Liberal Pharma Policy for Whose Benefit?

I couldn''t help being both amused and disappointed by Mr. Gopakumar Nair''s reactions to my small note on the New Drug Policy (Pharmabiz, March 21) . Amused because the reactions are so predictable. Disappointed because we would expect the "Indian" Industry, at least, to be more responsive to people''s needs and peoples concerns. Drugs are not like cars or washing machines. In the case of drugs those who need them most are the least likely to be able to pay for them. It is precisely because of this that pricing is such a major issue. If high process cost out a majority of people from the market, there is no point in having an indigenous pharmaceutical industry in the country.

International Price Comparison

Let me turn to the points Mr. Nair raises in his rejoinder. The first point is easily taken care of. Let me assure Mr. Nair that I am aware that different countries in the world use different currencies. In my note the note on conversion had been inadvertently missed. For readers who may have been impressed by words like "misinformation" and "chaotic figures" used by Mr. Nair, the Table should read as follows:

That, I hope takes care of any confusion that may have been created and readers can draw their own conclusions!

High Trade Margins Responsible for High Prices?

Mere statements asserting that high taxes, duties and trade margins are responsible for prices in drugs being higher in India than in neighbouring countries are unacceptable. High taxes and duties on medicines is a matter of concern in most developing countries. I would welcome an initiative by the Indian Industry, in partnership with public interest groups, to press the Government for a review of the duty and tax structure.

However I would insist that the Industry also appear to be seriously interested in lowering drug prices by taking other necessary measures. Mr. Nair talks of high trade margins. There are a large number of instances where the same company sells generic drugs to wholesalers at one-fifth or less of the price at which their branded products are marketed. The readers are free to draw their own conclusions as to who is crucially responsible for hiking prices of drugs. May I underline here that the entire marketing system of drugs in the country is designed to benefit BOTH the manufacturer and the wholesaler/ retailer. It is a system that has been arrived at for their mutual benefit, disregarding the interests of consumers. The industry is a captive to the demands of those involved in trading of medicines because it survives on aggressive promotion of its products, and needs them for its own survival.

Misinformation on Low Drug Prices

Any confusion that may exist regarding rise in prices of patented and off-patent drugs is in fact an Industry creation. It is the Indian industry that has for long asserted that Indian drug prices are the lowest in the world - an assertion, unfortunately, that has been unquestioningly accepted by most. This is a contention that we have always disagreed with. It is the Industry, which has repeatedly used figures regarding global process of on-patent drugs to try to prove that Indian drugs are much cheaper. As my earlier note had pointed out, this kind of selective use of figures deliberately hides the fact that off-patent drugs in India are often more expensive, not only in developing countries, but aso in some developed countries. This is of serious consequence because off-patent drugs account for more than 85% of the volume of drugs sold in the country.

It is precisely because of this that we feel that tying up the issue of price-controls with change in the Patent Act is illegitimate. What Mr.Nair is essentially saying is : allow us to make more profits (some would read it as profiteer) and we will develop new drugs. It is because we had anticipated such an argument from the industry that we had said that a change of the Indian Patent Act will be used as an excuse to decontrol drug prices further and thus the amendment of the Indian Patent Act would lead to a hike in prices of off-patent drugs too. Nr Nair''s assertions have only confirmed our worst fears in this respect.

Research and Development

"Promising trends" notwithstanding the total R&D expenditure as a percentage of sales turnover has shown little increase. Tying up price decontrol with the requirement to increase R&D expenditure suffers from the pitfall that higher profits allowed to manufacturers do not necessarily translate into higher R&D expenditure. We hold that in order to spur R&D activity the Government has to play a proactive role and pledge resources for such activity. Global experience shows that private R&D expenditure always follows public expenditure. We find the new drug policy entirely deficient in this respect - a 150 crore fund is a joke for any country seriously considering the prospect of emerging as an R&D superpower!

Local Manufacture

I totally puzzled by the argument that price decontrol will promote local manufacture. Price decontrol affects formulations - how will this promote bulk drug manufacture? Mr. Nair is of course correct (and honest) when he says that an "open policy" helps industry. What he has not said is that it helps the industry make profits and satisfy its shareholders. But then it would not require a genius to deduce that! But drug manufacture, I assume, is done to remedy diseases. If drugs are too expensive for those who require them, why do we need an industry at all?

WTO and the Industry

I am glad that Mr.Nair agrees with me on something - that the present situation has resulted in high import dependency. I am not interested in even discussing how self-reliant we are in production of formulations. India is not a Banana Republic, and I start from the premise that self-reliance means self-reliance in bulk drug production. The question is not which government is responsible for the WTO regime that is in force. The question is whether the government of the day and its policies are doing enough to protect indigenous industry. Mr.Nair takes resort to the tired TINA (there is no alternative) slogan.

I fear that large sections of the Indian Industry are not even interested in manufacturing any more. They are comfortable in being traders because their profits come from selling formulations, not from manufacturing bulk drugs. Yes, the WTO regime has made the situation difficult for bulk drug manufacturers. But do we see the same level of interest in this issue within the Industry as we see on the issue of price controls? We need to seriously engage in a debate regarding how to counter the problem of cheap imported bulk drugs. Can we not think of a cell within the industry that works on anti-dumping measures? Can we not think of measures to make bulk drug manufacturing more competitive?

Non-Intersecting Concerns

The last argument that Mr Nair has used really lets the cat out of the bag. He cynically asserts that the situation of wide price variations for the same drug is something, " we must be prepared to deal with and live with in an open market society". Who has to be prepared to do so? The Industry has no problems with it, because it stands to gain from such instances of blatant profiteering. But the people of this country certainly are not prepared to live with it. They, furthermore, do not require to be preached to on the merits of an "open market society" by an industry that wishes to put profits over their misery. Clearly we are talking of two non-intersecting sets of interests. I am disappointed because it need not necessarily be so. It is possible for the industry and consumers to work together, at times, to their mutual benefit. But for that the industry needs to show some sensitivity towards the needs of consumers.

About the author:

--- The author is with Delhi Science Forum