Drug pricing – the saga continues

There are murmurs of another task force being set up in New Delhi to look into India’s drug pricing policy.

This is the third government in the last decade that will be attempting to give India a progressive and, I hasten to add, “inclusive”, drug pricing policy. It’s predecessors – the NDA government and the UPA (Part One) – failed.

I am still figuring out whether they they wanted it that badly, in the first place.  After all, increasingly it is business that drives policy-making. And the pharmaceutical industry seemed quite happy with the status quo – 74 dated drugs under price control.  Perhaps ‘happy’ is not quite the word – no industry wants government to dictate pricing.  But the industry has learned to live with it pretty much like one who has for years suffered a nagging, suspicious spouse.  You lie, you cheat, you ignore. When there’s no option, you fall in line. 

Now, imagine being told you have to get married all over again to someone far worse. Pretty much this is what the Supreme Court said some years ago when it directed the government to frame a pricing policy that would take into account all essential drugs.  Now the broadest definition of that would mean a list of 360-plus drugs.  So the industry swung into action – lobbying so hard that the PMO was moved to take the issue away from the ministry of chemicals and fertilizers and vest it with a group of ministers (GoM) headed by agriculture minister Sharad Pawar. I have yet to see a report. (I haven’t checked the BCCI press releases yet!)

Now the court was responding to a NDA government appeal against a writ petition filed in the Karnataka High Court. The petitioner had objected to a new pricing policy that the NDA attempted to push through in 2002.  He won, following which the NDA government appealed. Rumour has it that the petition was filed with the “outside” support of a few companies who would have been hit by this new policy.

We do need a new way to keep prices of drugs affordable.  The current mechanism – which grants a margin over costs – is rigid, inflexible, and is known to be counterproductive. When prices are cut beyond a point, companies simply stop manufacturing. And where there is a vaccuum, there is scope for counterfeits, and spurious drugs.  At the other end of the spectrum, however hard the valiant NPPA tries to clamp down, companies find ingenious ways of side-stepping control like by adding new ingredients and jacking up prices. The result is also a plethora of drug combinations. I often wonder how doctors can tell the difference – assuming that they can. Then, there is a bunch of imported drugs that sell at the price that they think “the market can bear”.  I must add, their makers define the market rather narrowly.  But many have stayed out of the purview of price control.

So that brings us to what UPA -II will do. The Economic Survey released on July 2 has recommended limited drug price control to “essential drugs in which there are less than five producers.”  But there is no word on changing the way prices are controlled or kept at reasonable levels, yet.

If the government wants there are a number of international models that it can follow. It can tailor these to meet Indian requirements or come up with something innovative.  This should also go hand in hand with more government procurement of medicines such as through the Jan Aushadhi scheme – pharmacies dispensing generics – started by the chemicals ministry.

It all depends on what the government wants. Also, what the industry is willing to accept.


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