Ethics in pharmaceutical sales

Last updated August 23, 2023

The ethics involved within pharmaceutical sales is built from the organizational ethics, which is a matter of system compliance, accountability and culture (Grace & Cohen, 2005). Organizational ethics are used when developing the marketing and sales strategy to both the public and the healthcare profession of the strategy.^[1] Organizational ethics are best demonstrated through acts of fairness, compassion, integrity, honor, and responsibility.^[2]

Industry

The pharmaceutical industry is a highly competitive business and its success is dependent on the sales and marketing of each drug.^[1] The cost of research and development for each drug is hundreds of millions of dollars. In 2005 the research and development expenditure for the biopharmaceutical industry within Europe and the US was 15,474 million euro.(The Pharma Industry Figures, 2006). Some health economists peg the current cost of drug development at US$1.3 billion, others at US$1.7 billion^[3] The actual drug discovery and the drug development can take years. After which, testing and clinical trials are required prior to getting approval by regulatory boards. After launching the drug the company has much at stake as it has already outlaid millions of dollars the success of its sales is an important factor to the success of the company.

Sales practices

A pharmaceutical sales representative is the key part within the sales of all drugs.^[1] They ensure the healthcare profession is informed of the benefits of the drug along with the safety and the side effects according to the dictate of the company employing them. The term used is ethical promotion, which can be described as communication of ethical values to promote their product to the physician. (Wright & Lundstrom, 2004)

Regulations and guidelines

European Federation of Pharmaceutical Industries and Associations

The European Federation of Pharmaceutical Industries and Associations (EFPIA) stipulates that there is a Corporate Social responsibility for the pharmaceutical industry to recognize and acknowledge the need to act responsibly towards society and the communities in which it operates.

The EFPIA has also code of practice on the promotion of medicine, which entails the regulations over many areas of the promotion of medicine. These include events and hospitality that can be extended by a pharmaceutical company. Gifts and inducements must be inexpensive and provide value to the practice of medicine or pharmacy. All medical sales representatives must have the adequate training and sufficient scientific knowledge to provide relevant and precise information about the products. They must also comply with the requirements of the applicable codes.

Pharmaceutical Research and Manufacturers of America

In 2002 the Pharmaceutical Research and Manufacturers of America, issued a set of guidelines for its member companies to follow when it comes to the relationship between drug reps and doctors. The voluntary code significantly changed how drug company representatives interact with doctors. Changes range from restricting gifts to limiting consulting contracts offered to doctors.^[4]

PhRMA was inspired to come up with the code after years of criticism from groups like Families USA and Public Citizen. PhRMA already had a set of guidelines on this topic but its board decided that one of the best ways to thwart the criticism and prevent any appearance of impropriety was to come up with a stricter code.^[4]

"The PhRMA guidelines are one major factor contributing to a paradigm shift that directly impacts the way our industry conducts business,""Because of this shift, pharmaceutical sales forces must learn new and more compelling ways to create and keep customers, or perish because physicians are no longer willing to listen to their usual approach," said Susan Torroella, CEO of Columbia MedCom Group.^[4]

PhRMA is opposed to state laws that regulate interaction between pharmaceutical sales representatives and health care providers. PhRMA officials said state regulations could create a patchwork of conflicting rules across the states that might do more to confuse sales representatives and doctors than prevent improper perks."We do have the comprehensive guidelines combined with the guidelines of the Office of Inspector General. Not only would state laws be a duplication, it could be nightmarish because you would have differing standards for different states," said Jeff Trewhitt, a spokesman for PhRMA.^[4]

U.S. Department of Health and Human Services

After PhRMA enacted its guidelines, the Office of Inspector General for the U.S. Department of Health and Human Services issued guidelines similar to PhRMA's code, except with more severe penalties. Companies that fail to follow the department's rules could face a federal investigation that could lead to civil penalties.^[4]

Health care fraud

Pharmaceutical fraud involves activities that result in false claims to insurers or programs such as Medicare in the United States or equivalent state programs for financial gain to a pharmaceutical company.^[1] There are several different schemes^[5] used to defraud the health care system which are particular to the pharmaceutical industry. These include: Good Manufacturing Practice (GMP) Violations, Off Label Marketing, Best Price Fraud, CME Fraud, Medicaid Price Reporting, and Manufactured Compound Drugs. The Federal Bureau of Investigation (FBI) estimates that health care fraud costs American taxpayers $60 billion a year.^[6] Of this amount $2.5 billion was recovered through False Claims Act cases in FY 2010. Examples of fraud cases include the Pfizer $2.3 billion settlement and Merck $650 million settlement. Damages from fraud can be recovered by use of the False Claims Act, most commonly under the qui tam provisions which rewards an individual for being a "whistleblower", or relator (law).^[7]

Antipsychotic drugs are now the top-selling class of pharmaceuticals in America, generating annual revenue of about $14.6 billion. Every major company selling the drugs — Bristol-Myers Squibb, Eli Lilly, Pfizer, AstraZeneca and Johnson & Johnson — has either settled recent government cases, under the False Claims Act, for hundreds of millions of dollars or is currently under investigation for possible health care fraud. Following charges of illegal marketing, two of the settlements set records last year for the largest criminal fines ever imposed on corporations. One involved Eli Lilly’s antipsychotic Zyprexa, and the other involved Bextra. In the Bextra case, the government also charged Pfizer with illegally marketing another antipsychotic, Geodon; Pfizer settled that part of the claim for $301 million, without admitting any wrongdoing.^[8]

On 2 July 2012, GlaxoSmithKline pleaded guilty to criminal charges and agreed to a $3 billion settlement of the largest health-care fraud case in the U.S. and the largest payment by a drug company.^[9] The settlement is related to the company's illegal promotion of prescription drugs, its failure to report safety data,^[10] bribing doctors, and promoting medicines for uses for which they were not licensed. The drugs involved were Paxil, Wellbutrin, Advair, Lamictal, and Zofran for off-label, non-covered uses. Those and the drugs Imitrex, Lotronex, Flovent, and Valtrex were involved in the kickback scheme.^[11]^[12]^[13]

The following is a list of the four largest settlements reached with pharmaceutical companies from 1991 to 2012, rank ordered by the size of the total settlement. Legal claims against the pharmaceutical industry have varied widely over the past two decades, including Medicare and Medicaid fraud, off-label promotion, and inadequate manufacturing practices.^[14]^[15]

Company	Settlement	Violation(s)	Year	Product(s)	Laws allegedly violated (if applicable)
GlaxoSmithKline ^[16]	$3 billion	Off-label promotion/ failure to disclose safety data	2012	Avandia/Wellbutrin/Paxil	False Claims Act/FDCA
Pfizer ^[17]	$2.3 billion	Off-label promotion/ kickbacks	2009	Bextra/Geodon/ Zyvox/Lyrica	False Claims Act/FDCA
Abbott Laboratories ^[18]	$1.5 billion	Off-label promotion	2012	Depakote	False Claims Act/FDCA
Eli Lilly ^[19]	$1.4 billion	Off-label promotion	2009	Zyprexa	False Claims Act/FDCA

Advocacy groups

No Free Lunch

Some physicians have joined an organization No Free Lunch which asked physicians to make a pledge to not accept any pharmaceutical companies gifts no matter how large or small. The members base that gift giving forms relationships, which influences behaviour and creates a conflict of interest.

Related Research Articles

Novartis AG is a Swiss multinational pharmaceutical corporation based in Basel, Switzerland. Consistently ranked in the global top five, Novartis is one of the largest pharmaceutical companies in the world and was the fourth largest by revenue in 2022.

Pharmaceutical Research and Manufacturers of America, formerly known as the Pharmaceutical Manufacturers Association, is a trade group representing companies in the pharmaceutical industry in the United States. Founded in 1958, PhRMA lobbies on behalf of pharmaceutical companies. PhRMA is headquartered in Washington, DC.

GSK plc, is a British multinational pharmaceutical and biotechnology company with global headquarters in London. Established in 2000 by a merger of Glaxo Wellcome and SmithKline Beecham, GSK is the tenth largest pharmaceutical company and #294 on the 2022 Fortune Global 500, ranked behind other pharmaceutical companies China Resources, Sinopharm, Johnson & Johnson, Pfizer, Roche, AbbVie, Novartis, Bayer, and Merck Sharp & Dohme.

The pharmaceutical industry discovers, develops, produces, and markets pharmaceutical drugs for the use as medications to be administered to patients, with the aim to cure and prevent diseases, or alleviate symptoms. Pharmaceutical companies may deal in generic or brand medications and medical devices. They are subject to a variety of laws and regulations that govern the patenting, testing, safety, efficacy using drug testing and marketing of drugs. The global pharmaceuticals market produced treatments worth $1,228.45 billion in 2020 and showed a compound annual growth rate (CAGR) of 1.8%.

<span class="mw-page-title-main">Valdecoxib</span> Nonsteroidal anti-inflammatory drug

Valdecoxib is a nonsteroidal anti-inflammatory drug (NSAID) used in the treatment of osteoarthritis, rheumatoid arthritis, and painful menstruation and menstrual symptoms. It is a selective cyclooxygenase-2 inhibitor. It was patented in 1995.

Many countries have measures in place to limit advertising by pharmaceutical companies.

Pharmaceutical sales representatives are salespeople employed by pharmaceutical companies to persuade doctors to prescribe their drugs to patients. Drug companies in the United States spend ~$5 billion annually sending representatives to doctors, to provide product information, answer questions on product use, and deliver product samples. These interactions are governed according to limits established by the Code on Interactions with Health Care Professionals, created by the Pharmaceutical Research and Manufacturers of America (PhRMA). This code came into practice in 2002 and has since been updated to help define ethical interactions between health care professionals and the pharmaceutical companies

Mylan N.V. was a global generic and specialty pharmaceuticals company. In November 2020, Mylan merged with Upjohn, Pfizer's off-patent medicine division, to form Viatris. Previously, the company was domiciled in the Netherlands, with principal executive offices in Hatfield, Hertfordshire, UK and a "Global Center" in Canonsburg, Pennsylvania, US.

<span class="mw-page-title-main">Pharmaceutical lobby</span>

The pharmaceutical lobby refers to the representatives of pharmaceutical drug and biomedicine companies who engage in lobbying in favour of pharmaceutical companies and their products.

<i>Side Effects</i> (Bass book) 2008 book by Alison Bass

Side Effects: A Prosecutor, a Whistleblower, and a Bestselling Antidepressant on Trial is a nonfiction book by investigative journalist Alison Bass that chronicles the lawsuit filed in 2004 against GlaxoSmithKline by then New York Attorney General Eliot Spitzer.

David Franklin is an American microbiologist and former fellow of Harvard Medical School who while employed by Parke-Davis filed the 1996 whistleblower lawsuit exposing their illegal promotion of Neurontin (gabapentin) for off-label uses. Franklin's suit, filed on behalf of the citizens of the United States under the qui tam provisions of US federal and state law, uncovered illegal pharmaceutical industry practices and created new legal precedent that resulted in a cascade of criminal convictions and civil and criminal penalties against Pfizer and several other pharmaceutical companies totalling more than $7 billion. Civil cases also followed Franklin v. Parke-Davis. Insurance companies, led by Kaiser Permanente, sued Pfizer for fraud and violation of the federal Racketeer Influenced and Corrupt Organizations Act; the Kaiser case settled in April 2014 after Pfizer's appeal at the US Supreme Court was rejected. Franklin v. Pfizer also spawned more than a thousand wrongful death (suicide) suits associated with use of Neurontin. Numerous books have addressed the social, economic and healthcare implications of Dr. Franklin's stance and actions. The settlement was the first off-label promotion settlement under the False Claims Act.

The pharmaceutical industry in the United Kingdom directly employs around 73,000 people and in 2007 contributed £8.4 billion to the UK's GDP and invested a total of £3.9 billion in research and development. In 2007 exports of pharmaceutical products from the UK totalled £14.6 billion, creating a trade surplus in pharmaceutical products of £4.3 billion.

Pharmaceutical fraud involves activities that result in false claims to insurers or programs such as Medicare in the United States or equivalent state programs for financial gain to a pharmaceutical company. There are several different schemes used to defraud the health care system which are particular to the pharmaceutical industry. These include: Good Manufacturing Practice (GMP) Violations, Off Label Marketing, Best Price Fraud, CME Fraud, Medicaid Price Reporting, and Manufactured Compound Drugs. Examples of fraud cases include the GlaxoSmithKline $3 billion settlement, Pfizer $2.3 billion settlement, and Merck $650 million settlement. Damages from fraud can be recovered by use of the False Claims Act, most commonly under the qui tam provisions which rewards an individual for being a "whistleblower", or relator (law).

Reuben A. Guttman, born 1959 in New York City, is an American attorney and a founding Partner of Guttman, Buschner & Brooks PLLC ("GBB"), a DC-based plaintiffs' firm His practice involves complex litigation and class actions. He has served as counsel in some of the largest recoveries under the False Claims Act. The International Business Times has called Guttman "one of the world's most prominent whistleblower attorneys," and he has been recognized as a Washingtonian Top Lawyer by Washingtonian Magazine.

These are Wikipedia lists about the pharmaceutical industry. The pharmaceutical industry develops, produces, and markets drugs or pharmaceuticals licensed for use as medications. Pharmaceutical companies are allowed to deal in generic or brand medications and medical devices. They are subject to a variety of laws and regulations regarding the production, testing, and marketing of drugs.

Study 329 was a clinical trial which was conducted in North America from 1994 to 1998 to study the efficacy of paroxetine, an SSRI anti-depressant, in treating 12- to 18-year-olds diagnosed with major depressive disorder. Led by Martin Keller, then professor of psychiatry at Brown University, and funded by the British pharmaceutical company SmithKline Beecham—known since 2000 as GlaxoSmithKline (GSK)—the study compared paroxetine with imipramine, a tricyclic antidepressant, and placebo. SmithKline Beecham had released paroxetine in 1991, marketing it as Paxil in North America and Seroxat in the UK. The drug attracted sales of $11.7 billion in the United States alone from 1997 to 2006, including $2.12 billion in 2002, the year before it lost its patent.

References

1 2 3 4 The Editorial Board (November 27, 2015). "Turn the Volume Down on Drug Ads". The New York Times . Retrieved November 27, 2015.
↑ Suttle, Rick (2016). "Example of organizational ethics". Houston Chronicle.
↑ Collier, R (2009). "Drug development cost estimates hard to swallow". CMAJ. 180 (3): 279–80. doi:10.1503/cmaj.082040. PMC 2630351 . PMID 19188620.
1 2 3 4 5 Anderson, Tania (27 June 2003). "Just what the doctor ordered". Baltimore Business Journal.
↑ "Financial Crimes to the Public Report 2006". FBI. 2006.
↑ "FBI-Health Care Fraud". FBI.
↑ "Department of Justice". Department of Justice. 18 March 2015.
↑ Duff Wilson (October 2, 2010). "Side Effects May Include Lawsuits". The New York Times.
↑ "GlaxoSmithKline". BBC News. 4 July 2012.
↑ "GlaxoSmithKline Agrees to Pay $3 Billion in U.S. Drug Settlement". Bloomberg. 2 July 2012.
↑ Fred Mogul (2 July 2012). "NY to Get Millions in GlaxoSmithKlein Settlement". WNYC. Archived from the original on 19 April 2013. Retrieved 2 July 2012.
↑ "BBC News -GlaxoSmithKline to pay $3bn in US drug fraud scandal". BBC Online . 2012-07-02. Retrieved 2 July 2012.
↑ Thomas, Katie; Schmidt, Michael S. (July 2, 2012). "Glaxo Agrees to Pay $3 Billion in Fraud Settlement". The New York Times. Retrieved July 3, 2012.
↑ Sammy Almashat, M.D., M.P.H., Charles Preston, M.D., M.P.H., Timothy Waterman, B.S., Sidney Wolfe, M.D., Rapidly Increasing Criminal and Civil Monetary Penalties Against the Pharmaceutical Industry: 1991 – 2010, Public Citizen’s Health Research Group, December 16, 2010
↑ Thomas, Katie; Schmidt, Michael S. (2012-07-02). "GlaxoSmithKline Agrees to Pay $3 Billion in Fraud Settlement". The New York Times.
↑ "USDOJ: GlaxoSmithKline to Plead Guilty and Pay $3 Billion to Resolve Fraud Allegations and Failure to Report Safety Data". Justice.gov. 2012-07-02. Retrieved 2013-09-06.
↑ "Archived copy" (PDF). Archived from the original (PDF) on 2013-10-29. Retrieved 2020-11-22.{{cite web}}: CS1 maint: archived copy as title (link)
↑ "USDOJ: Abbott Labs to Pay $1.5 Billion to Resolve Criminal & Civil Investigations of Off-label Promotion of Depakote". Justice.gov. 2012-05-07. Retrieved 2013-09-06.
↑ "#09-038: Eli Lilly and Company Agrees to Pay $1.415 Billion to Resolve Allegations of Off-label Promotion of Zyprexa (2009-01-15)". Justice.gov. Retrieved 2013-09-06.