The Dolo-650 Debate: Dolo, the anti-inflammatory, fever reducer drug, became a household name in India during COVID-19 pandemic when doctors prescribed it widely to treat high fever symptom in infected patients. In July last year, Income Tax raided 36 premises of Bengaluru-based pharmaceutical company Micro Labs Ltd, that manufactures the Dolo-650 tablet. During raids, the Central Board of Direct Taxes (CBDT) stumbled upon documents suggesting “unethical practices” by the firm. The subsequent investigation into company’s matter opened a can of worms on the pharmaceutical industry’s open secret.Also Read - Dolo 650 Row: Company Says 'Impossible' on Allegations of Rs 1000 Crore Marketing Budget
CBDT accused the Dolo-650 makers of indulging in “unethical practices” and distributing freebies worth about Rs 1,000 crore to doctors and medical professionals in exchange for promoting products made by the pharmaceutical group. Also Read - Income Tax Return: CBDT Issues Fresh Guidelines to Streamline Faceless Assessment For Taxpayers
On Thursday, while hearing a PIL seeking directions to make pharmaceutical companies liable for giving freebies to doctors as an incentive to prescribe their drugs, the Supreme Court described CBDT’s allegation against Dolo makers as a “serious issue”. Also Read - 'Serious Issue': SC On Dolo-650 Makers Spending Rs 1000 Crore As Freebies On Docs For Prescribing Tablet
A bench of Justices DY Chandrachud and AS Bopanna was told by senior advocate Sanjay Parikh and advocate Aparna Bhat, appearing for petitioner ‘Federation of Medical and Sales Representatives Association of India’, that the market price of any tablet up to 500 mg is regulated under price control mechanism of the government but the price of the drug above 500 mg can be fixed by the Pharma company concerned.
Parikh alleged that to ensure a higher profit margin, the company manufacturing Dolo tablets distributed freebies to doctors to prescribe the 650 mg drug. The advocate also said he would like to bring more such facts to the knowledge of the court after a response is filed by the Centre.
“What you are saying is music to my ears. This is exactly the drug that I had when I had COVID recently. This is a serious issue and we will look into it,” Justice Chandrachud said.
The bench then asked Additional Solicitor General KM Nataraj to file his response to the plea by the petitioner in ten days and gave one week time thereafter to the latter to file his rejoinder.
It listed the matter for further hearing on September 29.
According to Dr Bipin Jibhkate, Consultant critical care medicine, and ICU director Wockhardt Hospitals, Mira Road, freebies are given to boost the sales of the medicine of a certain company and doctors should avoid doing so as it is not ethical.
The section 6.8 of the Indian Medical Council (Professional Conduct. Etiquette and Ethics) Regulations, 2002 states that medical practitioners shall not receive any gift from any pharmaceutical or allied health care industry and their salespeople or representatives including travel facilities, hospitality, cash or monetary grants, and funds for medical research.
“Expenses incurred by pharmaceutical industries for the distribution of freebies to medical practitioners are not eligible for deduction. It is wrong on the doctor’s part to accept any freebies from anyone,” Dr Jibhkate said, adding, that those doctors accepting freebies such as gifts and foreign jaunts from pharmaceutical companies will now be punished, according to the value of the gifts received.
Explaining further, the doctors noted that accepting freebies is punishable, and pharmaceutical companies cannot be granted the tax benefit by giving such freebies.
“So, lawfully the freebies should not be accepted. In case, the value of the freebies is around Rs 10,000 and Rs 50,000 the penalty will be up to six months, and for those priced Rs 50,000 to Rs 1 lakh, the doctors who accept them, their names would remain struck off the register for a year. Freebie of over a1 lakh, the penalty would be for more than a year,” he added.
Besides, the practice is also a crime under the Prevention of Corruption Act, 1988, for government doctors. Any agreement between pharmaceutical companies and medical practitioners in gifting freebies for boosting sales of prescription drugs violates Section 23 of the Contract Act, 1872.
In February 2022, the Supreme Court expressed concern at freebies – including gold coins, fridges, LCD TVs, and funding international trips for vacations -offered by pharmaceutical companies to “manipulate” doctors’ prescriptions and to recommend drugs produced by the firms and held that companies are not entitled to claim tax exemption on the expenditure incurred in giving incentives, and rather it would be considered as part of their income.
A bench of Justices U.U. Lalit and S Ravindra Bhat said: “It is a matter of great public importance and concern, when it is demonstrated that a doctor’s prescription can be manipulated, and driven by the motive to avail the freebies offered to them by pharmaceutical companies, ranging from gifts such as gold coins, fridges and LCD TVs to funding international trips for vacations or to attend medical conferences.”
Justice Bhat, who authored the judgment on behalf of the bench, said freebies are technically not ‘free’ – the cost of supplying such freebies is usually factored into the drug, driving prices up, thus creating a perpetual publicly injurious cycle.
The top court upheld a 2012 circular issued by the Central Board of Direct Taxes clarifying such expenses incurred by pharmaceutical and allied health sector industries for distribution of incentives to medical practitioners are ineligible for the benefit of Section 37(1) pertaining to business deduction.
The bench said: “Pharmaceutical companies’ gifting freebies to doctors, etc. is clearly ‘prohibited by law’, and not allowed to be claimed as a deduction under Section 37(1). Doing so would wholly undermine public policy. The well-established principle of interpretation of taxing statutes – that they need to be interpreted strictly – cannot sustain when it results in an absurdity contrary to the intentions of the Parliament.”
For breaking news and live news updates, like us on Facebook or follow us on Twitter and Instagram. Read more on Latest EXPLAINERS News on India.com.
Published Date: August 19, 2022 4:52 PM IST
Updated Date: August 19, 2022 4:55 PM IST
Copyright © 2022. India Dot Com Private Limited. All Rights Reserved.