Ensure affordable medicines

The Union government’s plans to overhaul the drug policy and ease regulatory framework may well be prescription of trouble for the common man.

The change is going to impact access to affordable medicines, especially for the economically weaker sections and the lower income groups.

The existing system of price control has been watered down, obviously due to pressure and lobbying from the pharmaceutical industry.

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Worrying signs

• Dismantling of controls on essential drugs
• Winding up of National Pharmaceutical Pricing Authority
• Only less than 20% of drugs under govt control
• Rest can be priced higher by 10% every year
• Around 7 per cent of households impoverished by health expenses
• Govt study says about 23.66% rural households faced catastrophic expenditures
• Percentage expenditure of GDP on healthcare remains at a paltry 1.1%

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According to public health experts, diluting price controls on essential medicines would mean ignoring high out-of-pocket spending on medicines that would impact the aam admi.

It was stated that delinking essential medicines from price regulation would result in a surge in prices of commonly used drugs.

In rural India, it is estimated that around 70 per cent of out-of-pocket expenses is on medicines, whereas it is around 60 per cent in urban areas.

It needs to be reiterated that essential drugs have to be made available to the poorer sections at prices they can afford.

The move towards dismantling price controls on essential medicines and winding up of the National Pharmaceutical Pricing Authority (NPPA) are obviously being done at the behest of industry lobbies under the pretext of removing regulatory controls or the oft-used phrase to aid ‘ease of doing business’ in India.

Currently prices of over 400 essential medicines are capped by the government, whereas all other medicine companies are allowed to hike prices by only 10 per cent annually.

Even with this control, most pharmaceutical companies make huge profits and not just the multinationals in this sector. Every year the profitability of the companies goes up as the pharma sector is considered quite lucrative. Moreover, in a country with a huge population of a billion plus and living standards quite unsatisfactory, there is a great demand for medicines and this is expected to increase in the coming years.
Though a section feels that stringent regulation is hampering the growth of the country’s drug manufacturing industry, which incidentally is one of the largest export revenue churners for the government, this is not the case.

Except for control on a few drugs, which may not exceed around 20 per cent or so, the pharma sector has no rigid regulation. It is because of this that this industry is currently pegged at over Rs 1 lakh crore.

Meanwhile, the government recently announced slashing of prices of 43 essential drugs by up to 35 per cent, a move that is expected to benefit patients suffering from several critical diseases.

The NPPA reduced prices in drugs that are used in treatment of diseases such as diabetes, cancer, asthma, cardiovascular diseases, mental disorders and kidney failure.

However, medicine brands with an MRP lower than the ceiling cannot be upwardly revised viz their prices. In fact, since March this year, the NPPA fixed prices of 540 essential medicines resulting in a saving of around Rs 3,400 crore, according to government sources.

Given the fact that the demand for medicines is increasing steadily and that profitability is not expected to be affected, price control needs to be regulated. The weaker sections should not be deprived of drugs needed for their treatment, must always remain the goal.

A recent study by Brokings India revealed that the percentage of persons impoverished by health expenses (during the period 2004 and 2014) remained unchanged at seven per cent.

This meant a huge increase in the number of households (from about 77 million in 2004 to over 88 million in 2014 due to the rise in population).

That’s like a population larger than Germany being pushed into poverty because of health expenses. Even Union Health Minister Nadda recently informed Parliament that as per NSSO Health & Morbidity Survey Data Analysis in 2014, “about 23.66 per cent rural households faced catastrophic expenditures.”

One may mention here another development – the government’s commitment to set up a single window approval system that will clear in 30 days what four different committees took three to four years viz research.

This is a major boost to innovation in medical research and may help prop up India’s sagging reputation in the area of ease of doing business.

The NITI Aayog has written to the Health Ministry to restructure the approval process for innovation in medical research as part of the government’s move to make the country a hub for manufacturing.

Can then it be expected that medical innovation may boost up manufacturing and bring down costs? While time will only tell, there is a projection that increased manufacturing would make available more drugs both in the domestic and exports market and shall accomplish the twin objectives of affordability and revenue generation.

The main challenge before an inclusive government is to ensure healthcare which includes affordable medicines to the poorer sections.

The question of increasing manufacturing is no doubt important but the main objective of this exercise has to be to ensure that masses are able to get necessary health care and buy the prescribed medicines.

Unless the people across the country are able to get easy access to drugs – and not witness family members dying due to high cost of medicines and health care – the whole exercise of the government, whether it is pharma research and manufacturing, will have little meaning.

The benefits of the country’s innovation must reach the grassroots. There is need to evolve a plan of action which should be formulated by a national committee comprising representatives of industry, doctors, economists and social activists to delve deep into the question of drug pricing and whether regulation is at all needed.

Also the question of how medicines at low cost can be given to people not just below the poverty line but also those from the EWS must be examined by this committee.

While the government claims to have taken some bold steps in various fields, “health for all” is an objective which cannot be left at the mercy of pharma companies, which would obviously think of profitability alone. Moreover, facilities like subsidies, if they set up units in select areas, which are in vogue could be continued.

Health for all is indeed one of the biggest challenges before the government. The massive economic burden of non-communicable diseases (NCDs), which has been estimated by the World Health Organization to be around $6.2 trillion between 2012 and 2030, needs to be addressed.

Obviously to tackle this problem, apart from increasing the percentage expenditure of GDP on healthcare from the current 1.1 per cent to at least 2.5-3 per cent by 2025, if not earlier, drug availability at affordable prices is equally imperative. The government needs to tread slowly and cautiously.

By: Dhurjati Mukherjee