Supreme Court tightens its grip on the conspiracy of pharmaceutical companies and doctors.
This time proposed in the budget that will give pharmaceutical companies gift freebies will be given to doctors to add to the doctor’s income. Still, its expenditure will not be recognized under income tax to the companies.
As per the sub-rule of the Indian Medical Council Regulation, 2002, they were giving freebies of pharma companies to doctors is punishable. The Central Board of Direct Taxes had said in the judgment that it is illegal for companies to give gifts to medical practitioners. Therefore, can not add expenditure on this head cannot be added to the income and business promotion of the companies. Because it is spent on illegal work, cannot illegal spending be exempted from income tax benefits?
This decision of the Supreme Court was challenged by the pharmaceutical companies. Apex Laboratory Company was arguing in the Hon’ble High Court that taking gifts to doctors is prohibited according to the rules. Still, companies can give an exemption of this expenditure should be valid under section 37(1) of Income Tax as Income Tax Act.
The Hon’ble High Court bench of Justices U U Lalit and S Ravindra Bhatt not only vehemently dismissed the Apex Laboratory case but also made some critical observations that shook the medical profession and the sector:
1. The Court observed, That This Shows prescription of the doctors can also be tampered with.
2. Pharmaceutical companies take advantage of free facilities to the doctors and get their medicines prescribed to the patients as a consultation.
3. With this contention, the petition of M/s Apex Laboratories Pvt Ltd against the decision of the Madras High Court was dismissed.
4. The High Court had refused to interfere with the decision of the Income Tax authorities against the claim of the benefit of business expenditure on the amount spent on gifts to doctors for creating awareness about ‘Ginkovit.’
5. These gifts are not technically ‘free,’ the bench said. The companies charge their cost in the price of the medicine, and in the end, the cost of these gifts is paid by the patient.
6. The prescribing of such drugs affects ‘effective generic drugs.
7. Justice Bhat observed that doctors and pharmaceutical companies complement each other in the medical profession. Therefore, they should adopt a comprehensive approach to regulate their conduct, keeping modern legal systems and rules.
8. The bench said doctors have a semi-trusted relationship with the patients. The patient considers the doctor’s prescription as the last word, even if he cannot bear the cost. Such is the level of trust in doctors. Due to this practice, this game of forcing the patient to buy medicine at a high price is illegal.
9. The apex court said that the supply of freebies (conference fee, gold coin, laptop, fridge, LCD TV, travel expenses, etc.) is not free. They are added to the cost of medicines, and this increases the price of the drug.
Giving a freebie is absolutely against public policy. It is explicitly prohibited by law. The above decision issued by the Hon’ble High Court on Tuesday has given a clear message to the companies working in medical practice and medical field to be socially friendly and not to earn undue profit.