Prescribed Corruption

Let me start off with a joke taken from the book Bad Medicine: The Prescription Drug Industry in the Third World by Silverman, Lydecker, and Lee. I changed it a little bit to make the political issues more appropriate for this article but nevertheless, the message remains the same as it describes the magnitude of unfavorable views on the pharmaceutical industry.

And it came to pass that the President of the United States, the President of Iran, and the president of the pharmaceutical industry had a private audience with the Lord. Each was allowed to ask one question.

The U.S. president asked, ‘Lord, when will our unemployment problem be solved?’ The Lord pondered, then said, ‘The year 2050.’ The President of the United States walked away, crying bitterly.

The President of Iran asked, ‘When will Iranian be able to build a Nuclear Missile capable of reaching America?’ The Lord thought for a while, then said, ‘In the year 2062.’ The President of Iran walked away, crying bitterly.

Finally the president of the pharmaceutical industry asked, ‘Lord, when will the public image of our industry become favorable again?’ The Lord thought for a while and then walked away, crying bitterly.

philippines_pharmaceutical_industrySome of my readers may not be aware of this but something stinks in the pharmaceutical sales industry especially in the Third World like the Philippines. An editorial column by Amado Macasaet from the Malaya Newspaper describes the unjust practices of Unilab, the biggest drug and pharmaceutical company in the Philippines. The column describes despicable practices in its sales force such as “initiation rites” where sales-trainees are subjected to humiliation, kind of like a practice traditional in fraternities. Other practices also involve company intimidation and coercion on some of its salespeople, as well as bribery and other practices that foster a culture of corruption in Pharmaceutical Company-Physician relationships. This article will focus on this culture of corruption infesting the pharmaceutical sales industry in the Philippines.

The pharmaceutical industry is a huge and very competitive industry worldwide. In the Philippines alone, Unilab Corporation made almost Php10.66 Billion in revenue in 1999 and averages Php20 Billion in sales in 2006. Competition for pharmaceutical sales is fierce as pharmaceutical companies try vying for a bigger slice of the market share. Sales methods come in various forms such as advertisements, personal selling, trade promotion, and sponsorship. Pharmaceutical companies invest billions of dollars on its sales force in an attempt to push for increased profits. The motivation for increased profits has made physicians susceptible to corruption from many unethical sales practices coming from the pharmaceutical industry, including influence from sales representatives bearing gifts and other “enticements”.

Subscribe to our Substack community GRP Insider to receive by email our in-depth free weekly newsletter. Opt into a paid subscription and you'll get premium insider briefs and insights from us.
Subscribe to our Substack newsletter, GRP Insider!
Learn more

A paper was published refuting the influence of gifts to physicians on medical prescription decisions. The article notes:

“…contrary to popular belief, physicians are not easy targets readily persuaded by salespeople, but rather are tough sells as evidenced by the minimal influence of sales activities on their prescribing behavior. According to Jacobson, the most important factor explaining the limited effect of sales representatives is that physicians know they have other sources of information. Scientific papers, advice from colleagues and a physician’s own training and experience also influence prescribing practices and, he said, most physicians view these sources as far more reliable and trustworthy than salespeople.”

The study was based on the case for the United States of America; the question now is: “Does the study’s conclusion apply to doctors in Third World countries like the Philippines?”

According to a report published by the World Health Organization, there are 0.58 physicians per 1000 of the population in the Philippines. In addition, according to the Philippine Department of Budget and Management, the country merely allocated about 2.7% of total government expenditure on health care. These support Consumer International Organization’s report that health professionals in developing countries work in overstretched and under resourced sectors on low pay and in difficult conditions. Since health education does not belong to the government’s high priority list, information on medical products do not get effectively relayed to the masses. Compound the fact that a majority of the Philippine population is under-educated (having only about 28.8% pursuing tertiary education), the likelihood of the masses comprehending prescription medication technical information is low. As a consequence, the masses are left to trust the judgment of health professionals such as physicians, regarding prescription medications. The pharmaceutical companies recognize this fact that is why their sales force focus on targeting favorable leanings from physicians who prescribe medications.

One must realize that pharmaceutical “sales” does not necessarily entail merely informing physicians about products. Salespeople care more about “persuasion” rather than “information”. Salespeople persuade clients (i.e. physicians) to prescribe their products, not necessarily merely to inform them about the products. The World Health Organization actually defines drug promotion as:

“…refers to all informational and persuasive activities by manufacturers and distributors, the effect of which is to induce the prescription, supply, purchase and/or use of medicinal drugs.”

These “persuasive activities” can be in the form of spending for the “entertainment” of physicians (e.g. wining and dining) and giving gifts and all sorts of “gimmickry”. Add to the fact that sales representatives are often pressured to meet sales quotas, gifts and other forms of “entertainment” can open the floodgates of creativity all in the name of persuasion.

A paper by Taryn Vian, sponsored by USAID, notes that:

Unethical promotion of medicines is a significant problem, not only in developing countries but also throughout the world. Studies have shown that industry hospitality (e.g. all expense-paid trips to luxury resorts), gifts, and free samples all can affect physicians’ judgment. Other potential causes of conflict of interest include physicians who have financial stake in pharmaceutical or medical device companies, or receive honoraria for speaking engagements, referrals, or participation in clinic-based research. The pharmaceutical industry is “not merely a provider of drugs, but…a substantial purveyor of information and persuasion,” according to a recent report published in The Lancet. In 1999, the industry spent $8 billion on direct sales visits to physicians and exhibits at medical conferences.

To be fair, this article acknowledges another study in the United States that dispute the claim above. However, given the fact that the conditions in the United States are very much different from the harsh realities in the Philippines, I submit that the level of motivation for doctors to succumb to the benefits of pharmaceutical company persuasion is different, as well. In the Philippines, acceptance of unethical persuasion practices and doctor participation to such, are quite common as described in the Macasaet article.

The corruption of doctors by pharmaceutical sales people can be very dangerous to the public as drugs may be prescribed not necessarily for their (technical) merit but merely from returned favors. Because patients are left to trust the judgment of doctors, patients will tend to buy the higher cost branded products their doctors prescribe although generally speaking, these branded products have little or no additional medical value to their generic counterparts.

In the Philippines, a law was enacted to promote the use of generic drugs. This “Generics Law” was put in place in 1988 as Republic Act No. 6675. This law mandates medical practitioners such as physicians to prescribe prescription medication in its “generic term”. However, the law does not prohibit physicians to include “brand names” of drugs if they desire. This non-prohibition in the section (Sec. 6 b) of the Republic Act, I believe, defeats the purpose of promoting public purchase of the lower cost generic drugs, given that most of the population in the Philippines (who are mostly under-educated) are only left to trust the judgment of their doctors. So if a doctor were to prescribe a drug in its generic form but with a brand name for the medication included in the prescription, there is a big likelihood that the trusting patient will get the brand name that a “pharmaceutical sales representative-persuaded doctor” prescribes! The patient may end up paying for a branded prescription medication without any added medical value to its generic counterpart. The Generics Law, then, is really useless with this loophole that can easily be taken advantage of by the corrupt pharmaceutical sales representatives and the corrupted doctors.

We often hear the saying that “Doctors Know Best” when it comes to health matters. That may be true but even if we grant that doctors know what is best, it does not necessarily follow that they all can be trusted. There seems to be a need for policies to be beefed up in the Philippines to protect against the culture of corruption in the pharmaceutical sales industry.

21 Replies to “Prescribed Corruption”

  1. Wow, that stuff from Mr. Macasaet scares me off from joining the pharmaceutical industry. And I always didn’t like the sales job, you need to lie to sell (what I learned in my short stint in the advertising industry), and the culture these days in some companies seems akin to a cult. There are so many corrupt managers in companies these days too, that may put our corrupt politicians to shame.

    I wonder if Unilab has a contract in the RH Law.

    1. Hi Chino,

      Having more of an introverted personality, I also don’t like sales jobs. I know what you mean about some companies looking like some sort of a cult. I was invited by a good friend of mine once to sit down and watch his presentation at this meeting in Makati to promote some nutraceutical product. The thing about his company, though, was that it worked as a Multi-Level Marketing company (i.e. pyramid). So from my observation, the technical merits of their products weren’t really the driving point of their business but the earning potential of the business. I don’t even remember anyone in that meeting talking about their product’s safety and efficacy; the discussions were all about making a lot of money. And boy with the way the people in that meeting responded to my friend’s presentation? I swear I felt like I was at a church or something. With regards to whether Unilab has a contract in the RH law… well… I won’t be surprised if they do.

      Thanks for reading!

  2. I’ll ask my sister on this. She used to work on inbound call for a pharmaceutical company. When we was moved to outbound call, she felt uneasy with her job and she resigned from it.

    1. Thanks for reading, OnesimusUnbound. I look forward to reading about your sister’s experience and thoughts about the whole thing.

  3. Hey Hector,

    I have to disagree with a few of points in your article.

    You left me with the impression that medical sales representatives engage in some rather unscrupulous practices; they use monetary rewards, paid vacations and dinners as incentives to get sales. I’ll grant you that. As an IT consultant, I’ve worked with a couple of medical professionals and hospitals/clinics and I observed this behavior firsthand — meals, money, miniskirts and massages. But I’ve also seen insurance salespersons do the same thing. One fetching young woman invited us to go clubbing to try to sell us a policy.

    The conclusion that I didn’t feel you were able to prove was whether these antics, while unethical, meet the definition of being illegal under the law. Or that any deals made under this type of arrangement directly led to the wrong medication being prescribed. Nor did you definitively prove that third world medical practitioners are more susceptible to influence by drug companies.

    Does UNILAB’s rabid corporate culture give them an unfair advantage in sales? They are certainly aggressive. And they have a wide-ranging product portfolio. But they are not infallible, nor are they automatically going to be the top seller in their category. Case in point — a cough medicine called ASCOF, manufactured by Pascual Laboratories. It trounced UNILAB’s cough remedy SOLMUX. Nothing UNILAB did could compete with it. Not even the cheesy Vic Sotto commercials. ASCOF beat SOLMUX not because of massive promotions or arm twisting. It did so because it simply worked. The Lagundi-derived medicine cured colds in 3-5 days. UNILAB’s SOLMUX took 1-2 weeks. Even better, ASCOF cost a fraction of UNILAB’s offering. This was one product that scared the pants off UNILAB. Filipinos can and will choose the best product. We just need to let the market take care of itself.

    What about the bribes and paid vacations? I can only attest to what I witnessed in the doctors’ offices I was working with. Sales reps like to bring cake. Usually black forest cake (I have no idea why). It certainly made one receptionist I befriended gain weight, a lot of weight. Weekly pastries and lunches out will do that. Did it boost sales? A lot of product ended up on the doctors’ shelves. ON CONSIGNMENT. That is, these weren’t dispensed. And a lot of them ended up being returned to the supplier at the end of the month while the doctors prescribed other medications, often generics. I learned that one rep tends to book her consignments as sales to boost her portfolio. Did the free gifts and paid lunches influence the medical professional? Not if the doctor has his head on straight.

    What about the hazing? And the unfair terminations? There are already remedies for those situations. You can take these up with the National Labor Relations Council. The system can work if you work at it. A relative of mine was fired from his position at one of our major financial institutions. After an admittedly lengthy process at the NLRC, he and his co-workers were awarded a multi-million Peso settlement. There’s nothing to stop UNILAB employees from doing the same.

    Rather than focusing on what business practices UNILAB may or may not engage in, there are a number of other aspects of the health care industry that need addressing. Take for example Manny Pangilinan’s influence on health care delivery. Metro Pacific owns Cardinal Santos Medical Center in San Juan and part of the De Los Santos General Hospital. If you opt for care at any of MVP’s institutions, you will notice a lot of extra tests included in your treatment. Things like full X-rays and CT scans and MRIs. Procedures which are probably unnecessary for a sprained ankle. Ask the physicians who have offices at these places and they will confirm that there is a mandate from hospital management to increase profits, hence the push to request any number of tests, especially those that can cost thousands. There’s where we should focus our attention.

    1. Hi Johnny,

      No problem, man. I welcome your disagreement and as always, I appreciate your input and the insightful discussions resulting from various angles.

      The purpose of the article was really a critique of the Generics Law in the Philippines, not about whether the unethical practices employed by many medical sales representatives (MSR) are illegal. Basically, I described the unethical practices to build up my critique of the Generics Law, suggesting that with the on-going unethical practices… the provision in the Generics Law that enables doctors to include brand names in their prescriptions severely weakens the intended purpose of the law. The MSRs would move heaven and earth to “work with the doctor” in pushing for their brand. There’s nothing wrong with that as long as the means are within the law (e.g. we don’t want MSRs resorting to illegal practices such as extortion just to make sure the doctors would prescribe their products). The MSR would be happy (to be able to meet his sales quota)… the doctor would be happy (receiving all the “benefits from his cooperation”)… perhaps even the pharmacies. The one getting the short end of the stick would probably be the consumer, especially the poor consumers as they may be buying more expensive brand name items having little to no medical advantage over the cheaper generics alternative. If the Generics Law intends to protect the consumers then I see no purpose of the provision in the law allowing doctors to include brand names in their prescriptions when the generic form is already there.

      You are correct, though, in your comment that I wasn’t able to prove that doctors in Third World countries are more susceptible to influence. I really didn’t intend to prove that. However, I wanted to raise that question based on the fact that doctors in Third World countries tend to be more overstretched in their work with lower pay. To prove the susceptibility point would require different and more data. However, the question of plausibility (not proof), I believe, can be entertained based on the factual conditions the doctors in Third World countries have.

      I am also a strong believer of market forces and the free market. The cough remedy case you cited was a good example of how market forces would set things straight. In fact, one of the reasons why I have an issue with regards to the Generics Law allowing for the inclusion of brand names in prescriptions is that it may give certain products an undue advantage. As your cough remedy case proves, even without thinking of the brand name, consumers would go for a product based on the merit and value it gives. This would encourage better competition amongst manufacturers because it would force them to compete on the grounds of the product safety and efficacy as well as cost, as oppose to bells and whistles. So there really is no good reason in the Generics Law for the option of adding the brand name in prescriptions (other than if the product currently does not have a generic counterpart yet).

      My sister used to work for a multi-national Big Pharma during the late 80s to the early 90s in the Philippines. The area she was assigned to was amongst the poorest areas of Metro Manila (I’m talking the Smoky Mountain kind here). The product she was peddling was the priciest amongst its class although it had an active pharmaceutical ingredient no better or worse than its competitor. So yes, she engaged in those unethical practices such as enticing doctors (and pharmacies) with gifts and for a few consecutive years she earned top sales awards in her company for the success of her product. Her product, although not really any better or worse than the cheaper competitor, topped sales in the impoverished area she worked in. She quit her job in the early 90s telling me that she couldn’t live with the practice anymore at the expense of the gullible public.

      I’m not suggesting that my sister’s case proves the point that unethical practices by MSRs boost sales. It is merely an anecdotal evidence just like many other similar (or even opposite) stories like the story you shared based on your personal experience. What I am merely saying is that if unethical practices could affect things especially if corruptible doctors are involved, then why make the condition easy for such corrupt practices by allowing the inclusion of brand names in prescriptions?

      The hazing stuff is another matter. It’s more about labor issues, I believe, which you correctly pointed out having an existing remedy already. I just found that interesting in the Macasaet article and I believe I did say that my article wishes to focus on the corrupt practices in the pharma sales industry (not the unethical labor practices such as “initiation rites”).

      Those other issues you mentioned are worthy of further discussions. I, too, have a big beef against other practices in the medical profession in the Philippines. I believe that doctors in the Philippines should be held more accountable than their current state of accountability. I really am piqued with the requirement of signing a liability waiver before these doctors would perform a surgery. Back in the early 2000s when my then 6 year old stepson had to undergo surgery, the hospital asked us to sign a liability waiver before they would operate on him. But that is another topic for another day of discussion.

      Thanks for reading!

      1. One of the reasons behind the Generics Law was precisely to give consumers choice; i.e. to allow them to choose among different brands with the same generic name. For me it just formalized the practice at the drug store counter. Each time I get a prescription filled, I always make it a point to ask the pharmacist if there are alternatives regardless of the brand of medicine prescribed. I’d been doing this long before the Generics Law was passed. (It helps a lot when you have a longstanding association with the corner pharmacy/drug store and the pharmacist staff.) It was, in fact, my local pharmacist who recommended ASCOF over SOLMUX to me. And they do this for a lot of their patrons.

  4. Medical industry is not alone in terms of an industry that takes advantage of the consumers trust in their professionals who sells them what is good for the company but not proportionally good for the consumer. Usually what is appropriate for the consumer in a wide array of products may be in the lower end of the commission rate. So all I can say is the buyer should get educated in many different things like finances. Read third party material. Advertising is about as credible as Noynoy campaigning for the Liberal party.

    1. That’s correct, Gogs. The medical industry certainly is not alone in this. I think in a level playing field under free market conditions, consumers would get educated as well using merit and value as the measuring stick. Thanks for reading!

  5. I once was a medical representative for an american multinational firm a few decades ago. the corruption you have written already existed. Government hospitals at that time were already filled with products that were never heard in the mainstream not because of their efficacy but because of the scandalous amount of SOP given involved. Those innocent looking prescripions you get from doctors when they prescribe you with medicines have the cash equivalent or points once the prescription pad is consumed. A top practitioner need not worry about his clinic’s airconditioning unit, refrigerator or even his car. those too can be had thanks to these drug firms. Those medical conventions are nothing but junkets bankrolled by drug companies from plane fares, accomodation, food and drinks with matching escorts (prostitutes) for those who have oversupply of testosterone. One time, with my ears still wet and initially assigned in the far north, I got the initial shock of my life when my boss called me from head office urging me to look for lady escort for our triple A client in manila who’s coming over for a convention that will keep him company for a couple of days. And now I heard that some generic drug distributors are inviting as stockholders the top physicians in every city just to get the prescriptions. Also paid family vacations here and abroad are now the major enticers just like cars. Try asking the drustore’s pharmacists or sales clerks about the preferred product prescribed by physicians. If it tends to favor one drug company’s product , it can be a red flag.

    1. Try asking the drustore’s pharmacists or sales clerks about the preferred product prescribed by physicians. If it tends to favor one drug company’s product , it can be a red flag.

      Thanks for the tip.

  6. Hi sir Hector, I commend you for this good article, however, being a pharma sales person myself, I would like to disagree on most points. This is where my company differs. We have a very strict code of conduct and ethical practices. But most companies are really into this. I cannot post details here but you are welcome to email me anytime. Thanks so much and mabuhay!

    1. Hello Max,

      I’m glad you liked the article and thanks for reading. Thanks for your input as well and I welcome your disagreement on the points my article raised. Anyway, I am glad that there are companies like yours who operate under a very strict code of conduct and ethical practices. Cheers!

  7. As a former exec in big pharma in europe i clearly do not condone any malpractice but do accept that standards vary according to company and particularly by culture/country regulations and by ‘rouge’ managers/sales personnel.

    Strict regulations are applied in most european countries relating to sales activity even to the number of sales personnel which can be employed by a company ( a % formula based on turnover) and the amount spent on sales/marketing activity, so possibly the excesses of the 80’s have been tempered.

    Also sales personnel – all graduates – are not paid a commission, to avoid any ‘pressure selling’

    High cost weekends/ conferences are part of the marketing activity, as in most other major industries but provision of cars etc is beyond the pale and also individual doctors have influence but are the prescriber not the buyer ( the govt. pays), individually are not significant, and most important of all have high ethical standards. also no big pharma wants bad press for the sake of a small issue.

    Apart from cost of medicines, which is high in the philippines, the major issue, and obviously related, is that circa 35 – 40% of all medicines sold are counterfeit ( not generic).
    That can be a death sentence.

    The industry is not whiter than white but maybe the reasons are closer to home.

    1. Hi libertas,

      I have been working in the life sciences sector (Academia, Pharma, and Medical Device) for all my entire career and I’m glad all my years have been mostly in the lab and Quality Assurance / Quality Auditing. I don’t think I would have made a good pharmaceutical salesperson… although sometimes I’ve wondered how nice it would be with all the flash and money associated with sales. 🙂 hehehe

      Thanks for reading!

  8. A consultant friend/ ex-colleague from the US who is currently advising the government here told me that he is now used to the 3 looks he gets in meetings
    The blank look – ‘not a clue what you are talking about’
    The horror look – ‘you want me to do something!’
    The grin – ‘to try and hide the stupidity of, (apologise for), a comment.

    And the after hours victim look – ‘i can’t afford to pay’

    But at 50,000 peso a day, plus exes, per person he is the one laughing all the way to the bank. what idiots in government

    1. “The blank look –- ‘not a clue what you are talking about'”

      You often see that in the lot that belongs to the Generation X and Generation Y crowd. Along with

      “The grin –- ‘to try and hide the stupidity of, (apologise for), a comment.'”

      when they realize the mindless drivel they’ve been spouting for the last ten minutes has zero semantic content. Kind of like what comes out of Barack Obama’s mouth on a daily basis.

  9. As a former Medrep, the Pharma industry in the Philippines is such a corrupt industry. Bribery is here and everywhere.

    The doctors itself is corrupt! ginagawang gatasan ang Pharma industry. They should set a strict ethical standards or law regarding this. Naka salalay ang kapakanan ng mga patiente dito.

    Pa golf, pa dinner sa labas, pa tour abroad for conferences iyan at dispensing doctors. Iyan ang ilan lamang sa mga Corrupt and bribery practices na ginagawa ng mga doctor na yan na kinukunsinte ng pharma industry. Dapat i regulate ito ng gobyerno. Dapat pagtuunan ng pansin itp sa kapakanan ng taumbayan!

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.