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Thursday, 23 April 2015 06:59
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Parliament panel wants price caps on all drugs

If it wasn’t bad enough that government policy on pharmaceuticals—on compulsory licensing, for instance—has kept India on the US’s IPR watch-list, the Standing Committee on Chemicals and Fertilisers has recommended that the scope of price control be extended from the current list of 509 formulations to the entire industry since ‘all medicines are essential and (are) taken only when (they are) needed by the patient’. Not only will this make investors from other countries look at India with suspicion—Japanese pharma firm Daiichi just exited its disastrous investment in Ranbaxy (later taken over by Sun Pharma)—it will ensure Indian patients are deprived of good quality medicines. Since profits are very low on the so-called essential drugs, and the entire industry has a price hike cap as well, the production of these medicines by top companies has been slowing and, in some cases, even falling over the years. As a result, around half of the industry’s production is meant for the exports sector where there are no price controls. Apart from the slowing in production —so much for Make-in-India—the other problem with price controls is that, with little incentive to invest in fraud-prevention, between a fourth and a third of India’s pharmaceuticals production is estimated to be spurious. Also, price caps have resulted in a situation where R&D expenses are very low, and there is little research on drugs of particular relevance to India.

Since Indian prices are amongst the lowest in the world, it is not clear what exactly the committee had in mind, more so since costs of medicine are not, in any case, the most expensive part of medical treatment. The committee has made the same mistake the government made when it issued a compulsory license for Bayer’s liver and kidney cancer drug Nexavar—since only a few thousand patients were involved, the government could easily have negotiated a price with Bayer and subsidised part of the cost of treatment instead of issuing a compulsory licence which just earned India a bad name. In the case of other medicines, similarly, if the government wants lower-cost medicine for the poor, it can get government hospitals/pharmacies to bulk purchase from pharma firms and get PSUs to produce more essential drugs—facilities at PSUs, for producing medicines as well as vaccines, are woefully underutilised. Under normal circumstances, the report may probably just have been junked, but these are not normal times. Apart from the fact that the Congress is hell bent on proving the government is anti-poor, while justifying not hiking prices of natural gas to levels at which the industry would find it viable, petroleum minister Dharmendra Pradhan repeatedly said market-pricing had its own merit, but the government had to keep in mind the paying capacity of the consumer ‘in a welfare state’.


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