By Ramesh Kanitkar
The draft National Pharmaceutical Pricing Policy floated in October by the Department of Pharmaceuticals inviting feedback from stakeholders charts out significant changes, but as in most policies that seek to alter decades of established framework, rising voices of dissent have invariably followed.
Two important draft introductions are being opposed by industry and non-governmental organisations alike – first, the clamping of the entire list of essential medicines, numbering a whopping 348, under price control as against the present 74 and second, pricing of drugs based on the average of the top three brands in each category.
These may be genuine concerns, but policy makers cannot be faulted squarely for proposing the new legislations.
Ironically, at some point or the other, the same NGOs that have pointed at the shortcomings in the new policy draft had previously called for a tighter grip on prices of medicines in India, given the appalling healthcare conditions in India and that medicines were not affordable to large sections of the population.
Those pleas were not left unheard. When Ram Vilas Paswan held the charge as minister for chemicals and fertilisers a few years ago, a possibility of all essential medicines being put under the span of price control came closer to reality. The slow process of bureaucracy and the combative industry associations scuttled that move arguing it was retrograde and will derail growth of the health industry.
Instead, what we had in the name of affordable medicines is the Jan Aushadhi scheme. Launched with hopes of bridging the need gap for medicines, the scheme that endeavoured to provide generic drugs in select towns and cities is at best breathing hard to survive now. It remains an unfulfilled task for the government to provide affordable medicines and universal healthcare to its teeming population.
Read closely, the NGOs have a fair point in opposing another issue. In objecting to the proposal to fix a price on the basis of the average of the three leading brands in a particular therapy area, there is sufficient reason to believe the proposal will not be an effective mechanism in curbing the runaway medicine prices. Effectively, what it will translate into is that those who calibrate their brand prices to the lower end of the segment may also be encouraged to tag their product closer to the leader’s price, making drugs even more unaffordable.
The NGOs are right in arguing that this amounts to top brands-based pricing rather than market-based pricing. In its enthusiasm to probably liberate the industry from the old rule of cost-based pricing of medicines, the government may have taken a bold but hasty decision.
While it looks practically difficult to calculate the average price of all the brands and then fix a ceiling as demanded by the NGOs, it will also scare away larger companies which have truly invested in building brands and their lifecycle management.
Knowing that wrong pricing strategies can be self-defeating, a few in the industry have learnt their lessons the hard way. Companies that have targeted smaller towns and cities are now striving to bring down the prices of medicines for those particular markets through a dual pricing approach. There are instances of multinational companies aligning with local partners for a deeper reach while at the same time keeping distribution and marketing costs within a limit.
What may be needed from the government’s side, besides being judicious to frame a reasonable pricing policy, are steps in creating a robust infrastructure.
For example, vaccination is a hugely unexplored area in India and there is a growing trend of large organisations investing in vaccines needed in emerging markets.
Organisations involved in vaccine projects encounter tremendous hurdles in maintaining quality and safety protocols due to the lack of a cold chain network in India.
In the best interest of the patients –who are under-served in India– it works well if the government, industry and patient groups devise a strategy that yield tangible results. At present, most policy initiatives are lost in endless debates, those that are mostly in the interest of protecting the industry and less pointed at patient outcomes.
It is a fact that though the industry has for decades opposed price controls on 74 drugs, the players have also made decent profits to sustain and shape up into large global corporations.
There is a role to be played by trade too — with the margins it makes and the relative absence of competition compared with developed countries, it can invest in quality infrastructure to ensure safe drugs till the end of the delivery cycle.
On its part, given the enormous power it wields, the government can be more proactive than unidirectional in its policy making process. INAV (Copyright Interpretative News and Views)