Court notices, medical practitioners have a quasi-fiduciary relationship with their patients. A doctor’s prescription is considered final, even if cost of such medication is unaffordable or barely within economic reach – such is level of trust reposed. Therefore, it is a matter of great public importance and concern, when it is demonstrated, a doctor’s prescription can be manipulated, and driven by motive to avail ‘freebies’ offered by pharmaceutical companies, ranging from gifts such as gold coins, fridges and LCD TVs to funding vacations or trips for medical conferences. These ‘freebies’ are technically not ‘free’ – cost of supplying such ‘freebies’ is usually factored into a drug, driving prices up, thus creating a perpetual publicly injurious cycle.

An agreement between pharmaceutical companies and medical practitioners in gifting ‘freebies’ for boosting sales of prescription drugs is violative of Section 23 of The Contract Act, 1872 [Commissioner of Income-Tax v. Kap Scan and Diagnostic Centre P. Ltd., (2012) 344 ITR 476 (P&H HC)]; is clearly ‘prohibited by law’; and not allowed to be claimed as a ‘deduction’ under Section 37(1) of The Income Tax Act, 1961. Doing so would wholly undermine ‘public policy’.

Hon’ble Justice S. Ravindra Bhat, M/s. Apex Laboratories Pvt. Ltd. v. Deputy Commissioner of Income Tax, Large Tax Payer Unit – II, [Special Leave Petition (Civil) No. 23207 of 2019].