Dhurjati Mukherjee
It’s too good to be true. Early this month, the Union Health Ministry reiterated its decision to provide free medicines to all patients attending Government health facilities across the country. Indeed, it is a significant move to help the poor and the economically weaker sections. For it has been found that purchase of drugs alone accounts for 72 per cent of out-of- pocket expenditure.
However, the financial allocation for this scheme is around Rs 3500 crores for 2012-13 and the entire programme is estimated to cost Rs 28,560 crores over the 12th Plan period. At present, the public sector provides health care to 22 per cent of the country’s people and, this according to the Health Ministry is expected to go up to 52 per cent by 2017.
Medicines would be provided free from 1.6 lakh sub centres, 23,000 primary health centres (PHCs), 5000 community health centres (CHCs) and 640 district hospitals. However, the Government would need to ensure that there is the requisite infrastructure to store these medicines in remote areas. There would, thus, be the need to set up state-of-the-art warehouses at the district level, from where the drugs could be dispatched to the PHCs and CHCs.
The Ministry has sent the National List of Essential Medicines (NLEM) 2011 – 348 drugs which include AIDS, analgesics, anti-ulcers, anti-psychotic, sedatives, anesthetic agents, steroids and anti-platelet medicines – to all States to use as a reference. Its State counterparts have been asked to create their own essential drug list keeping in mind the disease that is most prevalent in their region. Additionally, they have been advised to procure drugs directly from the manufacturer or importer through an open tender basis. Importantly, 75 per cent cost of the scheme for providing free medicines would be borne by the Centre while the rest will be the responsibility of the States.
Obviously this scheme and understanding is crucial as drug prices have increased exorbitantly. A Planning Commission panel has noted that there was nearly a 40 per cent rise in all drug prices between 1996 and 2006. It found that during the same period the price of controlled drugs rose by 0.02 per cent whereas those on the Essential Drug List (EDG) increased by 15 per cent. And, that the price of drugs that were neither under price control nor under EDL grew by 137 per cent! The panel was of the firm opinion that all drugs in the NLEM should be brought under price control since the cost of medicines constitutes over 60 per cent of the total cost of health care.
Accordingly, an estimate is that the price control on NLEM will have an impact of Rs 1100-1200 crores on companies. The earlier view that the policy may cause significant losses to companies with price control now stands negated. However, large companies and MNCs may take a three to four per cent hit on their sales since they have a large number of premium priced products. However, global drug manufacturers feel that the proposal to have the same pricing criteria for imported drugs is unfair as the cost of production outside India is higher.
Meanwhile, it has been a good year for the domestic market which is growing at a steady rate of over 15 per cent. Revenues from domestic drug market and exports have clocked Rs 52,000 crores though challenges in the export market from interpretation of the intellectual property norms cannot be ruled out. At the same time, quality may continue to haunt the Indian drug manufacturers with the past year seeing concerns raised by the United States regulator on drugs from forms including Ranbaxy and Lupin. It is generally agreed that quality is the single most important factor that needs attention of the domestic pharma market.
A recent study on drug pricing by the Ministry of Corporate Affairs revealed that profit margins on 21 common drugs manufactured by Indian companies have escalated significantly, obviously because of rising prices. Though pricing regulations of the National Pharmaceutical Pricing Authority (NPPA) say that companies can keep a profit margin of maximum of 100 per cent over the cost of production (COP) of a drug, mark-ups of 200 to 500 per cent were found to be very common with the highest margin being 1122 per cent (for a drug manufactured by GlaxoSmithKline).
The study compared the mark-up of some of the highest selling brands of various formulations. For example, for anti-hypertensive drug Amplodipin (strip size 2.5 mg x 10) the mark-up over COP was found to range from 452 per cent to Amlong produced by Micro Labs to 589 per cent. For the 10 x 10 mg strips the range of mark-up was from 630 per cent for Amlogard produced by Pfizer to 1078 per cent for Amlong produced by Micro Labs. Even for anti-diabetic drugs, the range is 231 per cent (Glycomer) to around 652 per cent (Glyciphage).
This proves the validity of the recent criticism of the proposed pharmaceutical policy which seeks to put a ceiling on drug prices at the average of costs of the three top selling brands. The study endorses that view and it is generally agreed that the debate over the pharma policy prompted this survey. The study clearly mentioned how unaffordable drugs were priced because of high mark-ups, limiting access to health care of a major section of the population. It further stated the need for the Government to “strictly ensure that all drugs are affordable prices”.
Meanwhile, a report pertaining to a study carried out in the national capital, Delhi, showed a disturbing trend that antibiotic resistance has been found to rise by 40 to 97 per cent with increased prescription of drugs. Unfortunately, it has been seen that there is an increased tendency among doctors to prescribe antibiotic drugs for minor ailments – primarily because of the pressure from pharma companies as also the reluctance of patients to give the requisite minimum time for drugs to cure.
In the study, doctors were able to establish a direct co-relation between introduction of antibiotics and the resistance developed by the bacteria against them. And, recommended that while there is an urgent need to detect isolates at an early stage, it is also necessary that drugs, especially antibiotics, are prescribed judiciously.
While the Government will do well in providing the free medicines to the poor, it must make an endevour to ensure that drugs are made available to all sections of the population at affordable prices. Moreover, it should insist on an advisory to doctors that the tendency of quickly prescribing medicines and vitamins – most of which are uncalled for – has to be done away with. Only if there is a holistic approach can the Union Health Ministry get kudos. (INFA)
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