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Drug Prices

Is There a Case for Enquiry?

Arvind Nair was the Information Officer of the Pharmaceutical and Allied Manufacturers' and Distributors' Association at the time of writing this article. 

This article, published as a series on "Drug Prices and Patents" in the 3 April 1965 issue of The Economic Weekly, presents the industry point of view on drug prices and patents. We present this article in the light of events that show that there is little understanding in the government on pricing of essential drugs in India. This article also contains a small excerpt from the Kefauver Committee Report on "Advanced Prices in the Drug Industry". 

Editor's Note: This article is a rejoinder to our editorial "Drug Prices : Case for Enquiry" in the issue of January 16, 1965. Arvind Nair is Information Officer of the Pharmaceutical and Allied Manufacturers' and Distributors' Association and he presents the drug industry's point of view.
 
Much of his article is devoted to refuting criticism of the patents system. His arguments on this subject are answered in the article which follows his by S S Sokhey, the wellknown microbiologist, who, as director of the Haffkine Institute, Bombay, for 20 years contributed much to medical and pharmaceutical research in India. Sokhey examines, on the basis of the experience of India as well as other countries and with considerable factual data, the impact of patents on drug prices and on the development of the Indian drug industry.
 
On the question of an enquiry into drug prices, Arvind Nair says in the last paragraph of fits article that such an enquiry, "provided it is impartial and the body conducting it is formed of persons who understand the medical, scientific and business problems of the industry and who will take an independent, objective and long-range view, may do some good in that it will dispel much of the misunderstanding and many of the misconceptions about drug prices". But later on in the same paragraph he opposes an enquiry with the argument that "critics of the industry are sure to make capital out of an enquiry, if one is conducted, as did happen in the case of the Kefauver Inquiry, to tarnish its image and shatter the foreign investors' confidence in the growth potential of the Indian industry". It is not at all clear how an enquiry which will help to remove misunderstanding and popular misconceptions about the drug industry will, at the same time, tarnish its image and undermine the confidence of the foreign investor.
 
Further, while Arvind Nair begins with the entirely valid statement that to determine whether drug prices are reasonable or not prices must be compared to costs of production, we find not one such comparison in his article. Is it because such comparison will invariably show the industry in unfavourable light? Or is it that the facts arc not available even to one in the confidence of drug firms? In either case, the need for an enquiry of the type are had suggested is emphasised since it will get at the real facts about drug prices and costs.
 
Finally, since Arvind Nair relies so much on excerpts from reports of the Development Council for Drugs and Pharmaceuticals, it is necessary to state that, though appointed by the Government of India, the Council is in effect a body representing principally the interests of the drug industry. It is definitely not the "impartial' body" capable of taking "an independent, objective" view whose impressions can he taken as conclusive evidence for or against on enquiry into drug prices.

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