Drug Policy

Drug Policy Arun Bal K JAYARAMAN in his comment titled 'Distortion Inherent in Drug Policy' (EPW, August 2) states that the scarcity of essential drugs is a natural reaction to the loss making efforts. Are the pharmaceutical companies really incurring losses due to the production of essential drugs? The findings of a recent study done by a consumer activist group shows that the industry's argument to explain scarcity of essential drugs are not based on the facts. This study revealed that even after substantial reduction of drug prices the companies are in a position to offer huge discounts to the chemists. In Category 11 drugs, where 55 per cent mark up is allowed the companies are in a position to offer upto 15 per cent cash discount. If with 55 per cent mark ups the companies are in a position to offer discount to the chemist it is obvious that the break-even mark up for these products is much below 55 per cent. Though price of Terramycin was reduced by 30 per cent after DPCO 1979 and it is a Category II drug with 55 per cent mark up the company was offering 15 per cent discount on Terramyein 10 mi vial in April 1986. In the case of Mayambutol (Cyanamid) the prices were reduced by 59 per cent between 1972 and 1984, In April 1986 the company was offering 20 tablets free for every 100 tablets purchased. It is unfair to compare the drug prices to the other commodity prices to justify the increased mark ups. Drug prices are usually high when the drugs arc newly introduced. If the production of the Category I and II drugs is a loss making effort then how can the companies afford to give cash discounts and bonuses to the chemists? The study qouted above has been done by an organisation interested in the consumer welfare and will be definitely be called biased by the industry.