Has India really forgotten about “Health for All”?

A little bit of reading leads me to understand that the government decided not to offer a central scheme for drugs and diagnostics, as it had promised earlier, but to incentivize state governments to initiate and run these schemes within their ambit. It is relevant to mention here that the Constitution of India decrees health care as a state subject. The Centre also announced a token incentive of 5% of its allocated budget under the National Health Mission, if checks and balances such as quality assurance, prescription audits etc. are initiated. If the number appears paltry, remember it is but an incentive.

On the face of it, this seems relatively sensible going by the successes touted in states such as Tamil Nadu and Rajasthan and to a certain extent in undivided Andhra Pradesh and Karnataka. However another news item also caught my attention about the Rajasthan govt’s plan to “downsize” its successful free medicine scheme. Aha! So are the state govt run health programs not really as great as they’re touted to be?

It appears that the Rajasthan govt identified that nearly one in five people who avail the benefit of the free-medicine scheme do not belong to the state. These free-riders add significant weight on the state’s already overburdened public health infrastructure. In this context, Chief Minister Raje’s comments also explain that the state seeks to slow down and make the scheme more efficient. Is this really such a bad thing?

Both these developments bring to the fore two important challenges plaguing health care in India. One, the public health system is in shambles and just cannot be relied upon to provide health care of equitable quality across the citizenry. Two, given the pathetic state of the public health care system, governments (state or central) pursuing free health care for its citizens is a mere pipe-dream.

So what is a practical alternative? Common sense tells us that any measure which seeks to bridge the gap between the yawning demand for affordable health care and its lackadaisical supply is a practical alternative. It is clear that the government cannot meet this gap. The only other alternative is the market, which the govt does not allow to function properly through misdirected and disproportionate regulations.

Activists and other “pro-poor” observers accuse the govt of ‘withdrawing from the public health space’ and call this “anti-poor”. What then is the current public health system with its pathetic infrastructure, long queues of patients, lack of medicines, absent doctors and horror stories of patients dying unattended in corridors and on the pavements outside the hospitals , if not anti-poor?

Today, the poor victims of these horror stories have nowhere else to go as the private sector keeps prices very high. This can be easily solved by relaxing entry norms into the sector to allow a glut of service providers. The resultant competition will lower prices much more effectively than any govt mandate.

Chief Minister Raje seems to have understood this well and may work to shift the burden to the private sector while assuring health care through govt sponsored insurance cover. Even this, at best, can be a temporary measure. Simply assuring health care does not absolve the govt of its duty. Ensuring an open market that brings in lots of players and a fair system that players cannot game must still be its prime responsibility. Generally, a hyper-competitive market that is reasonably fair, drives prices down and greatly benefits the consumers. How can something like this be anti-poor?

A good thing for the government to do would be to stop all its unproductive subsidies in the sector, including free medicines that might require a whopping $5+ billion. A temporary re-routing of this money directly to citizens through cash transfers could definitely be more effective. The JAM trinity – Jan Dhan Yojana, Aadhar and Mobile – creates such an ecosystem effectively.

With money in hand through direct benefit transfers and a plethora of affordable service providers, the common man is free to choose health care solutions that best suits his need. Pro-poor crusaders must actually push for these subsidies to halt after a certain period as this can lull the population into the ‘entitlement siesta’. Instead they seem to want exactly the opposite! A truly pro-poor stand would be to push the govt to create millions of jobs, increase household incomes and then provide households the freedom to decide the best health care solution for themselves.

Instead of throwing good money after bad, a radically different approach may be required to solve India’s health care challenges. A senior health official in Rajasthan said it best when he said, “increasing the budget doesn’t guarantee its error free implementation.” So-called ‘pro-poor’ activists accused the govt of withdrawing from the public health sector to create opportunities for the private sector and called out the stand to be the govt’s idea of promoting the private sector. For the sake of the health and welfare of the poor, it is fervently hoped that they are right.

Patient Centricity and Pharma

“Patient centricity is something you see in CEO messages but rarely in action”. I thought I had stuck my head into a beehive at a recent event, but surprisingly, I was stung not by bees but by the fact that the audience agreed with my statement. A thought that was intended to provoke thinking and challenge, was accepted as a matter-of-fact by the assembled group of industry executives and students of the college. Is pharma really not patient-centric or do we confuse patient centricity with something else?

Patient centricity is empowering the patient to choose as (s)he desires

Patient centricity is not about how you can take your brand to the patient. It’s neither about engaging the patient, nor about compliance. Generally these are the three angles on which pharma thinks. Hence we see a slew of patient awareness leaflets, patient engagement/assistance programs and compliance enhancers and tips from pharma companies. I’m not saying that these tactics are unimportant. I’m just saying it’s not patient centric.

Patient centricity is often easily confused with engagement and compliance. Engagement is defined as “actions individuals must take to obtain the greatest benefit from the health care services available to them.” Compliance is following the orders of your doctor diligently. This makes engagement and compliance patient oriented but not patient centric.

Patient centricity is slightly different and has been defined as ’a dynamic process through which the patient regulates the flow of information to and from him/her via multiple pathways to exercise choices consistent with his/her preferences, values, and beliefs. This fundamentally transformative concept affects how health care decisions are made and who has the authority to make them.’

To me, patient centricity is as fascinating a concept as it is contradictory. It is fascinating because it puts power into the hands of the patient. And it is contradictory because pharma does not like giving away power over its messages or processes. Pharma has traditionally never enjoyed interaction and has depended on ‘pushing’ messages across rather than having ‘conversations’. It probably also explains why we make do with medical reps who are not the sharpest knives in the drawer and scarcely invest in sharpening them.

Asymmetry of information is a barrier to becoming patient centric

Healthcare is an industry characterized by an asymmetry of information, which means that the seller knows a lot more about the product than the buyer. While this is often used as a statement to instill a sense of pride in sales reps (“no one knows as much about your product as you do”), it can also mean that the consumer does not have enough information to make an informed decision. And when he doesn’t, he decides on the only thing that he can use to compare, which is the price of one product versus another.

This can dramatically change in the information age when the internet allows access to information to almost anyone. Availability of information suddenly allows patients (consumers) to participate in decisions about their health. Can you imagine how valuable this can be in a self-pay market? If price sensitivity of consumers is pharma’s greatest challenge, why can’t pharma think seriously about patient centricity which can create transparency and trust in a consumer about a company and its products and services? Won’t services that create such trust in consumers empower them more? Won’t such empowerment make them advocates of pharma’s products?

The issue is that pharma rarely thinks beyond the doctor. We route every single piece of information through the doctor. At the conference as I spoke about how the ubiquitous internet allows us to make information available directly to consumers, I realized that the word DTC is taboo. It is so because pharma only thinks of pushing brand messages to everyone it addresses. This, while study after study shows that consumers trust branded messages lesser than credible third-party alternatives. It would be funny if it wasn’t ironical that pharma seems blissfully unaware that it ranks somewhere between Big Arms (weapons manufacturers) and Big Tobacco (cigarette manufacturers) on trust and credibility! Despite this, we continue to talk about creating trust and transparency for our stakeholders.

Opportunities for services to build trust and loyalty

How about putting our money where our mouth is for a change? How about telling consumers exactly what they want to know. How about listening and conversing with them and not merely pushing our products? How about building long-lasting relationships through services that they value rather than through branded messages which they don’t? In the connected world where every person and thing is connected to the Net, consumers tell us so much about themselves every single day. What they’re doing and eating. Where they’re visiting? When and how well they’re sleeping. What issues they have with raising children. What stress they go through. Etc. Etc. How about active social listening? That would not break any privacy data laws. Over years and through assiduous collation of such data from the public domain, trends begin to emerge. That is when health becomes predictable.

If health could become predictable through Big Data tools and analytics and we have a consumer group that considers participating in health care as very important, isn’t it a perfect match? Pharma would probably not consider it important since it wouldn’t relate to immediate product sales. But isn’t a sustained relationship with a trusting and loyal consumer group what every company in the world seeks? Why then do we concern ourselves with only selling our products? Why are relationships with consumers unimportant to us? I speak about patients who are the end consumers of our products. Sending discount coupons or the occasional disease awareness leaflet to an aware and empowered consumer is more an insult to their intelligence than a service.

Building sustainable relationships with them is definitely possible. But not when we only view them as buyers of our products. It can only happen when we consider our product sales as a by-product of our relationship and not its objective. Our objective must be to serve as a ‘go-to destination’ for their health needs. Until then, we will only see patient-centricity as an ethereal, futuristic and impractical inclusion in CEO speeches, but rarely in action.

The Right to Health or the Right to stay Unhealthy?

After the Right to Work, the Right to Food and the Right to Education were introduced by the earlier govt, they were duly criticized by a section of the polity as encouraging govt spending at a time of a burgeoning fiscal deficit. The new government – which consists of many of those critics – now thinks that the time has come for a Right to Health. The argument is that given the poor state of public healthcare infrastructure in this country, what are the poor and the disenfranchised to do?

 Some people argue that the government should deliver healthcare directly to the poor. Others favor cash transfers. Just to be sure this piece assumes that the role of the government is primarily limited to financing healthcare which is not envisaged in the govt’s policy document. It is difficult to say which approach seems the most favorable in an area with this magnitude of social impact.

Published literature suggests that contrary to popular sentiment, conditional cash transfers are necessary but not sufficient for improving health. Instead, good government-funded health care is essential, as are schemes which address social determinants of health.

India’s move to adopt cash transfer through schemes such as the Janini Swasthya Yojana (JSY) attracted polarised debate despite the scheme reportedly having shown success by reducing infant and maternal mortality rates.

A study published in The Lancet, found that the opposition is on two counts. First is that cash transfer requires precise identification of the needy. As with anything that has cash and govt together in it, the percent of women receiving payments ranged from as low as 7% to as high as 42%. This may leave a substantial number of poor out of the benefits.

Second, the inability of some Indian states to fully participate in JSY may be due to disparities in public health infrastructure between regions in India. Where will people invest the cash they receive if there are no facilities? The fungibility of money and low health awareness in the masses adds to the complexity.

Although in 2005 India implemented the National Rural Health Mission (NRHM) with the goal of increasing public spending on health from under 1% to 3% of GDP, Indian healthcare is still largely private.  An increase in public spending to finance healthcare is – to quote Arun Shourie – more said than done.

Therefore, should govt even attempt to throw more good money after bad? Is tax payer money best spent improving the supply of public healthcare itself? Is that even something we can expect? Or are markets better placed to provide health care and services?

If the Prime Minister is held to his pre-electoral promise of ‘minimum govt, maximum governance’, it would mean that the govt takes radical steps to deregulate medical education, produce medicines and insure people. This can only happen through large-scale privatization of the industry as the govt changes track from providing healthcare to only governing its provision.

It must also mean eliminating all subsidies to the sick or unhealthy as subsidies act as incentives to its beneficiaries and therefore creates more of whatever is being subsidized. If subsidies to the sick promote carelessness, indigence, and dependency, can its elimination strengthen the will to live healthy lives and to work for a living?

As a recent paper on the economics of healthcare states, if people are determined to live unhealthy lives, then there is no system that can fix the underlying problem. At the end of the day, health is largely a matter of personal responsibility.

The health sector is characterized by information asymmetry where doctors know more than patients, and the industry knows more than regulator. Asymmetry creates an imbalance of power and therefore compromises on honesty and morality. If the market decides not to be honest, no govt intervention can prevent, or even deter it. Focusing the State’s energy, power and resources to plug this loop can probably be the most impactful intervention to improve India’s pathetic health sector.

Subsidies to the poor through another Rights bill could only incentivize unhealthy behavior in a section of society that doesn’t need it and hardly impact the section that desperately needs it. The Rights to Work, Food and Education have shown it to be true in the past but in true Indian style, no lesson seems to have been learned.

The unending FDI debate in India Pharma

A few days ago the govt announced a 25% increase in FDI inflows into India due to some easing of the red tape by the Ministry of Commerce. While this may have eased the inflow of capital into the country, sectoral reforms are desperately needed to make sure that the return on that capital is guaranteed and stable.

If the pharma sector needs a boost, capital must flow in either from the government or through business corporations in the form of FDI. With PSU firms all but shut, it is unlikely that the govt will infuse capital into the sector. This leaves FDI as the only option.

Capital can thus flow either into existing companies (brownfield projects) or into new projects (greenfield projects). For money to find its way into greenfield projects, the govt must focus on sectoral reforms which range from smoothing out acquisition of land, getting the required environmental clearances, ease of hiring organized labour and so on and so forth.

Setting these things right are painful (since these are state subjects) and may even inhibit sector growth in the short term, which leads to the double whammy of the govt not attempting to set things right and the industry not showing disproportionate interest in investing in new projects.

This explains why FDI in greenfield projects in pharma which the govt allows 100% FDI through the automatic route shows little appeal to foreign investors. On the other hand brownfield projects which have often managed to cut through the maze of regulations and run profitable businesses appeal more to foreign corporations who would rather have quicker returns on their investments than have their money tied up in policy tangles.

While the Finance Ministry has understood this and is in all likelihood supporting the Commerce Ministry to ease regulations and get PM Modi’s “Make in India” vision to reality, the Parliamentary Panel that wants a ban on brownfield investments does so out of a misplaced sense of nationalism. Surprisingly for a country that recently prided itself for unshackling its economy and pushing pro-growth reforms, the Panel recommended a blanket ban on FDI in brownfield projects, which means it doesn’t want foreign pharmaceutical companies to invest in existing Indian ones.

This is surprising since it comes from a legitimate body that is mandated to think rationally and govern in the best interests of the Indian people. Tragically, the committee seemed more driven by public perception and chose to value Bollywood actor Aamir Khan’s judgement over those of veteran economists!

The central argument is that FDI poses a direct threat to the access and affordability of medicines and threatens to elbow out our domestic industry. This is somewhat difficult to digest. Nowhere in the world has this happened in the past.

There is no indication that foreign firms plan to acquire Indian generic companies to stop generic medicines. If anything, with blockbuster medicines going off-patent and govts around the world preferring generics to manage ballooning costs, pharmaceutical companies should increasingly integrate generic drugs into their portfolio of offerings. Also with the attractiveness of the Indian market, acquisition ofIndian companies – if at all – is more likely for their manufacturing strength in generics and their strong distribution capabilities in a complex land. Not to obliterate them.

The Panel’s concern that India’s domestic industry will die if foreign companies invest here is silly. On the one hand, why would anyone spend billions of dollars to acquire companies only to ‘kill’ them? And on the other, what stops Cipla or Lupin from gobbling up a few companies as they compete for the top spot with Sun-Ranbaxy?

Another argument (more moral than rational) is that FDI in the sector will hamper Indian medicine exports. Currently, India exports drugs to more than 200 countries and vaccines and bio-pharma products to about 151 countries. The export growth rate is around 10 percent per annum. And the major chunk of exports relate to generic drugs. Is it so difficult to imagine foreign companies exporting affordable generics from a land touted by our own leaders as “Pharmacy to the World”? That too when govts around the world have made their preference for generic medicine amply clear?

A third argument is that prices of medicines will rise in India due to FDI inflows. This despite a recent study by India’s own Department of Pharmaceuticals that found domestic drug prices to be immune to acquisitions. It is also pertinent to point out here that the largest critics of the recent Drugs Price Control Order (DPCO) were Indian companies through its lobby, the Indian Pharmaceutical Alliance (IPA). Even if the argument was logical, wouldn’t the stringent and ever-expanding DPCO drive foreign capital *out* of India? Then why bother to ban FDI at all?

The Parliamentary Panel also worried about a lack of compulsion on transfer of technology and similar other conditions expected to bring qualitative change to the domestic pharma industry. First of all, how does a ban on FDI ensure transfer of technology? If India needs technology then why does the govt want to compel things? Why not focus time and resources into creating market conditions that attract such investment into the country? Why would multi-billion dollar business corporations not want to transfer technology to India if cost of transferring it is low (tax laws), safety of the technology (IP laws) is assured and the return on investment is lucrative?

The interest that foreign firms take in India and its businesses will not increase disproportionately until the government makes it easy to operate in the country without letting regulations interfere. A govt voted in on a pro-business mandate must work to integrate India more into the global economy. And, if conditions are eased, market forces will decide whether domestic companies dominate the sector or fall prey to more efficient competition. Either way, the patient wins!

2014 – The year gone by ; 2015 – What can Pharma expect?

As we wind down the year gone by and look forward to welcoming a brand new one, I’d like to keep with the trend of summarizing some of the events that occurred while attempting to gaze into a crystal ball to see what it tells me of the future. The list is broad and directional and by no means an exhaustive one.

1) The effect of price control tapered off – the industry over all seems to have recovered well from the impact of the mandated price reductions that shook its performance in 2013. Over the last few months, it registered growth and the way forward looks optimistic again as companies impacted by mandatory price cuts have begun to see strong volume sales.

While price capping may appear to be a morally strong ground to hold, it seems anachronistic and makes little pragmatic sense when health delivery in the public sector is in such shambles. There are no hospitals to treat or no doctors to diagnose and PSUs which could have made these medicines at inexpensive prices for consumption through public health services, are all but shut down.

That said, there are a few more waves expected as the government expands the NLEM and brings more medicines under the price cap. Lowering prices of medicines has worked well for the new government and it seems to have sensed a soft target here. By forcibly lowering medicine prices, it excuses itself of having to invest in the sector to create more medical colleges, hospitals, and boost the public sector that delivers both affordable medicines and other health services.

This is much like the ex-gratia payments that are made after rail accidents. The silence of the families of the victims is assured when doles are paid out and it excuses the government of having to invest in improving railroad safety. The result is that terrible tragedies do not stop and innocent people continue to lose lives, much like those who will get no greater access to medicines and health care than they would have otherwise.

2) Importance of the US for the IPM – As companies declare their quarterly results, the importance of sales in the US as a percentage of total revenue is emerging as perhaps the most important factor of overall profitability. This is often derived from the ability of companies to price their products differently for the first-world which is often at a significant premium over prices in India. This has resulted in companies building lucrative businesses there, so much so that 40% of the generics consumed in the US are supplied by Indian companies. 

Of course, this dependence has brought the Indian way of doing business under much higher scrutiny than ever before. The US-FDA announced an increase in its staff at the Indian office in a bid to do justice to the vast number of companies that seek to serve the US market. Their audits led to much-hyped issuances of warning letters at times causing the domestic industry to play the victim card.

There have been attempts to highlight the poor quality of medicines produced in India by scholars from libertarian institutions such as the American Enterprise Institute (AEI) and the National Bureau of Economic Research (NBER). Sadly, the Indian government reacted with bluster, threatening to shoot the messenger by suing the institution rather than ordering an enquiry back home to fix the problem.

3) Pipeline fertility has moved to biotechs – Pharma’s bet on biologics has paid off. The most fertile pipelines today exist in biotech startups that do not feature on the “Big Pharma” list, but produce medicines that can significantly improve patient outcomes even as R&D pipelines in large pharma companies continue to remain dry. These medicines will undoubtedly contribute significantly to pharmaceutical sales that crossed $ 1 trillion.

Paradigms of pricing and product sales are getting redefined. While payers are negotiating hitherto unforeseen price ranges, the industry is witness to the “blockbuster” paradigm being busted. So on one side if  biologics push you to compare Lipitor and Seretide with Humira and Sovaldi, paradoxically on the ‘traditional’ medicines (NCEs) side, as Sir Andrew Witty indicated, there is a move to bring in efficiencies into research, reduce chances of error and therefore deliver a new drug more economically to patients than ever before.

Gilead Lifesciences’ drug for Hepatitis – C, Sovaldi (Sofosbuvir) busted the popular blockbuster paradigm by registering $8.5 billion in the first three quarters of sales. It was approved for launch in Dec 2013 and is expected to clock a whopping $11 billion by the end of 2014 – its first year on the market. Pfizer’s Lipitor was the only other product to achieve that quantum of sales after almost 6 years on the market! Gilead also got its act right by voluntarily licensing Sovaldi to a consortium of 6 generic companies for manufacture, supply and sales in emerging markets where it has priced the products at almost 1% of its US price ($900 in EMs vs. $84,000 in the US).

4) Indian government promotes alternative medicine – India’s Prime Minister has, in his recent cabinet expansion, created a separate AAYUSH portfolio, whose minister will be charged with promoting traditional medicines and practices of Ayurveda, yoga, naturopathy, Unani, Siddha and homeopathy. While this is not likely to go down well with allopathy practitioners, it can be certainly expected to impact the pharmaceutical industry that focuses almost exclusively on “western medicine”, as allopathy is popularly known in India.

5) Little progress on UHC or UHAM – Despite some announcements by the erstwhile Health Minister on the party’s key electoral promise of National Health Assurance — setting up an AIIMS-like institution in every state, affordable preventive checkups, free drugs and insurance for all — diagnostic checkups, there is little progress seen on this front. Even mandates asking doctors to prescribe only generic names are limited to a few states and institutions. Primary Health Centres and Government hospitals continue to be in bad shape and there is no perceptible difference felt by patients. Free generic medicines through the Jan Aushadi scheme has also not taken off.

Of course, all this takes time, but indicators of progress such as policy papers put out for public discussion etc have still not been seen. Today the government announced a 20% cut to its health budget in the 12th Five Year Plan and all but dashed hopes of focusing on a social sector of such high importance.

What is likely to happen in 2015?

The healthcare industry is in the middle of disruption with an emphasis on health and health delivery becoming participative. People around the world have begun to “own” their health and this has dovetailed quite well into the amalgamation of technological advancement which allows people to quantify health and predict outcomes better. So overall, what we see is a ‘consumerization’ of healthcare, where patients and caregivers are better informed and prefer to participate in decisions about their health. It is no longer the domain of the doctor only and the industry seems to be moving from a predominantly B2B (hospital-doctor-pharma) model to a B2C (hospital-doctor-pharma-consumer) model.

So, from an industry point-of-view, I’d expect the three major trends to be increased patient awareness and empowerment leading to health consumerization, targeted medicines providing superior outcomes and a subsequent paradigm shift in drug pricing and blockbuster definition.

We will of course continue to see more countries moving towards universal health care and try to balance health assurance with budgetary constraints, industry consolidation due to continued pressure on margins and inefficient pipelines and further commoditization of ‘traditional’ pharmaceuticals as the next wave of patent expiries begin to impact the industry.

Role of the government in India

The not-so-new government has been voted to power on a mandate to improve the economic situation for India and bring it back on a path of prosperity and growth where it was perceived to have diverted from under the left-leaning incumbent government. Some of the policy decisions of the past that did not curry favor with the industry were:

  1. Ambiguity around FDI allowed into pharma brownfield projects – Here the new govt allayed fears by not capping the FDI limit to 49% as was suggested by some parliamentarians. While it did not approve of an automatic route of investment to 100% – a decision more protectionist than pragmatic – it did rule to allow 100% FDI after review by the DIPP and the DoP.
  1. Mandatory price capping for medicines – After the fiasco of the DIPP first attempting to control non-essential medicines and then backing out, the logical step would be to adopt the legal way and expand the NLEM to include many of the non-essential drugs.
  1. Propensity to invoke compulsory licensing – There has been a feeling that PM Modi “sold out” to the US govt and its companies during his recent visit to the US. While that does not appear to be the case, setting up an IPR think tank to review or recreate India’s IPR policy seems a strange thing to do considering that the country’s stand is well embroiled into many treaties via the WIPO and the WTO. The bone in the side of the US is Section 3(d) which does not allow patent protection to incremental innovation. That is a section which should not be compromised upon at all.

So here the case seems to be of what the government should not do. While what the government chooses to do or not to do is its business, it will be crucial for the industry to negotiate through these rough waters as a brand new year appears on the horizon. It certainly looks like a happy one. Happy 2015 everyone!

#BJPPharmaLoot – Nonsense!

Ok. Let’s set the record straight on the so called #BJPPharmaLoot ‘campaign’ on social media. There is a lot of public sentiment getting whipped up around this hashtag. While the reach and the ability of a simple platform to shape public debate amazes, the ability to make comments without having to justify them with evidence or stand up for mistruths when you are held to account, disappoints.

The chronology of events adds good perspective to the issue. On May 15, 2013, the Dept of Pharmaceuticals under the Ministry of Chemicals and Fertilizers issued the Drug (Prices Control) Order, 2013 which is commonly called DPCO or ‘price control’. This is not the first time that such an order was issued. Amongst many other policies, a similar price control order was issued in 1995. Following increased consumer activism around high medicine prices, the order was reviewed in the National Pharmaceutical Pricing Policy in 2012 and subsequently the DPCO 2013 was made law.

Under this order, only prices of medicines that fall into the National List of Essential Medicines (NLEM) are regulated. This was done to ensure that medicines deemed ‘essential’ or life-saving (as defined by the WHO) were priced reasonably and within the affordability of a majority of India’s population that could buy them. The hundreds of millions, who didn’t have a hospital in their village or a pharmacist to buy the medicines from, were left to their fate. But that’s another story.

Under the DPCO of 1995 there were only 68 such medicines which were deemed ‘essential’. The 2013 order expanded that list considerably to include 348 molecules which were available as 650 formulations (capsules, tablets, injections and syrups of different strengths). Was it enough to create access to the 1.2 billion people of India? Of course it wasn’t. Were prices reduced enough? The order impacted prices of medicines by 22% which is in line with the reduction of prices in some developed markets.

As with most policy changes in India, the DPCO also was appreciated, critiqued and downrightly condemned in equal measure.  However, as the winds of political change swept India in May 2014, the National Pharmaceuticals Pricing Authority that is tasked ‘to implement and enforce the provisions of the Drugs (Prices Control) Order in accordance with the powers delegated to it’, decided to extend the price control order by citing Para 19 and giving itself sweeping powers to regulate prices of all drugs (essential and non-essential). In July, it issued an order to bring 108 more molecules that were not a part of the essential list of medicines and cap prices.  Under paragraph 19 of the Order, the NPPA was empowered to do it only under “extraordinary circumstances, if it considers necessary to do so in public interest”. Extraordinary circumstances are understood as times of national disasters, epidemics or such grave situations that require the government to step in and take control. Thankfully, neither such circumstances prevailed nor was there such a grave situation in India at the time.


Since it was clear that the NPPA may have acted in haste to regulate prices of non-essential medicines, the industry sued the body.  With its bluff called, the NPPA decided to reverse the guideline that gave it sweeping powers. This means that the NPPA can no longer act unilaterally to regulate the prices of medicines. What it definitely does not mean – as the #BJPPharmLoot hashtag erroneously claims – is that medicine prices in India have been deregulated.


Emotional messages such as in the picture above, are completely misinformed and spread untruths about the policy change. Look at the prices of Imatinib (generic molecule name of Glivec)  in the picture below. Do you see the prices mentioned in the emotional message anywhere there?


There are questions about whether this was hastily done to coincide with Prime Minister Modi’s trip to the United States where IPR related issues are expected to take centre-stage. The two issues seem unrelated. Firstly, the US government has never challenged India’s policy to regulate drug prices. Fighting against rising healthcare costs through the popularly known ‘Obamacare’ policy, it seems counterintuitive for the Obama administration to find fault with another government for doing exactly that. Secondly, the US has only challenged India on what it calls ‘flimsy’ patent laws. That has nothing to with the regulation of prices of non-patented medicines.

So, does the recent NPPA decision impact drug prices? The simple answer is not yet. Not only will the prices of medicines on the essential list (NLEM) continue to be capped as before, the prices of the new 108 non-essential medicines are also still capped. It is likely that the court may rule that the cap be removed, but until it does, who knows.

The only change that happened in the recent development is that the Solicitor General of India held that the NPPA over-reached its brief and therefore asked it to step back. That is all that the NPPA did. Medicine prices did not shoot back through the roof. They remain where they are. This interplay involved the Solicitor General of India and the NPPA. Whence BJP, Pharma or Loot?


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