Comment

Making drugs affordable and accessible to the needy masses has been the stated intention of the UPA government from the time it came to power five years ago.

Yet, new medicines introduced into the Indian market, especially anti-cancer drugs, have been marketed at prices that a large part of the Indian population cannot afford.

Not just multinational companies, the reduced prices pegged by reputed Indian companies also go beyond the reach of even many middle class Indian families. Stories abound of people selling their property and whatever they possess for the treatment of terminally ill patients.

For all of last four years, Ram Vilas Paswan, the union minister of chemicals and petrochemicals made noises about bringing drugs within the reach of the poor, but in action he did very little to make any difference.

Indeed, beyond setting up a committee that met just once to review the situation last year, the government just cooled off. The primary objective of the committee was to bring more discipline into fixing drug prices and curb prices of drugs that are unaffordable.

Though that objective sent nervous signals across the Indian and multinational camps, not much progress on a policy framework became visible.

The slowly unfolding plan of the government’s ‘Jan Aushadhi’ stores has a lot that is commendable, but these stores essentially deal in run-of-the-mill generic drugs and may not be even fit to deal in injectibles and other life-saving medicines. Also, these stores may take many more years to fan out into every government managed district hospital of the country.

However, some sparks from the Indian government have started again on curbing prices of patented medicines brought into the country by multinational companies. Reports suggest that the government is expecting multinational companies to price their drugs at the lowest in the world.

That may sound a little impractical but not impossible. An industry friend jokes that prices in Namibia and Congo can be compared with that in India. Pricing of imported formulations have been a vexatious issue for over a decade.

As per the Drug (Prices Control) Order, 1995, termed draconian by many for its price control mechanism, fixing the retail price of an imported formulation should be done, “Provided that in case of an imported formulation, the landed cost shall form the basis for fixing its price along with such margin to cover selling and distribution expenses including interest and importer’s profit which shall not exceed fifty percent of the landed cost.”

This proviso is being disputed by the Indian drug companies as the landed cost may be arbitrarily arrived at and may not be accurately monitored by the Indian government machinery.

Interestingly, GlaxoSmithKline Pharma recently declared that it will cut prices of all its medicines to less than half in the least developed countries. Not stopping at that, GSK CEO Andrew Witty said that at least 20% of the profits earned in these countries will be ploughed back for more investments. The declaration shows there is room for multinational companies to price their products competitively in India, too.

Similarly, US-headquartered Merck has piggy-backed on its “responsible pricing” plank for its second entry in India. Merck’s Swiss rival Novartis responded appropriately on pricing its brand Galvus after Merck priced its own diabetes drug Januvia in India at a much lower price as compared with international prices.

Some industry hands feel the Indian public health system should be provided with cheaper imported drugs and a separate pricing mechanism should be devised for the retail pharmaceutical market. That proposal appears pragmatic as it will encourage competition and also help in making the drugs more affordable.

Many developed countries such as Canada and France have such a mechanism where patented drug prices are negotiated before reaching the market. With a population of over a billion, the Indian government has a strong bargaining point as no large-sized drug company can ignore reaching out to a market this big.

However, with every company wanting to escape the rigours of price controls and the government lacking in its commitment to quality healthcare for its population, the genuine need of affordable drugs will remain unfulfilled and the gap between the prevalence and treatment rates will keep widening.

Pillman is an executive closely linked to the global pharma industry.