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MARKET FORCES JULY-2008

Research

1.0.0 INTRODUCTION

The unethical drug practices are common phenomenon

worldwide but it is more severe in developing countries.

Unethical drug practices have two dimensions. One is

drug related, and other is drug promotion related.

Extensive researches on drug related unethical practices

have been carried out internationally. However, there

is a dearth of literature on unethical drug promotion

practices. Parmar and Jalees (2004) observed that

pharmaceutical industry spends a substantial portion

of its budget on market research but do not carry out

the research on how to curb the unethical drug

promotion practices.

Unethical marketing practices have become an

integral part of Pakistans pharmaceutical industry.

These practices is so deep rooted that it has become

extremely difficult for pharmaceutical companies

to compete without indulging in such practices

(Parmar & Jalees 2004). The findings of the study

by Parmar & Jaleees (2004), were mainly focused

to such practices in one city, Hyedrabad, therefore,

it lacked generalizeability. In view of this limitation

there was a need to find whether such unethical

practices exist in other parts of country as well.

This paper has been undertaken with the objective

broadening the scope of the study to the whole of

Pakistan.

Lack of research on the subject does not mean that unethical

drug promotion practices do not exist. The pre-survey and

focus groups discussions indicate that unethical

pharmaceutical marketing practices have become an

acceptable norm of the pharmaceutical industry, and almost

all the pharmaceutical companies patronize these unethical

practices in collaboration with doctors, government and

private hospitals, health related agencies, and pharmacies

at the cost of patients well being.

All the entities as discussed above appear to be directly

or indirectly involved and it would not be fair to blame

any one of them, including pharmaceutical industry.

The focus of the subject study was to identify the

intensity and trends of unethical drug promotion

practices in Pakistan examine. Ascertain the involvement

of doctors, health related institutions and the

pharmaceutical industry in promoting such practices.

1.2.0 LITERATURE SURVEY

The previous researches indicate that unethical

pharmaceutical marketing practices have become an

acceptable norm of the pharmaceutical industry, and

almost all the pharmaceutical companies patronized

these unethical practices in collaboration with doctors,

government and private hospitals, health related agencies

and pharmacies at the cost of patients well being.

(Parmar and Jalees 2004)

PHARMACEUTICAL INDUSTRY IN

PAKISTAN:

UNETHICAL PHARMACEUTICAL

MARKETING PRACTICES

Rizwan Raheem Ahmed Tariq Jalees

SZABIST College of Management Science

Karachi, Pakistan PAF-KIET

tariqj@pafkiet.edu.pk

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Zaidi, et.al, (1995) observed that in the 13th national

psychiatric conference held at Abbottabad in

September 1999 nine papers were read by different

doctors; however, most of the papers were not on

the subject issue but were mainly focused on their

experience of administrating specific drugs to the

patients. Incidentally, some of the foreign guests

thought that the conference was not on psychiatric

issue but it was more on the specific drug promotion

activity. Two inferences could be drawn from this

incidence. One, the participating doctors were so

involved and occupied in their profession that they

erroneously ignored the themes and the objectives

of the conference; second, that the doctors did not

spend considerable time for developing the

appropriate paper for the conference. (Zaidi, et.al,

1995)

A report on the practices of 20 of the worlds

biggest drug companies revealed that drug

companies use unscrupulous and unethical

marketing tactics not only to influence doctors to

prescribe their products but also subtly to persuade

consumers that they need them. (Pogo et.al, 2006).

The report further alleges that since the drugs

companies cannot legally advertise their product

to the consumers, therefore, in order to circumvent

this drug companies are promoting their products

through patients groups, students and internet chat-

rooms. (Pogo et.al, 2006). The authors also observed

that the pharmaceutical companies through press

releases and web pages educate consumers on

“modern” lifestyle diseases, such as stress and poor

eating habits, but their prime objective for all such

activities is to promote their drugs. [Pogo et.al

2006]

A study on relationship between the medical

professionals and the pharmaceutical industry found

that the pharmaceutical industry is responsible for

corrupting the medical professionals. The study

also found that this un-ethical drug practices is not

limited to developed countries but is also found in

developing countries, also. (Zaidi et.al. 1995). The

authors, also, observed that the industry is rewarding

the doctors for prescribing their medicines, despite

the fact that better and cheaper medicines are

available in the market. The reward is inclusive of

sending physicians and their families to recreational

places within the country and overseas, giving

expensive gifts, footing the bills of doctors birthday

parties, wedding receptions and furnishing doctors

homes and clinics. It has also been alleged that

leased cars have also been provided to the doctors

by the firms for extensively prescribing their

medicines [Zaidi et.al 1995]

A similar research was undertaken in Nepal and

the findings were that doctors, generally prescribes

those medicines that are actively and unethically

promoted by medical representatives. The authors

observed that it is easier for the pharmaceutical

company to entertain doctors demand of personal

traveling, and lodging as these expenses could be

booked in the heads of conferences and seminars.

[Bishnu & Ravi 2005]

Fisher et.al. (1993) observed It is unethical for

journals that publish reports on psycho-

Pharmacology to accept drug company money for

anything. And, I think it equally unethical that the

American Psychiatric Association allows Drug

Company sponsored symposia as part of its annual

meetings. [Fisher, Bryant & Kent 1993]

All promotion by definition is information whose

aim is to market a product and as such has an

inherent bias towards showing the product in the

best possible light. Globally, there is a huge

imbalance between the available resources for

promotional activities viz. independent information.

As a result consumers and doctors are generally

subjected to a positive information bias that is drug

companies portray exaggerated benefits of drug

use while downplaying the risks and the side effects.

(Lexchin, 1995)

Arun ( 1998) observed irrational drug formulation

regulations contributes heavily for increasing the

drug cost. For example, in US the drug development

and approval cost is about $ 9.4 million.

Pharmaceutical companies being profit-oriented

thus have to resort to aggressive marketing in order

to meet this overwhelming drug formulation cost

and to have a reasonable profit to satisfy the stake

holders.

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Daniella, Zipkin & Michael (2005) studied the

interaction between pharmaceutical representatives

and internee (trainee doctors). They found that it

is common for pharmaceutical sales

representatives to interact with the internees. Most

of the internees were of the opinions that there

is nothing unethical on the interactions of the

sales representatives and internees. However, a

few of them confessed that factors such as visits

& contact of pharmaceutical sales representatives,

gifts and giveaway and quantity of sample

medicines have a positive influence on prescribing

medicines. (Daniella, Zipkin & Michael, 2005)

Parmar and Jalees (2004) developed the distinctions

between ethical, and unethical drug promotions

practices based on the focus group discussions.

The acceptable norms of promoting drugs through

doctors are visiting them, giving them presentations

on the merits and demerits of the drugs. Explicitly,

pointing out the side effects of drugs, giving

nominal quantity of drugs sample. These gifts and

give away must not be highly expensive and

restricted to items such as dairies, calendar, year

planner, etc. (Parmar and Jalees 2004)

Comparatively, unethical drug promotion practices

are prescribing drugs to the patients based on the

monetary considerations, and ignoring the well

being of the patients. The commonly used monetary

rewards for unethical promotion of the drugs are

discussed below: [Parmar and Jalees 2004]

(i) Monetary Reward

The crudest form of unethical drug promotion is

monetary reward. In this category, the cash reward

is linked with the quantum of the drug prescriptions.

The payments, in this case, are made on monthly

or quarterly basis.

(ii) Visits Within Country

In this category, the pharmaceutical companies

arrange conferences and seminars for the doctors

in those cities where doctors are not domiciled.

The objectives of such conferences/seminars may

be to update the doctors on the latest development,

but the real motive is to provide fully paid vacation.

The pharmaceutical companies arrange the air

traveling, lodging and boarding in a five star hotels.

This paid vacation could be for the doctors, and

their family members. Doctors travel to other cities

for personal reasons.

(iii) Foreign Visits

In this category, pharmaceutical companies arrange

foreign visits of the doctors. Like local visits, the

foreign visits again are arranged in the backdrop

of seminar and conferences but again the real

motive is to provide fully paid vacations to the

doctors and their families. All the traveling bills,

boarding and lodging are again borne by the

pharmaceutical companies. These foreign visits are

generally restricted for those doctors who are

actively involved in promoting their drugs.

(iv) Gifts & Give away

a. Medical Equipments:

Pharmaceutical firms give medical equipments like

stethoscope, thermometers, surgical kits and other

expensive medical equipments.

b. Personal Use Items:

In this category the pharmaceutical companies give

personal use items such as mobile, laptop, air-

conditioners, and even cars.

(v) Chamber Decoration

In this category, the pharmaceutical companies,

not only, refurnish the doctors chambers, but also

arrange furniture/fixture, sign boards, air-

conditioners, computers, curtains, etc.

(vi) Home Decoration

The arrangement of the home decoration is similar

to the chambers decorations as discussed above.

1.3.0 PHARMACEUTICAL INDUSTRY

After partition, Pakistan did not inherit any industrial

base. Like other consumer items, Pakistan met the

drugs demand through imports. The situation

remained the same up to 1960. In early sixties the

multinational pharmaceutical companies made heavy

investment in Pakistan for setting up pharmaceutical

manufacturing units. National pharmaceutical

companies also got encouraged, and started making

MARKET FORCES JULY-2008

Research

capital investment during the same era. In 1985,

the market share of multinational and national

pharmaceutical industry was 65% and 35%

respectively. [IMS, Q3 & Q4, 2005]

Presently there are about 586 leading Nationals and

Multinational pharmaceutical companies operating

in Pakistan. Of this total, 23 are multinationals and

rest are local companies. The local companies can

be classified into three categories: (1) Manufacturing

units (2) Importers that imports drugs in finished

form, and (3) Franchisers (not to be confused with

the franchisors in the FMCG). These companies

have all the required marketing setup and facilities,

but do not have drug manufacturing facilities. These

companies obtain the drug marketing rights from

other drug manufacturing companies on profit

sharing basis. The prevailing market size of the

industry is of Rs.80.11 billion, of this total the market

share of national pharmaceutical industry is 59%..

[IMS, Q3 & Q4, 2007]

The drugs prices of the national pharmaceutical

companies are lower, as they have a choice of

procuring the raw material from those countries

where it is available at a cheaper rate. The other

reason for the price differential is that the budget

of national pharmaceutical companies on research

and development is nominal as compare to

multinationals companies. Multinational companies

invest a substantial portion of their sales on R &

D. Launching a new molecule in the market cost

billions of dollars, therefore, they have to adapt to

marketing skimming strategy to meet the product

development cost and to skim the profit before

patent period expires. Multinational companies

know that after the expiry of the prescribed patent

period other companies would launch the same

drug or imitated drug at a cheaper rate. The local

national companies have two advantages. One, they

dont invest any funds on Research & Development

and second, they procure raw material from cheaper

resources [Parmar & Jalees, 2004].

1.4.0 STATEMENT OF THE PROBLEM

Is unethical drug promotion practice common in

Pakistan? Who initiated unethical drug promotion

practice in Pakistan? Who is responsible for the

continuation of the same?

2.0.0. METHODOLOGY

The following methodology was adopted for

achieving the objectives of the study:

2.1.0 POPULATION AND SAMPLE SIZE

The defined population of the study comprised of

doctors (General Practitioners, Medical Officers,

Consultants of different specialties, Opinion

Leaders), Pharmaceutical Personnel (Medical

Representatives, Sales Managers, Product Managers),

Pharmacists of different pharmacies, Influential

personnel of private and government hospitals.

The samples size for the subject study was 120. As

per Sekaran (2003) for multivariate sampling a

minimum of 20 samples per variable is required.

Thus the appropriate sample size should have been

80. However, to have a better representation,

samples size of 120 was selected. The breakdown

of the sample size was as follows:

No. Sample No. Of Samples

01 General Practitioners 17

02 Medical Officers 19

03 Consultants 11

04 Opinion Leaders 16

05 Pharma personnel 21

06 Government Hospitals 12

07 Private Hospitals 07

08 Pharmacies 17

The Hypotheses were tested through statistical

techniques such as Z-test, t-test and F-test. A

qualitative analysis was also carried out for analyzing

the other critical factors discussed in the study.

2.2.0 DATA COLLECTION METHOD

The questionnaires were administered in all the 8

cities simultaneously through sales force of a drug

company. All the persons involved in administering

the questionnaire were given an extensive orientation

on the purpose and the objectives of the study.

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3.0.0 SURVEY FINDINGS

3.1.0 HYPOTHESES TESTING

Four different hypotheses were developed and

tested using Z-test, simple ANOVA and F-test. The

results and interpretation of the four developed

hypotheses are presented below:

3.1.1 HYPOTHESIS 1

H1o: The level of unethical drug promotion

practices in pharmaceutical industry is high (at least

4) on the scale of (5 to 1)

The above hypothesis was tested through Z-test

and the summarized result is presented below:

Table 1

Level Of Unethical Drug Promotion Practices.

Mean 4.39

Standard Deviation 0.54

Hypothesized mean 4.00

Confidence level 0.95

Critical value one tail 1.65

Critical value two tail 1.96

Z-Calculated value 7.96

The hypothesis relating to high level of unethical

drug promotion practices (at least 4 on the scale

of 5-1) was substantiated. At 95% confident level,

Z critical value is -1.65, and Z-calculated value is

7.96 that falls in the non-critical region.

It may be pointed that the level of unethical

drug promotion practices as was ascertained by

Parmar and Jalees (2004) in their research was

3.56. The reason could be that the previous

study of (Parmar and Jalees) was a case study

of Hyderabad only, where as this study is all

Pakistan based, and the sample drawn is a

representative sample.

3.1.2 HYPOTHESIS 2

Focus group discussions indicate that the level of

unethical drug promotion practices is high in rural

areas. Thus the following hypothesis was formulated:

H20:The levels of unethical drug promotion

practices are high in rural areas.

Above hypothesis was tested through Z-Test (two

variables) and the summarized result is presented

below:

Table 2

Level Of Unethical Drug Promotion Practices In

Rural Area

Rural Urban

Mean 4.66 3.83

Known Variance 0.44 0.54

Observations 120 120

Hypothesized Mean Difference 0

Z 9.19

P(Z<=z) one-tail 0

z Critical one-tail 1.64

P(Z<=z) two-tail 0

z Critical two-tail 1.95

The hypothesis relating to higher level of unethical

drug promotion practices in rural areas was

substantiated. At 95% confidence level the Z-critical

value is -1.64 and Z-calculated value is 9.19 that

fall in the non-critical region.

3.1.3 HYPOTHESIS 3

An important aspect is who was responsible for

initiating the unethical drug promotion practices

in Pakistan. Doctors, pharmaceutical companies,

hospitals, and pharmacies all have different

opinions. Thus the following hypothesis was

developed:

H30: There is no significant difference on the

opinions of doctor, pharmaceutical companies,

hospitals, and pharmacies on who initiated

unethical drug promotion practices in Pakistan.

The above hypothesis was tested through simple

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ANOVA, and the summarized results are presented

below:

Table 3

Opinion On Who Initiated The Unethical

Drug Promotion Practices

Groups Count Sum Average Variance

Pharmaceutical

company 120.00 436.00 3.63 2.52

Doctors 120.00 283.00 2.36 3.12

Hospitals 120.00 138.00 1.15 0.46

Pharmacy 120.00 130.00 1.08 0.18

Source of SS df MS F P- F crit

Variation value

Bt. Groups 521.56 3.00 173.85 110.64 0.00 2.62

Within Groups 747.93 476.00 1.57

Total 1,269.48 479.00

The hypothesis relating to no significant difference

of opinions on who initiated unethical drug

promotion practices in Pakistan was rejected. At

95% confidence level and (3, 476) degree of

freedom the calculated F value of 110.64 is greater

than F- critical values of 2.62.

The above analysis also indicates that the

respondents believe that the pharmaceutical industry

had initiated unethical drug promotion practices in

Pakistan with a mean of 3.63. The doctors

contribution on this issue appears to be on the

lower side with a mean of 2.36.

3.1.4 HYPOTHESIS 4

In the previous hypothesis, it was discussed who

initiated unethical drug promotion practices, in

Pakistan. Focus group had diverse opinions on who

is more responsible for the continuation of this

practice. Thus to resolve the diversified opinion

the following hypothesis was developed.

H40:The contribution of the pharmaceutical

industry in continuation of unethical drug

promotion practices is higher than the doctors.

Above hypothesis was tested through Z-Test (two

variables) and the summarized result is presented

below:

Table 4

Opinion On Who Continued The Unethical Drug

Promotion Practices

Pharmaceutical Doctors

company

Mean 2.78 3.72

Known Variance 3.43 2.56

Observations 120.00 120.00

z (4.18)

P(Z<=z) one-tail 0.00

z Critical one-tail 1.64

P(Z<=z) two-tail 0.00

z Critical two-tail 1.96

The hypothesis relating to a higher contribution

of pharmaceutical industry in unethical drug

promotion practices was rejected. At 95%

confidence level, the Z critical value is -1.64 and

Z-calculated value is -4.18 that falls in the critical

region. Based on the above and previous analysis

the following conclusion could be drawn (1) the

pharmaceutical industry was responsible for

initiating the unethical drug promotion (2) The

doctors appears to be responsible for the

continuation of the same.

3.2.0 QUALITATIVE ANALYSIS

3.2.1 Tools Of Unethical Drug Practices

In the literature survey, it was discussed that the

pharmaceutical industry relies on the factors such

as monetary rewards, local visits, and foreign visits

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etc. for pursuing the unethical drug promotion

strategy. The intensity of these tools is presented

below:

TABLE 5

Monetary Local Foreign Personalized Chamber Home

Rewards visits Visits gifts decoration decoration

4.04 4.23 4.47 3.58 2.07 1.48

GRAPH 1

The above table and graph shows that foreign visits

with a mean of 4.47 are more in demand and local

visits being the second. The reasons for high

preferences for local visits and foreign visits are that

pharmaceutical industry could justify these expenses

by charging these expenses in the heads of

conferences and seminars.

3.2.2 Drug Promotion To Non-Qualified Doctors

Opinions on drug promotion to non-qualified doctors

were obtained. Ethically, the firms should not promote

their drugs through them. The respondents opinions

are presented below:

TABLE 6

Pharmaceutical Doctors Hospital Pharmacy

company

2.19 1.19 1.53 1.29

GRAPH 2

Majority of respondents of all the segments such as

doctors, Pharmaceutical companies, hospitals,

pharmacies, were strongly against drug promotion to

the non-qualified doctors. However, despite their

opinions it is a fact that the drugs are being promoted

through non-qualified doctors.

3.2.3 Legislation For Unethical Drug Promotion

Respondents opinions were obtained on the prospects

of strong legislation against unethical drug promotion

practices. The respondents opinions are presented

below:

TABLE 7

Pharmaceutical Doctors Hospital Pharmacy

company

4.76 4.51 4.42 4.35

GRAPH 3

4.04

4.23

4.47

3.58

2.07

1.48

–

1.00

2.00

3.00

4.00

5.00

Monetory Rewards Local visits Foreign Visits

Peronalized gifts Chamber decoration Home decoration

Tools used for nethcial drug prmotion practicesu

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The majority of respondents were strongly in the favor

of strong legislation against the unethical drug promotional

practices in Pakistan. Although there are already some

legislation on this issue it is not being implemented.

3.2.4 ERADICATION OF UNETHICAL

DRUG PROMOTION

Opinions on of the respondents were taken whether

it is possible to stop this unethical drug promotion

practices in Pakistan. The respondents opinions are

presented below:

TABLE 8

Pharmaceutical Doctors Hospital Pharmacy

company

1.67 2.08 1.58 1.71

GRAPH 4

Above graph shows that the majority of the

respondents i.e. doctors, pharmaceutical personnel,

hospitals and pharmacies, strongly disagreed with

the statement that the unethical drug promotion

practices cannot be stopped, now. Majority of

respondents were of the opinion that these

unethical practices can still be stopped.

4.0.0 CONCLUSIONS

The doctors and the pharmaceutical companies are

equally responsible for unethical drug promotion

practices in Pakistan. However, an interesting aspect

on this issue is that pharmaceutical companies were

responsible for initiating these unethical drug practices

in Pakistan, and the doctors are responsible for the

continuation of the same. The doctors not only demand

different rewards for prescribing medicine but a few

of them do not prescribe the medicines of those

companies who are reluctant to give monetary rewards.

The summarized results of the tested hypothesis are

presented below:

1) The hypothesis relating to high level of unethical

drug promotion practices (at least 4 on the scale of

5-1) was substantiated. At 95% confident level, Z

critical value is -1.65, and Z-calculated value is 7.96

that falls in the non-critical region.

It may be noted that the level of unethical drug

promotion practices as was ascertained by (Parmar

and Jalees, 2004) in their research was 3.56. The

reason for such a difference in the findings could

be that the study of (Parmar and Jalees) was a case

study of one city (Hyderabad) only, where as this

study is all Pakistan based.

2) The hypothesis relating to higher level of unethical

drug promotion practices in rural areas was

substantiated. At 95% confidence level the Z-critical

value is -1.64 and Z-calculated value is 9.19 that fall

in the non-critical region. Therefore, it has been

concluded that the level of unethical drug practices

are higher in rural areas as compared to urban areas.

3) The hypothesis relating to no significant difference

of opinions on who initiated unethical drug

promotion practices in Pakistan was rejected. At

95% confidence level and (3, 476) df the calculated

F value of 110.64 is greater than F- critical values

of 2.62.

The general perception was that the pharmaceutical

companies were responsible for starting this unethical

drug promotion practices with a mean of a mean

of 3.63.

4) The hypothesis relating to a higher contribution of

pharmaceutical industry in continuation of unethical

drug promotion practices was rejected. At 95%

confidence level, the Z critical value is -1.64 and Z-

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Research

calculated value is -4.18 that falls in the critical

region. Therefore, it has been concluded that

pharmaceutical industry is not responsible for

continuation of unethical drug promotion practices

but the doctors are responsible for the same.

The qualitative aspects of the analyses are presented

below:

a) The commonly used tools for unethical drug

promotion practices were monetary rewards, local

visits, and foreign visits etc. The drug industry prefers

arranging foreign and local visits of doctors for

prescribing their medicines as these expenses could

be charged in the heads of seminar and conferences.

b) Although majority of respondents were strongly

against drug promotion to non-qualified doctors,

but still the same is being practiced, especially in

rural areas.

c) The majority of respondents were in favor of

strong legislation against the unethical drug

promotional practices.

d) Majority of the respondents were of the opinion

that it would be very difficult to stop the unethical

drug promotion practices.

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