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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 drugs whose prices were reduced, presumably at his behest. What does this reduction indicate? Actually, 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.

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
draft National Pharmaceuticals Policy has been in circulation since December 2005. What is in circulation is Part A only; Part B, containing specific proposals for price control, is still awaited. In the interregnum, in lieu of Part B, several “trial balloons” have been floated by the union ministry of chemicals and fertilisers (MCF) headed by Ram Vilas Paswan. The union minister has intermittently spoken in enraged tones against overpricing of 4,000-5,000 per cent and has recommended to the union cabinet that all the 354 essential drugs of the 2003 national list of essential medicines (NLEM) be put under price control. Now step in the lobbies and the media plants on overdrive. We are told that the prime minister’s office (PMO) (Manmohan Singh or bureaucrats therein?) is opposed to this move;1 so also are the Planning Commission (meaning Montek Ahluwalia), the union finance ministry (meaning P Chidambaram),2 the union commerce ministry (meaning the otherwise vociferous Kamal Nath) and the union health ministry (meaning the unusually quiet, A Ramadoss), and of course, the Organisation of Pharmaceutical Producers of India (OPPI) and the Indian Drug Manufacturers Association (IDMA). Nevertheless, they are all gentlemen. We are warned how foreign direct investment (FDI) will evaporate overnight if such a move is put in place (although the pharma sector witnessed the maximum investment and growth during the 1980s, when the so-called licence raj prevailed and many more drugs were under price control). The national common minimum programme (NCMP) had however spoken in favour of affordable medicines but we do not know where Sonia Gandhi stands on the issue, especially after her much heralded resignation from the national advisory council.

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:

  • Why do these very same companies not reduce the price of their market leaders?9
  • How come we do not have a single drug from the top 300 drugs of the ORG-Nielsen list?
  • Who has ever heard of these obscure “branded generics” with a total market
  • 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)

  • Why have only 11 manufacturers out of the 5,877 in India reduced their price? Why is there not a single multinational in India amongst this list, like say Pfizer or Aventis, who sell (as shown in Table 2) highly overpriced drugs?
  • In most cases, the so-called reduction is about 5-30 per cent of drugs that have been already overpriced. What is one to make of a reduction when the margins are reduced from say 800 per cent to 700 per cent?11
  • In almost all these cases of “branded generics” in the MCF’s list, the difference between these prices (that is MRP) and the price to the retailer is of the order of 100 to 2,000 (two thousand) per cent at the least.
  • 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

  • Why large numbers of categories of drugs for crucial diseases are excluded? For example, there are few drugs for tuberculosis, malaria, none of the highly expensive antibiotics that can cost a few thousands of rupees per day of therapy like meropenem, none of the anticancer drugs, not a single drug for HIV disease, no vaccines, very few of the drugs for hypertension, diabetes, psychiatric illnesses, and so on.
  • Who benefits? The retailer and the manufacturer and not the patient!
  • Why cannot the union government take the Tamil Nadu Medical Services Corporation (TNMSC) prices as base prices
  • now that TNMSC has been asked to be the procurement agency for all of the northeast under the National Rural Health Mission (NRHM)?
  • 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

  • true not only for India but all over the “free market” world too.14
  • Competition does not work in the pharma formulations market.15 The notion of a free
  • market in pharma and health services is a contradiction in terms.

  • Nevertheless, India’s pharma sector is a “free” market in a different sense for a long time: one could make all kinds of irrational drugs from fresh human placenta, animal liver and cattle blood16 as also arbitrary combinations of different kinds of medicines and sell them at arbitrarily high prices.
  • In India, the same drug is sold at vastly different prices by equally reputed companies and often by the same company.17
  • The brand leader is often the price leader! That is, the most popular brand of a drug is also often the highest priced.
  • Medicines are the only commodity in which the end-user (the paying patient) does not decide what to buy and at what cost. The doctor prescribes and the patient pays. In addition, in India every doctor decides on his/her own which brand of which medicine to prescribe.
  • There is no choice for the consumer in this market. Unlike in case of other commodities the purchaser of medicines is extremely vulnerable as he/she is seeking immediate relief from suffering.
  • Asymmetries in information – in the doctor-drug company interface as much as in the doctor-patient and drug companypatient interfaces – is what leads to market failure. This special characteristic is the reason why even in market economies, all issues related to drugs, including their prices, are the subject of regulation by government agencies. The only exception is the US – but even in the US, the prices of drugs are indirectly regulated by health maintenance organisations negotiating prices to be paid on prescription costs. (The government’s own committees have reported that even in the so-called free market countries there is price control of some kind or the other.)
  • Pharma is the only sector in India (and probably in the world) where government
  • 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.

  • India’s pharma markets are full of unnecessary, unscientific and therapeutically useless drugs. This leads to further market distortion and market failure. We need to immediately weed out all these drugs by allowing only drugs as per the WHO essential drug list or the government’s own National Essential Medicine List 2003. And from the user’s point of view:
  • The major crisis in drugs in India is one of availability (in the public systems), access and affordability to the poor and the middle class.
  • According to the World health Organisation’s World Medicines Report 2004, India has the largest number of people, an estimated 649 million, without access to essential medicines.
  • In India, unlike in the developed countries, expenditure on medicines constitutes a large proportion (over 50 per cent) of total medical expenditure. About 80-90 per cent of this expenditure is out-of-pocket expenditure by the people since the government spends a very small proportion on procurement of medicines.19
  • Unlike in the developed countries, most Indian patients face the drug industry as hapless individuals because most are not covered by insurance or social security mechanisms.
  • Majority of Indians are below or near the poverty line; yet they are forced to spend on unnecessarily costly medicines. This unnecessary expenditure on medicines is a very important cause for indebtedness before and after hospitalisation.
  • 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.

    EPW

    Email: 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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