While slamming the current pro-industry economic policies at the cost of people’s health, a CII-sponsored study has called for sprucing up the existing criteria for price control and suggested bringing all activities related to health and pharma sector under one ministry.

“The balance that existed between industrial and health policy has taken a back seat, risking health security in the country. In its present form, the DPCO is as ineffective as it is inadequate in its coverage. There is urgent need to spruce up the existing criteria for price control. The present practice of using monopoly and market dominance measures should be replaced with the criteria of ‘essentiality’ of drugs. This would have maximum spill over effect on the entire therapeutic category, and is also likely to prevent the present trend of circumventing price controls through non-standard combinations,’’ according to the study 'India Health Report 2010’, done by Indicus Analytics for CII. The study assumes significance as CII represents the industry including the pharma and healthcare sector with large number of companies under the fold.

Direct price control should be applied on formulations rather than bulk drugs. This is likely to minimise intra-industry distortions in transaction. Other than overt regulatory controls, accelerating access to drugs can also be ensured by shoring up the mechanism of bulk procurement of drugs. “Large trade margins are the rule rather than exception in the Indian drug industry, and reflect the inadequacy of competition. One solution to ensure greater levels of competition, and also to ensure uninterrupted supply of drugs to public health institutions, is to spruce up the languishing central public sector drug undertakings. This move may also help in moderating market prices of certain therapeutic categories,” it said.

Post-2005, India has moved from the process to product-patent regime. Large drug companies often indulge in patenting medicines whose utility or efficacy is already known, which are typically designed to delay generic competition, and result in higher prices. Recent developments in Brazil and Thailand suggest that compulsory licensing can be an extremely powerful tool to combat high drug prices. In the Indian context, it is not only vital for the government, as it can hope to reduce procurement costs substantially, but also for people who access treatment in the private sector. This is especially important in India as 80 per cent of all out-patient treatment takes place in the private sector, as per the study.

The bigger drug manufacturers argue that the best way to reduce the price of patented medicine is through price negotiation rather than issuing compulsory licensing. However, available evidence from Latin American countries suggests that price negotiations are really not an effective tool to counter the high price of patented medicine, the study pointed out.

“India’s drug regulatory system is in a poor condition owing to various reasons, the more critical being the lack of adequate manpower, archaic laws, overlapping roles, hetero geneity in the procedures followed by state licensing authorities. Several vital regulations are divided across ministries, thereby resulting in ineffective control. For instance, the Department of Pharmaceuticals (Ministry of Chemicals and Fertilisers) is the nodal agency for price control and has the mandate to control the quality of the products produced by the industry (GMP compliance), while the CDSCO (Ministry of Health and Family Welfare) is in charge of aspects such as new drug licensing, and the state drug controllers monitor drug production and sale. The solution really lies in bringing regulation under one single agency, and it would be more meaningful if the entire job is taken over by the Ministry of Health and Family Welfare,” it suggested.