Drug samples, brand reminders to doctors should not be seen as gifts: Pharma body

The Finance Act, 2022 inserted a new section, 194R, to the Income Tax Act, 1962, providing for deduction of tax at source (TDS) on benefits or perquisites obtained from business or profession.

Jain said that this clause needs to be aligned to the government’s policy of ease of doing business.

Rules discouraging freebies to doctors 

The Medical Council of India had in December 2009 notified a code of ethics that prohibits doctors from accepting gifts, travel assistance or hospitality for any purpose. It said such practices could influence doctors to prescribe inappropriate or unnecessary medication.

Also read | Pharma-Doctor Nexus Part I: Why rules, Code for doctors, drugmakers have failed to curb unethical practices

In August 2012, the Central Board of Direct Taxes declared that doctors who accept gifts from drug companies should declare the equivalent value as taxable business income and companies should reveal such expenditure in their annual accounts.

Drug companies, insiders say, had been claiming deductions on these costs as legitimate business expenses; the tax officials have been denying these deductions.

This had led to litigation, and pharma companies have appealed against non-exemption from deductions.

The last amendment by the government, however, clarified that in order to make the intention of the legislation clear and to make it free from any misinterpretation, there was another insertion to  clarify that the expression “expenditure incurred by an assessee  for any purpose which is an offence or which is prohibited by law.”

Jain, however, insisted that this provision may also be against the basic spirit of the Drugs and Cosmetics Act.

Recommendation to government panel

In the aftermath of the Dolo 650 controversy, the Centre had set up a high-level panel under Dr V K Paul, member (health), Niti Aayog, to review the existing Uniform Code of Pharmaceuticals Marketing Practices.

A major controversy rupted in August last year when some media reports suggested that MicroLabs, the maker of Dolo 650, a pain reliever and fever-reducing agent, had spent Rs 1,000 crore on its marketing.

The IPA, in its report to the National Pharmaceutical Pricing Authority, however, said  the reports not correct.

Also read | Doctor-Pharma Nexus Part II: What drives drug prescription in India?

Jain said pharma companies have recommended to the Paul committee that “genuine marketing practices” be allowed.

“The meetings (between pharma company representatives and medical professionals) should take place in a normal location, instead of exotic locations. Educational activities should be permitted. Also samples should be given to the office.”

Pharma bodies have made recommendations related to samples, brand reminders and educational activity, said Jain.

He also stressed that all the laws governing the interaction between doctors and pharma companies should be in tune with each other and should specifically mention what practices are legitimate for pharma companies and doctors to follow.