| December 2, 2006 | ECONOMIC AND POLITICAL | WEEKLY |
|---|---|---|
| Corporate Irresponsibility in Drug Pricing On November 24, the minister of state for chemicals and fertilisers, Bijoy Krishna Handique, announced in the Rajya Sabha that pharmaceutical companies had voluntarily agreed to a reduction of trade margins on 886 medicines, as a result of which the prices of these drugs had come down. But just two weeks prior to Handique’s announcement, his senior colleague, the union minister of chemicals and fertilisers, Ram Vilas Paswan, addressing the economic editors’ conference on November 7, accused the representatives of big pharma of ‘vishwasghat’ or “breach of trust”. The context was an earlier (October 2) announcement by his ministry of the industry’s voluntary acceptance of a curb on trade margins of the 886 medicines with the claim that this would bring down the prices of those medicines manufactured on or after that date. Paswan had expressed his outrage at the industry not keeping their promise. But then a fortnight later the pharmaceutical companies seem to have, again presumably at the minister’s behest, made amends and kept their promise. The minister’s innocence apart, there is a need to probe into the actual benefit of the price reduction that accrues to consumers. For this, other than examining the extent of the price reduction, one would have to take the top selling brands and/or list of the medicines that are most prescribed in each detailed therapeutic category and examine whether they are part of the list of the 886 medicines. One would also have to find out the extent to which essential medicines (from the 2003 national list of essential medicines – the NLEM) have been included in the 886 medicines chosen for trade margin and price reduction. As regards the essential medicines, the ministry has itself admitted there has been no concrete offer on the part of the industry to reduce prices. And a preliminary analysis done by analysts S Srinivasan and Anurag Bhargava (forthcoming in this journal) seems to suggest that the 886 medicines do not include the top selling brands or the medicines most prescribed by doctors. Indeed, the sales revenue from the 886 medicines chosen is estimated to constitute less than 10 per cent of the total sales revenue of the Indian pharmaceutical market. The United Progressive Alliance (UPA) government released part A of its draft Pharmaceutical Policy 2006 in December last year, but part B, which was to deal with statutory price control, is yet to be brought into the public domain. Two government appointed committees – the Sandhu Committee and the Pronab Sen Committee (the latter, a task force set up at the initiative of the prime minister) – have dealt with issues of price regulation. Following these efforts, the union minister of chemicals and fertilisers flagged a proposal to regulate the prices of all the 354 medicines in the NLEM and circulated it within the cabinet. Predictably, there was internal opposition to this proposal from Ram Vilas Paswan’s more free market enamoured cabinet colleagues. A fresh committee, consisting of 11 industry representatives and three government officials, has been set up to examine the draft policy and the question of price regulation. Not only does the ministry of chemicals and fertilisers and the producer interest invariably take the lead in the formulation of pharmaceutical policy, with the health ministry sidelined, but organisations representing the public interest – for instance, the All-India Drug Action Network and the Medico Friend Circle – are kept out. It may be recalled that the Pronab Sen Committee had recommended a readily monitorable, market-based benchmark to determine the “reasonableness” of the ceiling price for each of the essential medicines whose prices were to be regulated, and had also pitched for compulsory de-branding of selected prescription drugs when there is evidence of clear market dominance. But despite being one of the more carefully thought out reports in the realm of economic policy-making to have emerged in recent times, the UPA government, under the sway of pressures from big pharma, seems to have deliberately allowed the report to gather dust. |
While the industry claims to offer drugs at “reasonable prices”, these are mostly unaffordable by large sections of the Indian people. After all, as the World Health Organisation’s The World Medicines Situation 2004 observes, an estimated 500-650 million people in India do not have regular access to essential medicines. One then needs to regulate the prices of essential medicines in the manner suggested by the Pronab Sen Committee. But that is precisely what the industry opposes and is trying to avoid by suggesting voluntary measures that go under the rubric of “corporate social responsibility” (CSR), which will, in practice, serve merely as corporate public relations exercises of little real consequence for the 600 million Indians who do not have regular access to essential medicines. Indeed, CSR is here a ruse to avoid the question of price regulation. EPW
Economic and Political Weekly December 2, 2006
