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Are Medical Sales Representatives behind Soaring Drug Prices?
Medical sales representatives are to be barred from selling drugs
 NO. 9 MARCH 2, 2017
 
(LI SHIGONG)

Last year, medical sales representatives came under the spotlight after a TV channel reported that doctors in six big hospitals in Shanghai and Hunan Province had received kickbacks to recommend the drugs their representatives were selling. Subsequently, on February 9, the General Office of the State Council, China's cabinet, issued a document barring medical sales representatives from selling drugs and other medical paraphernalia. They can engage only in medical knowledge dissemination and technical consultations. There will be a record of those who defy the directive.

The measure means that medical sales representatives—that's a group of nearly 3 million people—may have to switch to other work.

Medical sales representatives first appeared in China in joint-venture pharmaceutical companies in the 1980s, lobbying hospitals to buy their companies' products. Some hospital officials and doctors were found to have taken commissions to recommend drugs manufactured or marketed by these companies, and the practice was perceived as contributing to the rise in drug prices.

In recent years, growing disclosure on the corrupt practice triggered public anger, and the government finally issued a document to regulate the sector. However, some people think medical sales representatives are not the kingpins who push up drug prices in hospitals. They allege there are deep-rooted reasons, particularly the current system of subsidizing hospitals with the sale of medicine.

A timely regulation

Zhang Xiliu (Legal Daily): Medical sales representatives are supposed to be personnel who have received special education in medicine and pharmacology, and have clinical theory knowledge as well as practical experience. They engage in medical promotion after being trained in marketing and promotion techniques. Their job is to recommend medicines to doctors and at the same time observe the effects of the medicines and follow up on adverse drug reactions, instead of directly selling medicine.

However, as there are too many pharmaceutical companies in China, there has been increasingly fierce competition in the market. The lack of an industrial code of conduct and ineffective regulation have gradually turned medical sales representatives into unscrupulous sellers of expensive medicines. These representatives are the "links" in the circulation of medicine that raise drug prices. Actually, everything will operate smoothly without them, so why not remove them?

Even if medical sales representatives are allowed to continue, there must be strict regulations. State and local authorities especially should carry on medical reform with a view to making the most of basic and cheap medicines in clinical treatment, so that expensive medicines and corruption related to medical sales representatives will lose the ground they thrive on. This measure will help bring down inflated drug prices and in turn push forward medical reform.

Li Zhongqing (Nanjing Daily): If medical sales representatives bring convenience and benefits to patients, they'll be favored by the public. But the reality is that they are the key factor pushing up medicine prices. Now the state has redefined their work and banned them from getting involved in medicine sales. This is the legal bottom line. A reshuffle of this sector is expected to come, but we need to wait and see whether it will curb exorbitant prices.

More to be done

Zhao Hongbin (www.jiaodong.net): To put it bluntly, the so-called medical sales representatives are just salespersons who promote their medicines to doctors and hospitals. If they are allowed to promote only pharmaceutical knowledge and technical consultations, they are surely going to lose their jobs as most of them do not have the required academic proficiency.

In China, the mere mention of these representatives engenders public loathing as people blame them for exorbitant medicine prices and excessive prescriptions. Indeed, the more expensive the medicines, the bigger the profit for these representatives.

However, is it because of these representatives that doctors begin to prescribe excessively? It's obviously not so simple. Like other commodities, medicine prices are also decided by supply. Medical sales representatives exist because there is fierce competition among pharmaceutical companies. As long as these companies need to compete for market share, it will be hard to remove these salespersons. Maybe their operation process will become more complex. It's not easy to effectively regulate 3 million people, particularly when there are struggles over interests and economic benefits involved.

When ordinary companies want to push their commodities into supermarkets, they need salespersons and need to pay entry fees. It's almost the same with pharmaceutical companies that want to sell their medicines through hospitals. If commodity salespersons are removed, commodity prices will not necessarily drop. Commodity prices are high not just because salespersons draw their commission from the transactions.

Therefore, the key is to increase the supply of medicine and crack down on commercial bribery. Patients should be given the right to buy medicine outside hospitals. It will also help to cut prices if qualified entities are allowed to sell medicine online as this will reduce intermediary links and boost transparency. These measures might be more efficient than administrative interference.

Deng Haijian (Guangming Daily): Medical sales representatives are a group with certain professional medical knowledge. They have long been working in a gray area, promoting the sale of medicine. Standardizing their business will make it possible for them to play a positive role, instead of being blamed for exorbitant medicine prices.

Inflated prices stem from low productivity in the medical industry, many links in the drug circulation process, and most importantly, the mechanism of raising medicine prices to make up the shortfall in hospital funds. Regulating medical sales representatives will help to curb prices but that alone will not solve the fundamental problem.

Zhu Changjun (Yangcheng Evening News): For a long time, medical sales representatives were envied because they were making big money. But after their negative impact on China's medicine pricing began to be increasingly exposed to the public and the state imposed stricter regulations on the sector, this business fell into decline. It is gradually becoming a high-risk and infamous occupation. More and more representatives have already left or are planning to leave this sector.

However, this does not mean that this occupation will disappear from the country. China listed medical sales representation as an occupation in 2005. In most countries, this is a common job, but the duty of the representatives is not to sell medicines but to offer professional consultation services to medical practitioners, including doctors. The government means to transform the representatives' function, instead of scrapping the profession.

With more than 5,000 pharmaceutical companies, China is the biggest pharmaceutical ingredient producer and exporter in the world, but most Chinese companies produce the same medicines. As a result, in order to compete for the market, companies have to depend on their representatives' lobbying in many cases and even resort to bribery.

For any commodity, too many links in the circulation process plus low transparency will inevitably push prices up. The system of subsidizing hospitals through drug sales means, apart from the normal market premium, patients are also paying for the hospital staff's salaries. In this context, can you expect low drug prices? Medical sales representatives are just a part of the reason for high medicine prices, they are not the key reason.

Medicine pricing is not yet so complex that we can't resolve it. However, neither is the situation so simple that removing the representatives will automatically reduce medicine prices. Standardization is necessary for this sector but not the panacea for exorbitant drug prices. If the final aim is to cut drug prices, there are many other deep-rooted problems which need to be tackled through efficient and extensive reforms first.

Copyedited by Sudeshna Sarkar

Comments to yanwei@bjreview.com

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