Pharmaceutical body clears Micro Labs of charges of spending Rs 1,000 cr on gifts

The Indian Pharmaceutical Alliance (IPA) on Saturday cleared Micro Labs, makers of the paracetamol tablet Dolo-650, of the charge of offering gifts worth Rs 1,000 crore to doctors for prescribing the brand.

The IPA, whose members account for 60% of India’s domestic pharmaceutical market and around 80% of India’s exports, said in a report submitted to the National Pharmaceutical Pricing Authority (NPPA) that ” Given the interaction with the company’s management and the detailed response, it is clear that spending Rs 1,000 crore on a single Dolo-650 brand on freebies in a year is not correct.

The national price regulator had asked the IPA to investigate the matter under the Uniform Code of Pharmaceutical Marketing Practices (UCPMP). A three-member internal committee looked into the matter.

The investigative report that Business Standard has seen states that “the company’s total revenue is Rs 4,500 crore, of which approximately Rs 2,500 crore is domestic sales. Aggregate spend on domestic sales over the past four years (year on year across all activities) averages Rs 200 crore.

Hence, the fact that Micro Labs incurred expenditure of Rs 1,000 crore to promote Dolo-650 is misrepresented.

Sheetal Sapale, president-marketing of AWACS, a research and analytics company, told Business Standard in July that Dolo contributed about 7% of the company’s revenue in the pre-Covid era. . This contribution has increased to about 14 percent now.

“In the paracetamol market, Dolo had a 15% market share in the pre-Covid-19 era; this figure has now risen to 24%. It overtook Calpol, the market share which has remained at 20-22% over the past five years,” she explained.

Another claim against Micro Labs was that the 650mg dose is prescribed irrationally.

In a Supreme Court hearing, the Federation of Medical and Commercial Representatives Association of India (FMRAI) alleged that while the price of 500mg paracetamol is price controlled, the higher doses are out of price control. FMRAI’s lawyer argued in the Supreme Court that in order to boost profits, Micro labs were handing out gifts to doctors to prescribe a 650mg dose, which he called an “irrational combination of doses”. , according to a Livelaw report.

The IPA ethics committee investigation report however stated that “its strength has been endorsed in all treatment protocols issued by the Government of India and various state governments including the Indian Research Council (ICMR) during the pandemic. Also, it is a worldwide recommended dose and it is available in many countries such as the United States and European countries. The company maintains that the 650mg dose is accepted as an appropriate dosing regimen for mild to moderate fever.

Additionally, Dolo-650mg is covered by the National Essential Medicines List and its consumer prices have been controlled by the NPPA since 2016, the report added. “The price of Paracetamol 650 was Rs 1.84 per pill in 2021,” he noted.

Speaking to Business Standard, Micro Labs Executive Vice President Jayaraj Govindaraju had strongly refuted the accusations of spending Rs 1,000 crore to hand out gifts to clinicians to promote Dolo. “We spent Rs 1,000 crore on marketing spend across our 14 divisions over several years, not to market Dolo during the pandemic,” Govindaraju said.

According to the company, the amount was spent over 5 years or more and included gifts of low-value items such as tabletop souvenirs, brand reminders via diaries, pens, calendars, and more.

In response to the IPA survey, Micro Labs had shared five-year spend details for all activities. The company had committed a total of Rs 186 crore on total sales and marketing in the 2020-2.1 financial year of which Rs 65 crore was spent on product management team expenses, Rs 67 crore on scientific and academic services and Rs 53 crore on sales and promotional activities. In 2019-20, the company spent Rs 67 crore on sales and promotion activities.

The total expenditure for Dolo 650 is Rs 115.2 crore in 2021-22. It was Rs 71.2 crore in 2020-21. Spending was primarily on visual aids, printed promotional materials and literature, brand recalls, physician samples, and combined scientific and academic services.

The IPA noted in its report, however, that it has neither the mandate nor the resources to investigate the issue of tax evasion that the CBDT is investigating.

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