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Compliance & Ethics in the Pharmaceutical Sector: How to Curb the Ills

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Compliance and Ethics

Compliance is a large part of enterprises that are exposed to regulatory purview. It cuts across industries and businesses – and is key towards a healthy and efficient corporate existence. To enforce compliance, the element of ethics needs to be taken into consideration. Ethics, in the simplest sense, are moral values in action.

The existence of ethics came into the picture from the need to develop a united action to assure the necessities such as shelter, food and survival leading to a social consensus on what values were acceptable and what were not. Talking of today’s day and age, very few of us realize that the workplace culture that we have is a product of the culture of the society we are a part of and having customized bylaws, is a common feature amongst business corporations, clubs, associations, etc.

Business Ethics and Pharma

Business ethics lays the guidelines that a company must use while interacting with entities in and out of the company. Such activities typically seek to promote the goals of the company without sacrificing the common good of its customers, competitors, and employees.

Like any industry, the pharmaceutical and drug sector is vulnerable to the ills of the society and moral depravity. However, unlike other industries, the pharmaceutical industry faces the risk of unparalleled monetary loss by unethical practices and non-compliance with regulations. Reputational capital is at the heart of this business as the goods and services offered by the companies are personal in nature and hold the potential to cause irreparable damage to a person’s well-being. 

According to a news report, 26 pharmaceutical companies paid some $33 billion in fines during 2003 to 2016. The top 11 alone accounted for $28.8 billion, or 88%, of the total, the report said.  Further, in India CCI fined two pharma companies to the tune of Rs. 74 crores in 2019.

Issues with Pharma and Drug Sector

The various Ethics and Compliance issues involved in the pharma industry could be as follows:

  • Misleading advertisement

  • Misguiding prescription

  • Selling of samples to public 

  • Uncontrolled/unapproved testing 

  • Integrity

  • Information sharing

  • Fairness

  • Pricing and Fair Distribution

  • ‘Gifts’ to doctors, researchers and regulatory bodies

An empirical study named ‘Study of Ethics Training Influence on Ethical Behaviour of Medical Representatives in Pharmaceutical Industry’ published in the International Journal of Life Science Pharma Research points out the link between Ethics training and conduct of Medical Representatives. It points towards the supposition that there is a strong and significant association between ethics training and ethical behaviour of medical representatives. Research study also confirms that ethics training is integral in establishing ethical behaviour among employees and helps to avoid corporate liability.

A few pointers from the study are as follows:

  • Domestic companies do not put much emphasis nor make it mandatory for their medical representatives for ethical training.

  • Multinational company medical representatives are more ethical compared to domestic company medical representatives.

  • Exposure by multinational companies to ethics training and emphasis leads to ethical practices of medical representatives which develop sales tactics to help solve ethical dilemmas. In domestic companies, however, the boundaries may conform to their own beliefs, which result in poor decisions in ethical dilemmas.

To enforce ethics into the medical profession, The Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations 2002 are in place which prohibit medical practitioners from accepting gifts from the pharmaceutical business or their sales representatives, or publicly advocating for any medicine or product. The neutrality of the medical profession towards the drug manufacturing as well as a level playing field for pharmaceutical business, is the intent behind the regulations.

How to curb Unethical Practices and Promote Compliance Culture

1. Policy enactments

On the internal policy front, having a Code of Conduct in place for bigger organizations has become a necessity. The CoC not only creates a document to be adhered to but contributes to promoting ethical corporate governance practices. CoC is especially for managerial persons, but it also extends to employees and contractual workers.

Keeping the nature of the industry in mind, a Gift Policy is highly recommended in order to curtail practices such as bribery and corruption. Medical professionals have often been in news for accepting gifts from pharma entities in exchange for recommending their products.

2. Ethics Committee 

Creating a framework of ethical regulation within by structuring ethics committee, compliance committee and ethics champions can be one way to go. Ethics champions are individuals working in an organizations but also having a parallel role which is an ethics role. There could also be ethics counsellors within the organization that could be the point of contact for consultation regarding any ethical dilemmas the team/business faces.

3. Self-regulation

The concept of self-regulation is already existing in some form in the pharma sector. Associations need to be strengthened and more self-regulation needs to be brought in via various policy enactments as well as standards. Given the current scenario, pharma companies need to resort to standardised business practices in order to avoid antitrust violations.

4. Compliance and Ethics Training

Training and workshops of employees and management on a regular period contributes toward making the organization overall compliant with the laws as well as with the ethical standards. Many jurisdictions, while evaluating compliance programs or deciding penalty for violations, take into consideration the company’s training programs and compliance programs while making a decision. The US DoJ has a standardised evaluation methodology and the amendment to Indian Prevention of Corruption Act also to some extent looks within the commercial organization’s training programs.

5. R&D for Public

Holistically, drug companies are largely seen to be profit making global corporation that refuse to contribute to public cause without a business cause. In order to dodge this perception, pharma sectors can contribute some area of their research towards providing for public health issues. This could include waiving patent for a particular drug and could be a part of their CSR policy.

6. Ethics Inspectors

The Indian Pharmaceutical Alliance has proposed installing Ethics Inspectors within pharma companies. These officers would monitor the adherence to ethical practices, policies and voluntary codes put in place by the government.


Pharma and drug industry is already regulated at every step of the process of manufacturing and distributing to marketing and selling. Hence, they are exposed to an increased risk of overlooking compliances and bypassing ethical standards to get the job done. Increasing compliance standards and imbibing ethical values is, therefore, essential to the pharma sector.

We must here put a caution that the motive is not to question the humongous profit-making of pharma entities. But to ensure that the profit is not a result of tainted practices and overlooked standards. As Bazerman and Tenbrunsel state in their Harvard Business Review column, “we want to know why managers and consumers tend not to hold people and organizations accountable for unethical behaviour carried out through third parties, even when the intent is clear.”

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