Commentary
MEDICINES
Why Is Paswan’s Price Reduction a Let-down?
In the first week of November 2006, union minister of chemicals and fertilisers, Ram Vilas Paswan came out with a list of 886 drugswhose prices were reduced, presumably at his behest. What doesthis reduction indicate? Actually, for no disease and for no companyhave the top selling brands seen any reduction in the price. Thereduction by a few companies of a few medicines, none of which arethe brands most sold by these companies, or are the most prescribed,will not improve access to affordable drugs for the consumers.
S SRINIVASAN, ANURAG BHARGAVA
Omnia Romae cum pretio: Everything in Rome-at a price.
– Juvenal AD c 60-c130. It isn’t that they can’t see the solution. It is that they can’t see the problem.
– G K Chesterton, 1874-1936.
A
Notwithstanding such reported behaviour from our elected representatives, the fact is that several expert committees set up by the union government in the post-liberalisation period have stressed the importance of drug price regulation.3 For instance: the Drug Price Control Review Committee of 1999, the Sandhu Committee of 2004, and a task force appointed by the PMO in 2005 (chaired by Pronab Sen of the Planning Commission), the Commission on Macroeconomics and Health 2004, etc. However, the industry does not want controls of any kind and in accordance with their wishes, the number of drugs in the price control basket has come down over the years from over 347 in 1979 to 74 in 1995. This number would have been less than 30 if the Supreme Court had not stayed the Pharmaceutical Policy 2002.4The court directed the union government of India to first decide the basket of essential drugs to be put under price regulation and a methodology thereof. In response the government came out with the NLEM in 2003 in which there are 354 drugs. The Pronab Sen Committee recommended all these 354 drugs in the NLEM (as well as equivalent drugs in the same therapeutic class) be put under regulation/monitoring/ control; and fixed dose combinations of these drugs would have the same price ceiling too – a measure that would have discouraged irrational combinations at one stroke. This was too much to swallow and not to the liking of the industry and therefore severe lobbying has resulted in a series of committees packed with industry representatives – the latest a joint committee consisting of pharmaceutical industry representatives (12 members) and four members of the MCF. This committee is supposed to provide recommendations on price monitoring and control. No representative from the union ministry of health, let alone patient groups and public interest organisations, has been included in the committee. Did you wonder why? One presumes it is a new form of consultative governance where only the producer interest is consulted about how to make its commercial practices seem like acts of benevolence to the nation state. In the meanwhile, a packet of oral rehydration salts costs Rs 14 (approaching the retail price of a bottle of saline), rural patients with tuberculosis have to spend Rs 1,000 per month on therapy,5 a patient with a dog bite has to incur an expense of Rs 1,5456 on the cost of vaccines alone, and some antibiotics and anticancer drugs cost Rs 6,000 per day.
Assessing Paswan’s ‘Price Reduction’
As a result of these desultory consultations with the industry, during the first week of November 2006, union minister Paswan came out with a list of 886 drugs, actually only 499 brands, whose prices companies have reduced – presumably at his behest. However, this list of “reduced” prices is a bit of an eyewash, entirely in line with earlier tokenisms that a politically unwilling government and an aggressive
Economic and Political Weekly December 16, 2006 industry keep offering to a puzzled public. We explain why.
Given in Table 1 is a sample comparison of prices claimed by Ram Vilas Paswan as “reduced”.7 But reduced with respect to what? We need to also look at Table 2, which provides a glimpse of the “free market” of branded drugs.
Some questions and observations that emerge are as follows:
share of Rs 1,500 crore in a market of Rs 25,000 crore? (For instance, Cipla totally dominates the market for anti-asthma medications with brands like Asthalin, Theo-asthalin, Seroflo, Aerocort – yet there is not a single drug in its list that covers asthma. Lupin is the largest producer of anti-TB medications like AKT-4, Combutol, and yet not a single anti-TB medication is in their list. Ranbaxy has many antibiotic brands that are popular with doctors, like Cifran, Mox, Zanocin, Roscillin, Sporidex. None of these figure in the list. Ranbaxy is India’s top company with other brands like Calmpose, Histac, Revital, Storvas, Fortwin, Volini. None of these too figure in the list.)10
Table 1: Price Comparison of ‘Reduced’ Prices
(All prices in Rs)
| S r | Name of Drug/Strength | U s e | Paswan’s Reduced Price | Leading Brand’s Price | TNMSC/Gujarat | LOCOST |
| Govt Price | Price | |||||
| 1 2 | Cetrizine 10 mg, 10 tabs Albendazole 400 mg, 10 tabs | Antiallergic Antiworm | 10.68 (Citimed, Cadilla) 118.70 (Wozole, Wockhardt) | 23.96 (Ceticad, Cadilla) 145.80 (Zentel, GSK) | 0.53 3.50 | 2.25 11.00 |
| 3 | Ofloxacin 400 mg, 10 tabs | Antibiotic | 118.16 (Woflox, Wockhardt) | 531.00 (Tarivid, GSK) | 8.69 | 26.00 |
| 4 5 | Atenolol 50 mg, 14 tabs Amlodipine 5mg, 10 tabs | High BP anti-anginal Anti-high BP | 17.96 (Storatol, Ranbaxy) NA | 30.71 (Aten, Zydus) 20.50 (Amlopres, Cipla) | 1.15 0.958 | 2.80 2.50 |
| 6 | Amoxicillin 500 mg, 10 caps | Antibiotic | 60.48 (AMX 500, Ranbaxy) | 80.00 (Mox, Ranbaxy) | 10.56 | 14.50 |
| 7 8 | Ethambutol 800 mg, 10 tabs Atoravastin 20 mg, 10 tabs | Anti-TB For high Cholesterol | 26.46 (Ranbetol, Ranbaxy) 118.16 (Atoritic 20, Wockhardt) | 39.60 (Combutol, Lupin) 148.00 (Atorva, Zydus) | 12.00 NA | 19.50 49.50 |
| 9 | Fluoxetine Cap. - 20 mg | Anti-depressant | 27.41 (Flucap 20, Ranbaxy | 32.00 (Fludac, Cadila) | 2.43 | NA |
| 10 | Flucanozole 150 mg, 10 tabs | Antifungal | 303.40 (Funaz, Wockhardt) | 320.00 (Forcan, Cipla) | 9.21 | 25.00 |
Sources and Notes: Prices of leading brands are from MIMS India, October 2006; prices of Tamil Nadu Medical Services Corporation (TNMSC) are from their website www.tnmsc.com; and where TNMSC prices are not available for specific drugs, the Gujarat government’s rate contract prices are quoted from http://gujhealth.gov.in/CMSO_RCInfo.pdf; and prices of Low Cost Standard Therapeutics (LOCOST), Vadodara, an NGO making quality generics are at www.locostindia.com.
Table 2: A Glimpse of the ‘Free’ Market of Branded Drugs
(Prices in Rs per tablet)
Sl Name of Drugs Drug under Lowest Price of Brand in Highest Price of Brand in Rupees/ Highest Priced No Price Control Rupees/Brand Name/Manufacturer Brand Name/Manufacturer Brand/Lowest Priced Brand × 100 (Per Cent)
Drugs for bacterial infections: like pneumonia, urinary tract infections
1 Ofloxacin 200 mg No Rs 3.20/Zo/FDC Rs 31.00/ Tarivid/Aventis 969 2 Levofloxacin 500 mg No Rs 6.82/Levoflox/Cipla Rs 95.0/Tavanic/Aventis 1392 3 Ciprofloxacin 500 mg Yes Rs 3.90/Zoxan/FDC Rs 8.90/Cifran/Ranbaxy 228 4 Azithromycin250 mg No Rs 8.50/Zathrin, FDC Rs 39.14/Vicon/Pfizer 460
Drugs used in viral infections including HIV/AIDS
5 Zidovudine 100 mg No Rs 7.70/Zidovir/Cipla Rs 20.40/Retrovir/GSK 265
Drugs used in heart disease, hypertension, high cholesterol
6 Amlodipine 5 mg No Rs 1.51/Amlodac/Zydus Cadila Rs 6.00/Amlogard/Pfizer 397 7 Atenolol 50 mg No Rs 0.40/Ziblok/FDC Rs 2.45/Tenormin/ Nicholas Piramal 612 8 Valsartan 80 mg No Rs 5.90/Valzaar/Torrent Rs 41.00/Diovan/Novartis 694
Drugs used in diabetes
9 Pioglitazone 15 mg No Rs 0.99/Pio/Systopic Rs 6.00/Piozone/Nicholas Piramal 606 10 Glimepride 1 mg No Rs 0.80/ Glimestar/Discovery/Mankind Rs 5.30/Amaryl/Aventis 696 Drugs used in cancer 11 Tamoxifen 10 mg No Rs 2.70/Tamodex/Biochem Rs 20.00/Nolvadex/ICI 741 12 Letrozole 2.5 mg No Rs 9.90/Oncolet/Biochem Rs 181.50/ Femara/Novartis 1833 Drugs for psychiatric ailments 13 Risperidone2 mg No Rs 1.69/Respidon/Torrent Rs 27.00/Risperdal/Ethnor 1598 Drugs for metabolic disorders 14 Risedronate 35 mg No Rs 50.12/Risofos/Cipla Rs 500.00/Actonel/Aventis 997 Drugs for arthritis 15 Leflunomide 10 mg No Rs 8.00/Rumalet/Zydus Cadila Rs 44.00/Arava/Aventis 550 Drugs for erectile dysfunction 16 Sildenafil citrate100 mg No Rs 29.16/Penegra/Zydus Alidac Rs 584.00/Viagra/Pfizer 2002
Source: MIMS India, March 2006, CIMS, January-April 2006.
Economic and Political Weekly December 16, 2006
Also, brands of other companies that sell well and are not in list: (a) Cadila’s top selling brands include Ciprobid Amlodac, Atorva, Dexona, Ocid, Pantodac, GRD, Globac, Penegra. (b) Wockhardt’s Spasmoproxyvon, Proxyvon, Methycobal, Decdan, Wokadine
One is driven to the conclusion that there is no price reduction in reality but merely a decrease in profiteering from a level that was absurdly high.
Two years ago, the National Pharmaceutical Pricing Authority (NPPA) conducted a study on three commonly used drugs including the antihistamine cetrizine. It found, for example, that Ranbaxy was selling 10 tablets of cetrizine to the retailer at Rs 1.80 (i e, at 18 paise per tablet) while the MRP was nearly Rs 26. Now with the so-called generous reduction in prices, and with the proposed 35 per cent trade margins to be given to the retailer, one would expect cetrizine to be priced at up to Rs 3 for 10 tablets. Yet the prices mentioned in the list for cetrizine are as given in Table 3.
What then does this reduction indicate? For no disease and for no company have the top selling brands seen any reduction in the price. The reduction by a few companies of a few medicines, none of which are the brands most sold by these companies, or are the most prescribed, will not improve access to affordable drugs for the consumers. It is a token step, in the form of a public relations exercise, to divert attention from the real issue of price regulation, rather than being of any real consequence. Reduction of drug prices of lesser known and lesser promoted brands, constituting less than 10 per cent of the market whose trade margins have been highlighted, should not divert the attention from the overpriced nature of the drugs of the drugs which sell the most in the market. Drugs are overpriced many times over in relation to the cost of manufacture.
What is required is a comprehensive policy which does not take a piecemeal view of the situation but addresses pricing of all drugs in relation to the cost of their manufacture for all categories of drugs, with special emphasis on essential medicines, rationalisation of the number of formulations in the market, control over the extravagant amounts sent on drug promotion, improving drug supply within the public health system, improving prescription practices, etc. The role of the government is not to negotiate with a handful of manufacturers over the prices of a few drugs but to adhere to its commitments on price regulations mentioned in the December 2005 draft policy document and lay down policy guidelines in this regard.
Solutions offered like drug banks at district level and providing free medicines for below the poverty line (BPL) patients through donations by drug companies rather than improved availability in the public health system or improved affordability with price regulation cannot even be considered token measures. The theatre of illness in India is too vast and complicated and such solutions are too minuscule and at best populist. The government may ask itself why it cannot even deal with simpler tasks: like ensuring that corporate hospitals implement the contracted free care percentage in return for land given to them at throwaway prices.
In the meanwhile, the highpoint of this tragedy-turning-into-a-farce is the relative silence of the union health ministry. The latest negative salvo from the health ministry12 is to shoot down the idea of modifications in the Essential Commodities Act on the apparently reasonable pretext that it would infringe upon the Drugs and Cosmetics Act administered by it. Turf wars apart, one would think that the poor citizen should have been the main concern.13
Pharma-Health Services Market
Let us put the above remarks in context by briefly reviewing the peculiar features of the pharma and health services market
market in pharma and health services is a contradiction in terms.
Table 3: Prices for Cetrizine in Paswan’s Reduced Prices List, November 2006
(Prices in Rs)
Drug Brand Company Previous Present Price Price Per 10 Per 10 Tablets Tablets
Cetrizine Stanhist Ranbaxy 22.05 12.79 Cetrizine Cetcip Cipla 33.65 25.00 Cetrizine Cetimax Cadila
Healthcare 26.75 12.84 Cetrizine Sertride Wockhardt 26.59 21.10 Cetrizine Cetirid Cadila
Healthcare 25.63 16.12
Source: Prices from the MOCF website, http://chemicals.nic.in
Economic and Political Weekly December 16, 2006 tender procurement prices are 1-3 per cent of the retail market prices! This, if anything, indicates the level of overpricing.18 An example: for the Tamil Nadu government, a drug company bids to supply Albendazole 400 mg tablets, a medicine for worms, at a mere 35 paise per tablet, while brands of this drug sell for Rs 12 in the market.
Committees constituted by the government have clearly documented abnormal rises in prices of drugs after they were taken off the list of price-controlled drugs, e g, after price deregulation in 1995 the price of some TB drugs rose by 250 per cent. Yet no action, except some tokenisms, has been taken. To quote from the report of the Standing Committee on Chemicals and Fertilisers, 2005-06, Fourteenth Lok Sabha:20
The committee’s examination revealed that though, there is a provision that a strict watch will be kept on the movement of the prices and the government may determine the ceiling levels beyond which increase in prices would not be permissible, this provision has seldom been applied. In this context, some of the state governments have also informed that when the cases of high prices of Anti-cancer drugs, Antibiotics, Nutraceuticals and Cetrizine were referred to the National Pharmaceutical Pricing Authority (NPPA), the latter conveyed its helplessness in curtailing the high prices. The committee are unhappy over this unsatisfactory state of affairs and desire that the situation should be remedied forthwith. They therefore, recommend that for the category of drugs for the same therapeutic use, the government should determine a reasonable ceiling beyond which increase in prices may not be allowed.
At a recent conference of economic editors, Ram Vilas Paswan said that he felt cheated (‘vishwasghat’) by the pharmaceutical industry, after he realised the failure of the industry to keep its promises to reduce prices.21 His sense of both outrage and innocence is touching. Did he and the MCF not take the trouble of going through the list, before splashing full-page advertisements in the newspapers?
The real issue is not that the industry is being hurt by a 12-year old list of 74 odd price-controlled drugs (as per the1995 policy) or whether 100 or 200 drugs shall be put under price control or monitoring. The real issue is that in principle, the industry is opposed tooth and nail to price regulation as part of public policy, because price regulation interrogates the price, the profit and the cost of manufacture of a drug, and imposes some discipline amidst the extraordinary anarchy in the Indian market, and keeps open options of interventions in favour of ordinary people.
EPWEmail: sahajbrc@icenet.co.in madhurag_bhargava@rediffmail.com
Notes
1 ‘Government May Oppose Price Control for Essential Drugs’, Times of India, June 27, 2006.
2 P Chidambaram has represented the drug industry in both intellectual property rights related cases for Novartis in the Glivec case (see Narrain, Frontline, Volume 22, Issue 8, March 12-25, 2005), as well in arguing against price control in the current case in the Supreme Court on drug pricing in Union of India vs K S Gopinath and others. Petition (s)for Special Leave to Appeal (Civil) No 3668/2003. Of course, these were before he became the union finance minister, it will be argued.Quis custodiet ipsos Custodes? (Who will watch the watchmen?)
3 Regulation is the politically correct word of the times, which in the eyes of the industry subsumes hopes for some kind of wishy-washy hands off price “monitoring”. Nobody is clear how this will be done, given that promises of good behaviour of the pharma industry have never seen the light of day.
4 Actually the Supreme Court stayed only that part of the 2002 Policy that had to with price regulation.
5 G N V Ramana, B M Chandra Sekhar Naidu, K J R Murthy, G N Ramana, B M C S Naidu, K J R Murthy, ‘Mapping of TB Treatment Providers at Selected Sites in Andhra Pradesh State, India’, World Health Organisation, WHO/ TB/97.233, 1997.
6 Five doses of Rabipur (Hoechst), each dose
costing Rs 309. 7 Available at http://chemicals.nic.in 8 Pro rata price: Rs 0.47 for 10 tabs of 2.5mg. 9 As the editorial in MIMS India, December 2006
points out: “Some companies such as Nicholas market the same medicine under two or more brand names such as Orthobid and Embulide. Both contain nimesulide 100mg. Orthobid with a retail price of Rs 29.19 for 10 tablets is one of the top 10 popular brands of this medicine with sales in excess of Rs 2.85 crore per year. Yet the price of Orthobid has not been reduced while the price of never-heard-of Embulide brand has been reduced from Rs 22 to Rs 18. How does the company explain the price difference of over 160 per cent between two brands of the same medicine? Cipla sells the same medicine (Nicip) for less than Rs 4 to chemists! Some of the “reduced” prices are higher than the normal market prices. For example Levoflox (levofloxacin 500 mg) of Cipla is retailing at Rs 74 for 10 tablets while Medley has very kindly agreed to reduce the price of its Quinocin brand from Rs 90 to Rs 80. Who on earth will buy Quinocin? Incidentally Centaur Lab. is selling the same medicine for Rs 34.”
10 To add further: According to this price reduction list, Cadila Healthcare is offering a lower priced ciprofloxacin, Gercip at Rs 5.73 per tablet, while in the market, a brand like Zoxan of FDC already exists which costs. Rs 3.90 per tablet, but which sells less than the market leader Cifran which sells at Rs 9.0 per tablet. The fact that Ranbaxy can reduce the price of one of its lesser selling preparations like Ceflor (ceftazidime) from Rs 309 to Rs 185 while the leading brand for this drug like GSK’s ceftazidime (Fortum) can continue to sell it at nearly Rs 350 per vial indicates the extent of overpricing. Does this not call for a drastic reduction in the price of Cifran or Fortum?
11 “Some price reductions are ludicrous: there is a grand reduction of 1 paisa in the price of Ranbaxy’s Amitil 1ml (prochlorperazine) injection: from Rs 4.99 to Rs 4.98! A patient will have to hunt for a retail chemist who will be kind enough to return two paise coin. Such coins are not being minted anymore.” MIMS India, op cit.
12 ‘Health Ministry Rebuffs Paswan’s Opposition to Drug Pricing Policy’, The EconomicTimes, November 20, 2006 at http://economictimes.indiatimes.com/articleshow/482316.cms.
13 The modification in the essential commodities Act is a provision that seeks to prevent
Economic and Political Weekly December 16, 2006
companies from moving out of the radar of the NPPA, under Paswan’s ministry, for some time by adding new ingredients and by changing the brand name. While the original drug theoretically remains under price control, NPPA takes some time to fix the price for the modified composition and till then it is as good as having no price control over the drug.
14 The formulations, but for the first four, that follow are from a July 2006 press release of All-India Drug Action Network (AIDAN), of which the authors are members. For more detailed analysis and arguments see Impoverishing the Poor: Pharmaceuticals and Drug Pricing in India, LOCOST/JSS, Vadodara/ Bilaspur, December 2004; and A Lay Person’s Guide to Medicines: What Is in Them and What Is Behind Them, LOCOST, Vadodara, 2006.
15 The API or bulk drugs market is a better example of many players reducing prices – however, oligopoly in the vital anti-TB segment of rifampicin and ethambutol has led to market failure. For more discussion on market failure in the pharma market in India, seeImpoverishing the Poor: Pharmaceuticals and Drug Pricing in India, op cit.
16 India’s leading anaemia preparations like Dexorange contained haemoglobin obtained from slaughterhouse blood, a situation without parallel. In spite of vehement protests over two decades by drug activists, the use of animal haemoglobin was banned only in 2000. It took 20 years and more for the drug regulatory authorities to conclude: “haemoglobin obtained from animal blood could be unhygienic and such preparations are needed to be taken in extraordinary high volume to deliver the recommended level of iron in anaemic cases and thus lacks therapeutic rationale.”
17 The same drug of the same strength manufactured by two trusted companies can vary from 2 to 20 times in their prices, which has no credible explanation other than overpricing. Levofloxacin used in infections is sold by Cipla is Rs 7 per tablet, while Aventis sells it at Rs 95 per tablet. What is worse is that costlier drugs like Cifran, a brand of ciprofloxacin, most often sell more because of more aggressive promotion. Hence, the next statement: the brand leader is also the price leader.
18 See for instance: S Srinivasan (1999): ‘How Many Aspirins to the Rupee? Runaway Drug Prices’, Economic and Political Weekly, February 27, March 5, 1999.
19 “As a result of the costs of a single hospitalisation, 35 per cent of people fall below the poverty line. Out-of-pocket medical costs alone may push 2.2 per cent of the population below the poverty line in one year” (India – Raising the Sights: Better Health Systems for India’s Poor, World Bank, May 2001).
20 Recommendations/Observations of the Committee, Para 10, in Availability and Price Management of Drugs and Pharmaceuticals. Seventh Report, Standing Committee on Chemicals and Fertilisers, 2005-06, Fourteenth Lok Sabha, Lok Sabha Secretariat, New Delhi, September 2005.
21 ‘Paswan Accuses Pharmaceutical Industry of ‘Cheating’’, The Hindustan Times,November 7, 2006 athttp://www.hindustantimes.com/news/ 181_1838171,0002.htm
Economic and Political Weekly December 16, 2006
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