To avoid tax documentation: Doctors demand cash payments from pharma Cos

KARACHI: Doctors have refused to receive their monthly ‘cut’ from the pharmaceutical companies through the banking channels, as the tax authorities have initiated a campaign to bring actual earnings of doctors in the documented regime, market sources said.

“Local pharmaceutical manufacturers are making monthly payments to certain big names, and now these payments would be made in cash as per the demand of the doctors,” a senior marketing manager of local manufacturer said. "Payments to doctors are directly proportionate to the sales under their prescriptions and may run into millions in some cases."

The tax department is obtaining information about doctors, medical practitioners and medical consultants from Pakistan Medical Association, hospitals and pharmaceutical companies to bring their actual earnings in the documented regime. Pharmaceutical companies spend millions of rupees in cash and kind on doctors to encourage doctors to prescribe pricey brand-name drugs and devices pushed by sales representatives.

An official at a leading pharmaceutical manufacturer said that no official letter had been received from FBR so far, but sales and marketing departments of some companies had been contacted by tax officials seeking details of money and gifts being dished out to doctors. “Off course the pharmaceutical companies are reluctant to provide these details as this would impact pout relationship with doctors and they will stop prescribing our products,” the official said. The official said the ‘cut’ of doctors made a significant portion of the companies’ marketing budget, which increased the medicine prices. “All these expenses are accounted for when a company approached the drug regulatory company for price fixation of the drugs,” the official said. A notification was issued by the Federal Board of Revenue (FBR) last month addressing the commissioner inland revenue in Karachi showed a list of 30 private and public hospitals operating in the city to collect data of all health practitioners working in these facilities so their provided details would be cross-matched with the claims they made while filing withholding statements. “Wide differences in the income/revenues so determined and declarations by the doctors would lead to issuance of notices,” a tax official said.