India & drug pricing : Now, list of essential meds questioned

In continuation of the challenges arising from the roll-out of India’s new drug pricing policy, a question has now been raised on the current National List of Essential Medicines (NLEM) that specifies the universe of drugs under price control.

“Some may argue that the NLEM is not appropriately designed,” said Dilsher Singh Kalha, Secretary, Department of Pharmaceuticals (DoP) which administers the policy, addressing CEOs and senior executives at the annual general meeting of industry body OPPI three weeks ago.

Let me count the reasons

In his speech and later while talking to the media on the sidelines of the event, Kalha spoke of why the NLEM might need amending.

Under the new policy, prices are fixed as a simple average of the prices of the top three brands by market share of a specified drug. For almost 100 drugs in the NLEM there is “no evidence of market price and share of the molecule,” he said.  The numbers are not captured in the database of IMS Health that the pricing authority relies on while fixing prices. “Some of these are hospital supplies,” he said adding that one option would be to amend the NLEM to leave out drugs that are not available in retail. (See a related post from Apothecurry last year arguing that data would be prove to be a stumbling block).

Two, 55 drugs have “better alternatives” available in the market which can be reflected in the NLEM only after amendment, he said.  “I have written to the ministry of health (MoH) that I would be guided by them (on this matter),” he said. The MoH supervises the preparation of the NLEM.

The NLEM 2011, which is the most recent one, comprises 348 drugs.

Easier said than done

This is significant.  The NLEM is not a document that can be easily amended. Preparing and updating the NLEM is a long, drawn-out process.  The NLEM 2011 took two years and the participation of over 87 experts from leading government hospitals, the Indian Pharmacopeia Commission, the World Health Organisation and so on. It was finalised after several rounds of deliberations, workshops etc.

True, the NLEM 2011 clearly refers to itself as a “dynamic document” that is revised on a regular basis. Prior to this it was revised in 2003 and before that in 1996.  That’s once every seven to eight years.

The question is : what is to happen in the interim?

Then, there have to be sound reasons to amend the NLEM.  Prima facie, the lack of availability of data does not seem to be a good enough one.  After all, keeping prices in check is just one use for the NLEM.

Another use is to promote the rational use of medicines and as a reference document for correct dosage forms and strengths for prescribing.  For instance, as the 2011 document points out, preference is to be given to single-drug formulations over combinations where appropriate. Also, there is an emphasis on cost-effectiveness.  “Careful selection of a limited range of essential medicines results in higher quality of care, better management of medicines, and more cost-effective use of health resources,” it says.

The use of the NLEM is “expected to improve prescribing practices as well as health outcomes,” the document says.  So clearly, there is a “prescriptive” element to the NLEM.

To amend it to reflect the molecules with more currency in the market it would be necessary to establish that these alternatives are indeed better from a scientific/clinical/cost point of view and not popular because the industry has promoted these for their own benefit in favour of others.

If the latter, then amending the NLEM to reflect that would be like the tail wagging the dog. Would the health ministry agree to that?

Between two stools

The Indian drug industry is currently in a period of adjustment to the new drug pricing policy that came into force earlier this year.  There have been hurdles such as a stand-off with chemists on trade margins, and too short a time allotted by the government to change packaging to reflect the new prices.  There has also been an impact on sales with industry growth slipping below the 10 per cent mark in the year to September – the first time in 2013, according to IMS Health.

The first two issues are gradually on their way to being resolved.  And industry is no doubt hoping that a reduction in prices will be compensated by an increase in volumes over time. That should give the government some breathing room from those who are both supplicating and sueing over the policy.

But it is now faced with what appears to be a more intractable problem. While the DoP has acknowledged it, it seems it expects the MoH to solve it. Will the MoH do so or will it hit the ball back into the DoP’s court?

This is an issue that the current secretary, DoP need not worry about for much longer. As Kalha pointed out himself he is due to retire at the end of the month. Unfortunately for his successor, bad news keeps.

Pic sourced from klynslis’s photostream on Flickr.


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