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Putin’s Proposed Reform Worries Drug Producers
Prime Minister Vladimir Putin has promised to ban pharmaceutical makers from sending representatives to doctors’ offices, a practice they spend up to 50 percent of their revenue on and one of the last open channels for companies to promote prescription drugs.
“We should get rid of these so-called pharmaceuticals representatives working in medical institutions,” Putin said Oct. 9 at a meeting on the development of the drugs industry. In the past 10 years, Russia has seen the rise of “a clearly abnormal type of interaction” between medicine producers, particularly foreign companies, and parts of the medical community, he said.
It is impermissible to have “pharmaceutical holdings paying specialists to prescribe patients substances produced by these companies,” Putin said. “Producers sponsor corporate events, various seminars, including some with trips to warm beaches. Those are the sorts of events that thousands of Russia’s medical specialists are being caught up in.”
Pharmaceuticals or medical representatives are consultants who work for the producers and discuss the companies’ products with doctors, but they are not directly involved in sales, said Alexander Kuzin, chief executive of DSM Group, a marketing agency.
Visits by representatives are among the main ways that medicines are promoted here, especially those that require prescriptions, said David Melik-Guseinov, research director at PharmExpert. Under the law, prescription drugs can only be advertised in special publications, which not all doctors have access to. If pharmaceutical companies are banned from sending out representatives and organizing conferences, then it is unclear how new medicines will be introduced to the market, he said.
Drug makers are now spending between 10 percent and 15 percent of their revenue on representatives, roughly the same as their production costs, an executive at a Russian pharmaceuticals company said. For foreign companies not producing drugs in Russia, the figure can reach 40 percent to 50 percent, Melik-Guseinov said.
“Statements about bans, to put it mildly, are untimely,” said an executive at an international drug producer’s office in Russia.
Officials have already toughened the procedures for registering prices on vital medicines, which account for about 30 percent of pharmacies’ stock, and prosecutors have been investigating their pricing. Foreign companies have also had to deal with the ruble devaluation.
PharmExpert expects a minor fall in medicine use, both in ruble terms and in units — the first declines in the past 20 years.
The pharmaceuticals companies say their representatives are not doing anything unethical or illegal.
“Promoting prescription drugs is essential to providing medical workers with knowledge about the latest treatment methods and the constantly changing information about diseases, treatments and medicines,” said Fabio Landazabal, the head of GlaxoSmithKline in Russia. They also provide a reverse link for doctors to communicate with producers.
GlaxoSmithKline does not allow representatives to give doctors expensive presents or money, Landazabal said. They are also not allowed to hold cultural, entertainment or sports events.
Representatives from transnational companies are essentially working as sources of information; they explain when and to whom it is best to prescribe which medicine, said a representative from a European pharmaceuticals producer, who agreed to speak on condition of anonymity.
“We can give a doctor a bouquet and candy on Women’s Day, but we don’t offer money or a percentage of the sales, just like staff from the majority of other innovative producers,” she said. “I’ve heard of companies whose representatives offer doctors money, but hardly every doctor agrees to that.”
To evaluate the effectiveness of their work with doctors, she said, the company analyzes sales of the medicines they are promoting at pharmacies located on site. The representatives recommend which pharmacies to send patients to, so that the medicine is guaranteed to be available.
Kuzin, of DSM Group, agreed that there were only isolated cases where drug makers pay doctors. It would be easy to uncover a doctor’s financial interest since identifying information is on each prescription, he said.
After Putin’s statement, pharmaceutical companies were reluctant to discuss their representatives. Questions about their number and duties went unanswered by major corporations such as Sanofi-Aventis, Nycomed, Bayer-Schering Pharma and Novartis.
Each of the 20 largest pharmaceutical makers working in Russia has about 200 to 250 representatives, while the rest have fewer, the executive from the foreign company said. At the very least, there are some 7,000 to 8,000 such representatives.
According to HeadHunter, pharmaceuticals firms were offering an average monthly salary of $1,268 for representatives, plus social benefits. Additionally, 45 percent of firms are willing to provide a company car and 35 percent include a notebook computer.
Ten percent are willing to compensate employees for their promotion expenses. The vacancy notices do not clarify what those expenses might be.
The average monthly cost for a company to employ a representative is about 160,000 rubles ($5,450), including bonuses, auto expenses, promotional materials and unified social tax payments, said Melik-Guseinov, of PharmExpert.
Pharmaceuticals representatives rank second in Moscow as the most sought-after professionals, behind only insurance agents, said Mikhail Zhukov, chief of the HeadHunter group. There are 1.7 resumes for every vacancy in the field, whereas the figure for economists is 21, he said.