is far smaller than the number of specialized staff at the U.S. Food & Drug Administration.

This complaint is echoed by Chino Srinivasan, head of a nonprofit pharma company called LoCost in Baroda, Gujarat. "If we want to do something, we can," he says. "India can launch rockets." But at least so far, activists complain, the government has failed to weigh the needs of patients against the prerogatives of drugmakers.

Kripalani is BusinessWeek's India bureau chief.