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. Organizational ethics are best demonstrated through acts of fairness, compassion, integrity, honor, and responsibility.
Industry
The pharmaceutical industry is a highly competitive business and its success is dependent on the sales and marketing of each drug. 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 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. 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.
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.
"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.
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.