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‘Medicines for All', the Pharma and givers. The only equitable solution in
a country like ours is free healthcare of the Industry and the Indian State
same standard, to all. The question that would arise would be: why should the rich get free treatment? Our answer is that except for the very rich and the creamy layer of the middle class, almos t everybody else is likely to court impoverishment when faced When we consider that with critical health conditions. It is in the expenditure on medicines There are a few articles of faith re- garding healthcare which are interests of the poor that the relatively in India accounts for 50% to gainin g increasing currency: good well-off, and the middle class are given qualit y healthcare should be accessible, access to publicly provisioned healthcare, 80% of treatment costs, India's affordable, and available to all in need as this would in the long run ensure quality pharmaceutical success has and the poorest person should get the care. The real rich can look elsewhere if clearly not translated into same quality of healthcare as the richest they find it inconvenient to use the public availability or affordability of person. Obviousl y in India this would be healthcare system. Of course, people with seen as a daydream. But in even the so- better incomes will have to contribute medicines for all. As part of calle d developed economies, except the more by way of taxes, etc. Universal Access to Healthcare, US, free quality healthcare is a reality with Even if we do not have a free universal good quality healthcare should nobody having to pay at the point of ser- healthcare system in a couple of years, be accessible, affordable, and vice and nobody denied free healthcare. movement towards achieving it must A major component of healthcare is begin . The easiest way to restore faith in available to all in need. Providing medicines. In India, research studies show the system is to stock quality medicines at quality medicines to all – free at that expenditure on medicines accounts all levels of public healthcare. the point of service – in all our for 50% to 80% of the total cost of treat- Cost of Free Medicines
public facilities is an achievable ment. In addition patients end up paying for a variety of tests. The significant issue here is that of the task. This article estimates the Ironically, the Indian pharmaceutical cost of provisioning free medicines. Our cost of providing free and quality industry is seen as a success story; and it is estimates show that it will cost the central medicines at all levels of public indeed so in comparison with most devel- and state governments around Rs 30,000 healthcare and offers suggestions oping economies with the possible excep- crore per year if medicines are given free tion of China. India's pharma success – to all from the primary to tertiary levels, on how this can be done.
currently selling Rs one trillion worth of subject to various assumptions. A recent active pharmaceutical ingredients (APIs) study by Gupta et al3 estimates the cost to and formulations annually – has given it be Rs 33,546 crore. We give the details of the title of "pharmacy of the world".1 This our estimate in Annexure 1 (p 50).
success is attributed, among other reasons Four aspects must be looked at to en- to India's process-patent-only-regime for sure that the system does not work at medicines post the Patents Act, 1970.
The irony, and the tragedy, of course is • Restrict the list of medicines available that this success has not translated into in this country to essential medicines. The availability or affordability of medicines current National List of Essential Medi-for all.2 What can be done to provide cines (NLEM 2003) and WHO's Model List Some of the arguments in this paper were medi cines in all our public facilities espe- (2010) have around 350 medicines. This presented at a meeting of the High Level cially to the poor? The response of policy- can be increased to 500 to include medi- Expert Group of the Planning Commission in makers is akin to the discourse in the issue cines for rare conditions and unnecessary December 2010 and elsewhere. Comments from Anant Phadke and T Srikrishna and of right to food and subsidised food for the fixed dose combinations and drugs of constant education from lawyers Leena poor. They have come up with targeted doubtful or no value can be removed.
Menghaney and Kajal Bharadwaj on schemes which suffer from disagreement • Price regulation of all these medi cine s.
intellectual property issues are gratefully over who should be targeted, what should be • A national vaccine policy to regulate the the extent of free care, which pre-existing entry of new vaccines as also in the Ex- S Srinivasan ( is with disease conditions should be exempted and panded Programme on Immunisation (EPI).
LOCOST, Vadodara and with the All-India how to deal with the potential hazard of the • Proactive use of Trade Related Aspects Drug Action Network and Medico Friend Circle.
system being exploited by healthcare seekers of Intellectual Property Rights (TRIPS) Economic & Political Weekly EPW June 11, 2011 vol xlvi no 24
flexibilities including issue of compulsory working capital from the district adminis- supply of drugs by the National Rural licences on patented drugs that are high tration. The 20% margin on the procure- Health Mission (NRHM) programme. In- priced and/or are not easily availabl e. ment prices takes care of the overheads. deed the pharma trade in Assam is look- Needless to say, action and regulation Suppliers are mostly well-known compa- ing forward to the day when the current on other unethical practices endemic to nies quoting much lower prices for the dis- state health minister – whose zeal is seen the pharmacy scenario in India would also trict administration (Table 1). It does not as the cause – will step down or lose his help. For instance, incentives to doctors by reach out to the primary health centres ministerial berth even as the traders way of drug promotion; the "cut" practice (PHCs) however. Most importantly, the ini- are hoping that the NRHM will not get by doctors,4 laboratories, CAT scan centres, tiative in both these districts was taken by an extension. etc. The professional medical associations an IAS officer and collector Samit Sharma, What will happen to the pharma sector like the Indian Medical Association (IMA), who is a paediatrician by training. A tribute in India in the event of full-scale restruc-the Indian Association of Physiotherapists to the effectiveness of these efforts is the turing and price regulation? Certainly (IAP), the Federation of Obstetric and sale of generic drugs at these prices by other there will be a shake out with perhaps Gynaecological Societies of India (FOGSI), private retail pharmacies in Chittorgarh some of them even deciding to shut shop the Pharmacy Association, and the Medi- who put up hoardings to announce the since there will be no free rides to the cal Council of India (MCI), among others, availability of generic medicines (see also bank thanks to overpriced, irrational must also act in convergence with the Tables 1 and 2). The Rajasthan govern- medicines and fixed dose combinations above objectives. ment has announced free medicines for (FDCs). The marketing expenses of these all in all the government facilities from companies will decrease unless they end Availability of Medicines
2 October 2011 on the lines of the TNMSc, up spending more on product differentia- Two remarkable attempts, among half a with Sharma now heading this effort.
tion of the same essential drug – that is dozen, to make medicines available and What can the rest of India's public one company claiming their generic prod- affordable have been those by the Tamil healthcare system learn from these expe- uct is superior to that of the competitor. Nadu Medical Services Corpo ration riences? The major lesson is that the pub- The number of retail pharmacies will also (TNMSC)5 and the ones at Chittorgarh and lic health system can deliver given appro- come down as the retail trade will not be a Nagaur districts.6 The former has attained priate leadership and political will. Indeed money spinner, at least in the short run. In a level of stability though it probably has bulk formulation suppliers in Assam com- the medium and long run, sales may pick its share of critics. Its strength lies in the plained to this author and his colleagues up if some retail outlets are contracted to rock bottom low prices at which essential that the offtake of bulk formulations have provide and not sell medicines and as access medicines are procured, and a high de- fallen in recent years, because of free to government provisioned healthcare gree of transparency in the procurement Table 1: Comparison of Chittorgarh, TNMSC Procurement Prices and Retail Market MRPs
and related operations. It supplied about 270 Generic Name of Drug Chittorgarh Tender drugs in 2007-08 as per its essential drug list (EDL) with 21 fast moving drugs account- Albendazole tab IP 400 mg ing for 80% of its procurement budge t. It Alprazolam tab IP 0.5 mg also had 322 "specialty" drugs – out of Arteether 2 ml Inj 9.71 for 80 mg per vial which 10 drugs accounted for 85.6% of the Amylodipine tab 5 mg 0.42 for 10 tabs of 2.5 mg budget and one – Temozolamide Caps – for Cetrizine 10 mg 52%. The TNMSC system services all levels Ceftazidime 1000 mg 8.77 for 250 mg injection of care. The patient does not have to pay Atorvastatin tab 20 mg 2.30 for 10 tabs of 10 mg for these drugs7 which are available only Diclofenac tab IP 50 mg through the government health system. Diazepam tab IP 5 mg In the Chittorgarh district and Nagaur Amikacin 500 mg *For similar strengths and pack sizes unless indicated otherwise, accessed 29 April 2011.
district models, the drugs are available at Source: Prices in Columns (3) and (4) from Samit Sharma's presentation, July 2009, and websites cited, op cit. Source for TNMSC
the district hospital levels at the retail level prices: and
as well through a series of retail shops run Table 2: Comparison of Chittorgarh Procurement Prices and Printed MRP
by the government cooperative set up for Drug Manufacturing
Name Given by Company Ingredient Name of Rate at Which Drug Is Rate at Which Drug Is Sold Medicine (Generic Name) Purchased by the Chemist the purpose. The above poverty line (APL) (Stockist Price) One Injection patients have to pay for the medicines. Cadila Any user outside the system could also German Remedies access these medicines at the same low Wockhardt prices from the generic shops retailing Alembic these at various places in the district. The system runs on a 30-day credit Ranbaxy from the suppliers, with the provision for Cipla returning unused medicines, with no Source: Samit Sharma's presentation, July 2009, and websites cited, op cit.
June 11, 2011 vol xlvi no 24 EPW Economic & Political Weekly
becomes near universal. Many of them will Several government committees have The question of "what will we do for attempt to promote ayurvedic and herbal commented on the wide differences and R&D for new drugs" has to be confronted products, hoping that there will be no high prices within India – though they do head on but more creatively. R&D funding price and other regulation on these. Many not term it a market failure (see Box).10 for new drugs15 will have to be seen as part companies will diversify into biologics and Some questions need to be clarified. of a larger national innovation policy with vaccines and of course focus on exports. It Will companies have the freedom to make the clear understanding that Indian is here that the government of India could other medicines – otherwise rational, me pharma companies will work jointly with pitch in with funds for R&D of useful drugs too ones – in the post-Universal Access the government to discover new drugs for for the national scenario, prize funds for scenario? Following the experience of conditions that are relevant to India/third innovation and related activitie s. National Institute of Clinical Exce llence world. The policy should also envisage uni-(NICE) in the UK, we are tempted to suggest versities working on basic research.16 Price Regulation
that pharma companies can make and Those Indian pharma companies who want That price regulation in some form is es- even sell them as long as they are rational to plough their own furrows on R&D must sential is now accepted in much of the lite- (to be decided by the Drug Contro ller also be encouraged to do so. One thing rature and in practice. Most advanced General of India). However, only those however is clear – making the patenting of "free market" economies have some form drugs will be reimbursed by the govern- publicly funded research mandatory will of price regulation/subsidy/reimbursement ment (or an autonomous designated body not result in quality R&D per se.17schemes.8 The Indian pharma formulations like, say, an Universal Access to Health The other issue is the carrot often dan- industry is characterised by wide-ranging Corporation) which are in the govern- gled by the Indian pharma lobbies like prices for the same product and high profits, ment list of reimbursable drugs.14 But then I ndian Drug Manufacturers Association apart from marketing and selling unnec- India is not the UK. We will have to deal whenever such discourse takes place. They essary combinations. Our analysis showed with the formidable capa cities of the Indi- offer to supply all the medicines required that more than 60% of the top-selling 300 an companies to lobby for their products. by the state and central governments free drugs which accounted for nearly 80% of So all things considered it is preferable to or at the TNMSC prices. The quid pro quo is the retail sales are not to be found in the have only a restricted list (the 500 mole- "non-interference" especially in matters of national essential drug list. There are also cules allude d to before) which would be pricing. However, this will not work be-other ironic consequences due to suscepti- licensed for manufacture and/or market- cause (a) it is difficult to regulate, manage ble users making decisions in distress and ing in India. India however needs an and morally justify such vastly different out of ignorance. Often, these decisions equivalent of the NICE. prices in the same country to the middle are taken on the "advice" of prescribers, and due to the "marketing" efforts of com- Box 1: Some Recommendations from Select Committee Reports
panies – called asymmetry by our econo- The report of the Standing Committee on Chemicals & Fertilisers, 2005-06, Lok Sabha observes:11 mists. As a result, the costlier versions of The Committee's examination revealed that though, there is a provision that a strict watch will be kept on the movement of the prices and the government may determine the ceiling levels beyond which increase in prices the same drugs are bought more, and ir- would not be permissible, this provision has seldom been applied. In this context, some of the state govern- rational combinations sell more because the ments have also informed that when the cases of high prices of anti-cancer drugs, antibiotics, nutraceuticals doctor prescribes them. We have discussed and cetrizine were referred to the National Pharmaceutical Pricing Authority (NPPA), the latter conveyed its helplessness in curtailing the high prices. The Committee are unhappy over this unsatisfactory state of affairs this elsewhere in detail.9 Tables 3 and 4 and desire that the situation should be remedied forthwith. They, therefore, recommend that for the category (p 46) as also Tables 1 and 2 make the of drugs for the same therapeutic use, the government should determine a reasonable ceiling beyond which price distortions clear. Collectively it qual- increase in prices may not be allowed.
ifies as a market failure – in the sense that Draft Pharmaceutical Policy 2006 (hereafter the draft policy)12
much of the intended clientele is left im- All 354 drugs in the National List of Essential Medicines 2003 (354 drugs with formulations of specific strengths poverished after buying India's modern numbering about 663 excluding exemptions) would be brought under price control. This is in addition to the medicines, or worse cannot afford to buy existing list of formulations of 74 drugs. the medicines prescribed, illustrating the Department-Related Parliamentary Standing Committee on Health and Family Welfare,
classic Indian descriptive metaphor (also August 201013
witnessed in the food sector) – "sitting on 34 One option for making available affordable medicines put forth before the Committee was to cap the profit the banks of the Ganga, yet thirsty". It is margin of all medicines irrespective of whether they are under DPCO or not. This step would do away with the need of monitoring prescriptions, identifying the manufacturers supplying low-priced medicines and without not a failure if one compares these prices to any need to prefer generic over branded products. If fixation of MRP is done by NPPA based on a fair, transparent international prices of medicines, especially system keeping interests of all stakeholders in mind nearly all issues on pricing would get resolved. This system is already in vogue in many other fields such as electricity rates, bus and taxi fares, interest rates, insurance HIV-related medicines. In fact inter- premium just to mention a few. Lastly, with the floating of an open tender in the market, all drug manufacturers/ national civil society acolytes of India's stockiest would come forward with the offer of lowest possible rates… pharmacy prowes s see the low prices of 36 The committee is, however, of the considered view that given the current ground realities in the country where more than 80% population is dependent on private medical care and nearly 45 crore people live below HIV medicines here as a triumph of the the poverty line, the most effective and direct approach would be to put a blanket cap on profit margins of all market. The collateral fallout is an inter- medicines across the board. Medicines are the only item where the decision to buy is not taken by the purchaser esting pheno menon: local predators are but by a third party, i e, the doctor. Therefore, if prescribers and producers join hands and take advantage of a viewed as saints abroad.
patients' helplessness, only the State can stop them.
Economic & Political Weekly EPW June 11, 2011 vol xlvi no 24
class constituency, who may have to buy access to insurance schemes, etc. Indeed measure the goal of universal access and the medicines or to justify it before the ju- one can see government doctors advising same quality of healthcare for all. Its pas- diciary, if nobody else, and (b) it would in patients to buy "better" medicines from the sage through Parliament will also be diffi-
effect translate and be perceived as "sarkari" nearest retail pharmacy. And (c) this would cult since MPs would want to know what
medicines for the poor; and costly , quality therefore negate the basic premise of happens if the private players renege or if
medicines for those who can afford or have equity in health and postpone by a long the low prices agreed upon do not turn out to
Table 3: Highs and Lows in Cancer Drug Prices
be feasible down the line or even within the contracted period. These are not concern s Letrozole 2.5 mg (10 tablets) that can be laughed away for this is pre- Imatinib 400 mg (10 tablets cisely what happened with the vaccin e Nozolamide 250 mg (5 capsules) commitments made by private vaccine Pemetrexed 500 mg (vial) manufacturers after the infamous closure of Exemestane 25 mg (30 tablets) Source: "NPPA Study Finds Huge Gap in Cancer Drug Prices", Joe C Mathew in Business Standard, New Delhi, 31 October 2010.
the vaccine public sector units (PSUs) by the Table 4: Difference in MRPs of LOCOST and Retail Market Brands
No Name of Drug
Brand Name and Manufacturer Per MIMS (December 2008) Lowest MRP To LOCOST MRP (%) 1 Albendazole tabs Rs 14.85 per strip of 10 tabs Albezole – Khandelwal Rs 12.00 per tablets Combantrin – Pfizer Rs 14.83 per tablets Nemozole – IPCA Rs 9.75 per tablets Rs 17.00 per tablets 2 Amlodipine tabs Rs 3.70 per strip of 10 tabs Amlodac – Zy – Alidac Rs 15.10 per strip of 10 tablets Amlopres – Cipla Rs 36.86 per strip of 15 tablets Calchek – IPCA Rs 22.50 per strip of 10 tablets Lama – Stadmed Rs 15.03 per strip of 10 tablets Myodura – Wockhardt Rs 15.45 per strip of 7 tablets 3 Amoxycillin caps Rs 12.50 per strip of 10 caps Amoxil – Zydus Cadila Rs 18.60 per strip of 6 capsules Amoxivan – Khandelwal Rs 33.00 per strip of 10 capsules Biomoxil – Biochem Rs 37.73 per strip of 10 capsules Rs 35.50 per strip of 10 capsules Rs 67.50 per strip of 15 capsules Novamox – Cipla Rs 65.00 per strip of 15 capsules 4 Amoxycillin caps Rs 22.00 per strip of 10 caps Amoxil – Zydus Cadila Rs 35.40 per strip of 6 capsules Amoxivan – Khandelwal Rs 65.00 per strip of 10 capsules Biomoxil – Biochem Rs 68.17 per strip of 10 capsules Rs 38.33 per strip of 6 capsules Rs 120.80 per strip of 15 capsules Novamox – Cipla Rs 48.95 per strip of 6 capsules Rs 4.25 per strip of 14 tabs Aten – Zydus Cadila Rs 30.71 per strip of 14 tablets LONOL – Khandelwal Rs 27.50 per strip of 14 tablets Tenolol – IPCA Rs 32.35 per strip of 14 tablets Tenormin – Nicholas Piramal Rs 40.00 per strip of 14 tablets Rs 1.70 per strip of 10 tabs Calmpose – Ranbaxy Rs 22.00 per strip of 10 tablets Placidox – Lupin Rs 14.00 per strip of 10 tablets Valium – Nicholas Piramal Rs 23.00 per strip of 10 tablets 7 Enalapril Maleate Rs 4.40 per strip of 10 tabs Ena – 5 – Stadmed Rs 19.00 per strip of 10 tablets Enace – Nicholas Piramal Rs 25.85 per strip of 10 tablets Envas – Cadila Rs 46.07 per strip of 15 tablets Rs 25.00 per strip of 10 tablets 8 Fluconazole caps Rs 31.25 per strip of 10 caps Forcan – Cipla Rs 34.51 per capsules Syscan – Torrent Rs 41.00 per capsules 9 Glibenclamide tabs Rs 3.35 per strip of 10 tabs Daonil – Aventis Rs 9.00 per strip of 10 tablets Euglucon – Nicholas Piramal Rs 8.80 per strip of 10 tablets 10 Metformin tabs Rs 5.20 per strip of 10 tabs Glyciphage – Franco Indian Rs 17.25 per strip of 10 tablets Walaphage – Wallace Rs 7.20 per strip of 10 tablets 11 Diclofenac tabs Rs 3.00 per strip of 10 tabs NAC – Systopic Rs 16.00 per strip of 10 tablets Tromagesic – Themis Rs 3.15 per strip of 10 tablets Voveran – Novartis Rs 34.70 per 15 tablets 12 Paracetamol tabs Rs 3.80 per strip of 10 tabs Rs 16.50 per strip of 15 tablets Rs 10.50 per strip of 10 tablets Malidens – Nicholas Piramal Rs 9.60 per strip of 10 tablets Pacimol – IPCA Rs 6.30 per strip of 10 tablets 13 Rifampicin caps Rs 34.50 per strip of 10 caps Rs 42.39 per strip of 10 capsules Rifamycin – Biochem Rs 59.18 per strip of 10 capsules Rimactane – Novartis Rs 22.90 per strip of 4 capsules 14 Salbutamol tabs Rs 1.90 per strip of 10 tabs Asthalin – Cipla Rs 5.21 per strip of 10 tablets Salmeplon – Khandelwal Rs 2.08 per strip of 10 tablets The prices of the other brands were taken from MIMS, December 2008.
LOCOST prices are from January-March 2009 price list. The situation has not changed much in the two years since.
June 11, 2011 vol xlvi no 24 EPW Economic & Political Weekly
then union Health Minister A Ramadoss. ever present threat of these being intro- biotech drugs is sought to be moved to It is also unclear how the numerous players duced in the retail market first followed by the department of biotechnology (DBT) will divide the cake of government supply.
the vaccine manufacturer lobby's attempt thus moving it out of the purview of drug to conduct "demonstration projects" to price regulation too which is currently un- Regulating Vaccines
universalise them through the public der the department of pharmaceuticals, and Biotech Products
health system. These concerns again are mini stry of chemicals and fertilisers. In The current trend – backed and initiated not theoretical and have been discussed, fact, biotechnology is the new sacred cow by the influential Bill Gates among others in the context of the HPV vaccine, in this that has to be given a long rope as the older – is to advocate vaccines for many of the journal earlier.21 ones like (the departments of) atomic health problems facing the developing As regards biologics, it is debatable energy and space lose their sheen.23 world. Indeed it is good to have a cure, whether the optimism or for that matter, and a vaccine, if we could, for say, Box 2: Cost of Treatment with Biotechnology-
the high prices are justified (see Box 2). when supply of clean water and food is the Avastin (or Bevacizumab of Genentech/ • Abciximab (antianginal, Eli Lily): Rs 39,480 for a solution, why resort to vaccines? If vaccine Roche, a drug used to treat various can- 60 kg man per day manufacturers had their way, 54 vaccines cers, including colorectal, lung, and kid- Epoeitin alfa (Wepox/Wockhardt, Treatment of anaemia of chronic renal failure): Rs 10,200 for 8 would enter India. However our perform- ney cancer) extends the life of a cancer weeks for a 60 kg man and ance with EPI itself is very poor. Full im- patient by a few months. Here is what one • Rs 1,912 to 11,475 per week for a 60 kg man munisation – BCG, DPT3, OPV3, Measles- industry researcher has to say, • Interferon alpha-2a (Roferan-A/Nicholas Piramal) was 66% maximum, probably significant- …the hype (in the western biotech industry) used in types of leukaemia: Initial therapy costs ly lower in 2008.18 Table 5 shows the kind would have us believe that it is a roaring of Rs 43,552- Rs 1,30,656, then maintenance therapy costs of Rs 1,06,158- Rs 3,18,474 (6-18 of markups prevalent in vaccines since success. Financially this is certainly not the there is no price regulation. case. The top 2 or 3 companies account for • Etanercept (Enbrel/Wyeth) –in severe arthiritis: most of the revenues, and just a few years A national workshop of academicians and Rs 18,131 per week of therapy which has to be ago it was estimated that the industry as a taken long-term. concerned health activists which met in whole has lost $100 billion since its incep- June 2009 proposed a draft national pol i cy.19 tion in the 1970s (The Economist, 2006). Are As the draft vaccine policy points out, these disastrous financial figures compen- Much has been written on using compul- sated by overwhelming medical success? It The choice of which vaccine to give (or not does not appear so. One of the most well- sory licence (CL) as a means of promoting to give), target population, and mode of ad- known biologics is Avastin, used to treat generic competition. India's Patents Act ministration (dosage, schedule, interval be- various cancers, which had revenues of $5.7 provides25 for it under Sections 84 (if initi- tween doses, intramuscular or intra dermal, billion in 2009 (Allison 2010). This extends ated by a private party), 92 (notification by etc), are important policy decisions that life by a couple of months (Shaffer 2010). government that a CL needs to be issue d must be guided by a strong scientific ration- Medically speaking one might well describe ale, after wider scientific debate in the coun- Avastin as a qualified success and yet it for public non-commercial use, natio nal try, with rigorous inputs from multicentric is one of the blockbusters of the industry. emergency or extreme urgency), 92A (CL field epidemiology, irrespective of whether U ndoubtedly there are biologics that do a lot for generic exports) and 100 (for govern- it has been proven in populations abroad.
of good, especially for certain patients (and, ment use). Nothing much has been done in Combining any UIP (Universal Immunisa- financially for certain companies), but that is this regard in India in terms of using these tion Programme) vaccine with any non-UIP not the whole picture.22 vaccine needs rigorous scrutiny and public provisions. Thailand, Malaysia, Indonesia, debate. Other combinations must be proven In any case it is illogical to keep these Cameroon, Eritrea, Zambia, Zimbabwe, to be equivalent to or more effective and safer biotech drugs out of the purview of the Ghana, Mozambique, Ecuador, Brazil, Italy, than single vaccines before adoption.20 Drugs and Cosmetics Act. All biotech Canada and Israel, have been far more Costs, efficacy and effectiveness are ob- drugs are overpriced and there is no courageous in issuing CLs despite the per- viously very important especially with the price regulation. In fact the regulation of ceived strategic vulnerabilities of some of them with respect to the western govern- Table 5: Difference in Vaccine MRPs and the Prices for Physicians
Constituent Vaccines MRP in Rupees, Price Offered to Discount in ments where the principal big pharmaceu- Rupees (A-B) Margin of Profit tical companies are located. India is one of for the Physician the few countries where issu ing CLs for Diphtheria, Tetanus, acellular pertusis, local manufacture is meaningful, because inactivated poliomyelitis vaccine, Indian industry has the capacity to back it Haemophilus influenzae b conjugate vaccine up by actually manufacturing the drugs so Imovax polio Inactivated Poliomelitis vaccine licensed. Also, there are at least a couple of Component pertusis, Diphtheria and tetanus toxoids 1,211 Varicella vaccine drugs for which a CL initiated by the gov- Hepatitis A vaccine ernment would be of use to the HIV patient Diphtheria, Tetanus, pertusis, Haemophilus community at large – for instance, Ralte- influenzae b conjugate vaccine gravir, Etravirine, Rilpivirine, Maraviroc – Haemophilus influenzae b conjugate vaccine all useful in the new types of resistant Source: Lodha, Rakesh and Anurag Bhargava (2010): "Financial incentives and the Prescription of Newer Vaccines by Doctors in India", Indian Journal of Medical Ethics, January-March, VII: 1.
strains of HIV. To that one can add pegylated Economic & Political Weekly EPW June 11, 2011 vol xlvi no 24
interferon (for chronic hepatitis C), a patent failures of health markets, continue to products imported from countries like granted despite post-grant opposition; and espouse (or fail to clearly speak up against) India /China. But they are actually pro-sorafenib tosylate (useful for renal cancer), TRIPS plus (more than that require d by tecting their turf from Indian generics and erlotinib (useful in lung cancer) – the TRIPS) measures. These include: data exclu- hence their (western pharma's) own bot- patent -worthiness of the last two is still a sivity – in bilateral Free Trade Agreements tomlines. Competition has been elevated matter of dispute in the courts.26 (FTAs); the attempts to derail Sectio n 3d of to an economic war of attrition and a war There has been a most encouraging the amended Patents Act 2005 of India;28 by all means fair and foul, including creat- "Note on CL" by the Department of Indus- against border measures proposed on ing trade barriers gift-wrapped in the lan- trial Policy and Promotion (DIPP)27 of the Anti-Counterfeit Trade Agree ment (ACTA);29 guage of intellectual property (IP) protec-government of India around July 2010. against the confla tin g and clubbing of tion, quality and protection of invest-From what one can discern the matter is issues of intellectual property with public ments. Many international civil society likely to be stymied by those in the India n health issues relating to issues of quality advocates of access to medicines (from the cabinet who think issuing CLs will send of drugs under the guise of the WHO- US, EU, South America and Africa) are the "wrong signal" to those interested in backed International Medical Product s aghast at their own governments acting as investing in this country. India does not Anti-Counterfeiting Task Force (IMPACT) ; accomplices of the commercial agenda of need foreign direct investment (FDI) in the and of late, investmen t measures in bilat- big pharma and continue to be at the fore- pharma sector and issuing of CLs would be eral FTAs being secretl y negotiated – front of countering the harmful effects of well within TRIPS provisions, the Doha notoriously the investo r-to-tate dispute these newer barriers to cheaper generics. Agreement and the so-called August 30 settlement provisions .30 "If you cannot beat the competition, buy provisions. All these are settled matters it out" is another popular strategy. Thus at internationally, with maybe differences in ‘Counterfeit' Charges
least six major Indian pharma companies particularities. Likewise the market qua Unfortunately these efforts are made by have been partially and completely bought market ideologues in the Indian cabinet, the European Union/American govern- over with at least four others having major including the respected economist prime ments at the behest of the big pharma marketing tie-ups with multinational cor-minister, despite the accepted wisdom lobbies ostensibly to protect their peoples porations (MNCs). This trend does not about inherent asymmetries and potential from harmful, spurious, and "counterfeit" augur well for the health security and MAHATMA GANDHI UNIVERSITY
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The last date for receiving the applications in the office is 21 June, 2011. Application form and other details can
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June 11, 2011 vol xlvi no 24 EPW Economic & Political Weekly
pharma self-sufficiency of I ndia or for the (Vadodara/Bilaspur: LOCOST/JSS), also available Richard R Nelson, Bhaven N Sampat and Arvids A online at: Ziedonis (2001): "The Growth of Patenting and many countries counting on India as the collections/2879052 and http://www.scribd. Licensing by US Universities: An Assessment of pharmacy of the world. The sooner the com/my_ document_ collections/ 2474529 the Effects of the Bayh-Dole Act of 1980", Research 10 The Sandhu Committee Report of 2004, the Policy, 30: 99-119.
government takes measures to stem the easy earlie r Drug Price Control Review Committee 18 See for immunisation coverage figures for 2008: pickings that home grown drug companies Report of 1999, and a Task Force appointed by the PMO in 2005 and chaired by Pronab Sen from the EPI2008/India08.pdf, accessed 29 April 2011.
have become, the more hopeful we can be Planning Commission, the Commission on Macr- 19 Y Madhavi et al (2010): "Evidence-based National of realising dreams of universal access to oeconomics and Health 2004, etc, – all have en- Vaccine Policy", Indian J Med Res, May, 131: 617-28 .
dorsed price regulation of drugs.
20 There is another recent draft at the behest of the healthcare. One can only hope for a shift 11 Recommendations/observations of the Committee, government that is doing the rounds and that in the mindsets of those in powe r to effect Para 10 in "Availability and Price Management of negates this sound principle, inter alia.
Drugs and Pharmaceuticals". Seventh Report, 21 Sarojini N B, Sandhya Srinivasan, Madhavi Y, the change. Those without access to medi- Standing Committee on Chemicals and Fertilisers, Srinivasan S and Anjali Shenoi (2010): "The HPV
cines in India and elsewhere expect it as a 2005-06, Fourteenth Lok Sabha, Lok Sabha Secre- Vaccine: Science, Ethics and Regulation", Eco- tariat, New Delhi, September 2005. nomic & Political Weekly, 27 November, XLV: 48.
matter of human right and entitlemen t. 12 The draft policy had several other recommenda- 22 Personal Communication from industry observer tions but it was quietly shelved because of opposi- and researcher Gayatri Saberwal, 29 April 2011. tion from India's pharma industry on the price The citations in the quote refer to the following: regulation aspects.
"Profitless Prosperity". The Economist. 379, 63 (22 1 For some reasons not analysed sufficiently, India 13 "On Issues Relating to Availability of Generic, April 2006); Allison, M "Avastin's Commercial dominates the formulations market internation- Generic-Branded and Branded Medicines, Their March Suffers Setback", Nature Biotechnol, 28, ally and China dominates the API market. Formulation and Therapeutic Efficacy and Effec- 879-80 (2010); and Shaffer, C "Pfizer Explores Rare 2 See Sakthivel Selvaraj and Anup K Karan (2009): tiveness" (Presented to the Rajya Sabha on 4 Au- Disease Path". Nature Biotechnol, 28, 881-82 (2010).
"Deepening Health Insecurity in India: Evidence gust 2010) (Laid on the table of the Lok Sabha on 23 The Draft Biotechnology Regulatory Authority of from National Sample Surveys since 1980s", Eco- 4 August 2010).
India Bill 2009 also has the by now infamous nomic & Political Weekly, 3 October, XLIV: 40.
14 Ruth R Faden and Kalipso Chalkidou (2011): clause, Section 63, that proposes imprisonment 3 Narendra Gupta (2010-11): "What It Costs to Pro- "Determining the Value of Drugs – The Evolving and fine for anyone who "without evidence or vide Medicines to All Sick Persons in India", MFC British Experience", N Engl J Med, 7 April, 364 scientific record misleads the public about safety Bulletin, August-January, Issue 342-43.
(14). As the authors point out, "Contrary to some of GM crops". No soft-pedalling of the law here. reports, NICE has no authority to restrict access – 4 Can be curtailed possibly by spelling out reim- Space and Atomic Energy – presumably one can British law mandates only that the NHS provide bursable costs of each test and diagnostic proce- ‘mislead' and get away to some extent.
funding to cover recommended drugs. Nor is dure – assuming we are talking of a universal 24 Figures courtesy Anurag Bhargava, 2008.
NICE responsible for setting drug prices. In the 10 access system that will specify reimbursable costs to 15% of cases in which it recommends against 25 Section 84 – CLs initiated by generic companies who to private practitioners. providing access to a drug because of poor cost- can apply when (a) the reasonable requirements 5 See for latest procurement effectiveness or clinical effectiveness, stakehold- of the public with respect to the patented inven- price s of TNMSC, accessed 29 April 2011. Also, ers regularly exercise their right to appeal the de- tion have not been satisfied or (b) it is not availa- S Srinivasan (1999): "How Many Aspirins to the cision and are sometimes successful. (Roughly ble to the public at a reasonably affordable price Rupee? Runaway Drug Prices", Economic & Politi- 30% of the NICE recommendations are appealed, and (c) the patent is not being worked. The grant cal Weekl y, 27 February-5 March.
and roughly 10% of the appeals result in substan- of CLs to competitors such as generic companies 6 See: Low Cost (Generic) Medicines Initiative, tial changes to the recommendations.)" Thanks to can be an effective measure to make patente d Sunita Sheel for pointing out this report.
drugs affordable and available. However, the pro- new/ generic.htm. and visions impose a three-year waiting period from 15 For a spirited summary of the arguments against GMP.htm, viewed 29 April 2011. Also, S Srinivas- the date of the grant of the patent befor e a generic high R&D costs, see Donald W Light and Rebecca an (2009): "Too Good To Be True But True: Retail company can make an application for a CL. Warburton (2011): "Demythologising the High Sale of Generic Drugs at Low Prices by the Gov- Costs of Pharmaceutical Research", BioSocieties, Section 92 – Notification by central government ernment in Chittorgarh District", Health Action, 6: 34-50.
in the official gazette that a CL needs to be issued September, also in MFC Bulletin, October 2009- for public non-commercial use, national emergency 16 There is a vast burgeoning literature on pharma
Januar y 2010.
or extreme urgency. After the notification, the innovation and desirable policies in a post-2005, 7 Maulin R Chokshi (2008): "TN Drug Procurement patent controller can grant a compulsory license product patent world, especially on how to use Model", WHO-SEARO.
to a generic company so that the drug is made TRIPS flexibilities, how to get around patenting 8 For medicine price mechanisms in other countries,
available to the public at an affordable price. by prize funds, patent pools, etc. The degree of see Chapter III of the Report of the Drug Price Control their belief in the sanctity of the TRIPS/WTO sys- Section 92A – CL to generic company when another Review Committee, Dept of Chemicals and Petro- tem varies and mostly not stated upfront. Never- country wants to import drugs. This provision is chemicals, New Delhi, October 1999. For a more theless, see for instance, Joseph E Stiglitz and Ar- important, as Indian generic manufacturers play recent review of these, see: Sengupta, Amit, Reji jun Jayadev (2010): "Medicine for Tomorrow: a key role in supplying medicines to developing K Joseph, Shilpa Modi and Nirmalya Syam (2008): Some Alternative Proposals to Promote Socially countries with insufficient manufacturing capacity. "Economic Constraints to Access to Essen tial Beneficial Research and Development in Pharma- Section 100 – Government use licence, which will Medicines in India", Centre for Technology and ceuticals", Journal of Generic Medicines, 7 July: apply in situations where the government needs Development and Society for Economic and So- 217-26; and the readable chapter 8 on "A Policy to manufacture, procure, distribute and sell the cial Studies in Collaboration with WHO SEARO. A Agenda for IP, Access and Innovation" in T Hoen, patented drug on a non-commercial basis.
more recent news item (2011) at "Germany Caps Ellen F M (2009): The Global Politics of Pharma- 26 "Two domestic drug makers", according to a re- Drug Prices", Nature Biotechnology, February, 29 (2).
ceutical Mono poly Power: Drug Patents, Access, In- port in the Business Standard, 3 May 2011 (http:// For other views, see Gregson, Nigel, Keiron Spar- novation and the Application of the WTO Doha rowhawk, Josephine Mauskopf and John Paul Declaration on TRIPS and Public Health (Nether- (2005):. "A Guide to Drug Discovery: Pricing lands: AMB). And the more legally researched g-route-by-june/434161/), "Cipla and Natco, are Medicines: Theory and Practice, Challenges and tract by Spennemann, Christoph and Jerome H known to have already written such requests to Oppor tunities", Nature Reviews Drug Discovery, Reichman (2011): Using Intellectual Property global pharmaceutical MNCs for such a contract 4 February: 121-30. For a review of the use of evi- Rights to Stimulate Pharmaceutical Production in to manufacture an AIDS drug and a cancer drug, dence in the market approval process, reimburse- Developing Countries: A Reference Guide (New respectively. Natco's request for permission to ment, and price control mechanisms for medicines York, Geneva: UNCTAD, United Nations). To touch manufacture a generic version of cancer drug Sor- and medical devices in Thailand, South Kore a, base with India n reality, see Sudip Chaudhuri, afenib has been rejected by Bayer. Cipla is await- and Taiwan, see Jirawattanapisal, Thidaporn, Chan Park and K M Gopakumar (2010): Five Years ing a response from Merck on AIDS drug Raltgravir. Pritaporn Kingkaew, Tae-Jin Lee, Ming-Chin into the Product Patent Regime: India's Response The next step, following an unsuccessful attempt Yang (2009): "Evidence-Based Decision-Making (New York: UNDP).
to enter into a contract, will be to apply for a com- in Asia-Pacific with Rapidly Changing Healthcare 17 See Sara Boettiger and Alan B Bennett (2006): pulsory licence….three cancer drugs – Nilotinib , Systems: Thailand, South Korea, and Taiwan", "Bayh-Dole: If We Knew Then What We Know exclusively marketed by Novartis under the brand Value in Health, Vol 12, SUP3 [Note(s): S4-S11]. Now", Nature Biotechnology, 24: 320-23. Also see name Tasigna; Sunitinib, marketed by Pfize r as Thanks to Szymon Jaroslawski for these papers.
Bhaven N Sampat. The Bayh-Dole Model in Devel- Sutent; and Bristol Myers Squibb's Dasatinib 9 We have discussed this at length in LOCOST (2006): oping Countries: Reflections on the Indian Bill on (brandname Sprycel) – are the other products A Lay Person's Guide to Medicines: What Is in Them Publicly Funded Intellectual Property. UNCTAD- eyed by domestic pharma companies for compul- and What Is Behind Them (Vadodara: LOCOST) . ICTSD Project on Sustainable Development on sory licensing opportunities".
And also in LOCOST/JSS (2004): Impoverishing IPRs and Sustainable Development. Policy Brief the Poor: Pharmaceuticals and Drug Pricing in India Number 5, October 2009. Also David C Mowery, cussion.doc, accessed 29 April 2011. The DIPP of Economic & Political Weekly EPW June 11, 2011 vol xlvi no 24
the Government of India administers the Patents health, the facilities are geographically acces- recollect that these are at TNMSC rates which are Act 1970, the Trade Mark Act 1999, Geographical sible – which is of course not true generall y. very low and are quoted at just above bare costs Indications of Goods Act, 1999 and Designs Act, 2000. It also coordinates issues relating to World (2) Population of Tamil Nadu and India: 7.2 crore of manufacture. If India's pharma industry sells Intellectual Property Organisation (WIPO) in and 121 crore (2011 provisional census figures).
medicines at this rate and only these essential consultation with other ministries. A departmental (3) Tamil Nadu government drug budget for medicines at that, they probably will be in a release of 11 April 2011 clarified, "As the existing legal framework is comprehensive, government medicines 2011-12: Rs 142.88 crore out of a to- spot of a bother with respect to sustainability has decided that there is no need to issue additional tal health budget of Rs 4,554 crore (Table 6). and v iability. We suggest that the Chittorgarh/ guidelines for the issue of compulsory licences".
There is a bias in TN government policies of late Nagaur figures, which are on the average 3-4 28 Internationally acclaimed by developing countries towards tertiary care.
times the TNMSC price, are more realistic. Or like and positive groups as a life-saving measure that prevents evergreening and frivolous patenting, a Table 6: Amount Budgeted for Supply of Medicines through TNMSC (2011-12)
clause that prevented the product patenting of at least the following drugs after vigorous contesta- 2011-12 (in Crore) tion pre-grant, post-grant: lamivudine/zidovudine (fixed-dose combination); tenofovir (intermediate, Directorate of public health salt and pro-drug forms); darunavir polymorph; and preventive medicine tenofovir disoproxil fumarate/emtricitabine (co- Directorate of medical and rural health services formulation); imatinib crystalline form; pro-drug of oseltamivir; crystalline adefovir dipivoxil; Directorate of medical education crystalline adefovir dipivoxil; and valgancyclovir.
29 For instance: See chapter 2 (full text at http:// (4) We add another 25% (liberal guesstimate) the figures of socially-oriented manufacturers ber/tradoc_147079.pdf, accessed 29 April 2011) of the released text, dated 3 December 2010, pro- for medicine supply under other specia l pro- LOCOST (prices at vides for Border Measures in case of all IPRs, not grammes for chronic and endemic diseases like These rates (that of Chittorgarh, L OCOST et al) only copyrights and trademarks. It also includes TB, malaria, leprosy, HIV, renal problems, car- will ensure better accommodation for manu- exports; it also includes in-transit consignments diovascular diseases, etc. The above total of facturer's overheads and distribution margins/ unde r customs supervision. We can all anticipate the effect of these strong border measures on the Rs 142.88 crore will be revised to Rs 178.60 crore. overheads of the supply chain. So we will make flow of in-transit generic medicines. These meas- (5) We also assume that the prescriptions and the above estimate 4 times Rs 7,504 crore that ures are one-sided and there is little recourse for treatment are by and large rational in the TN is around Rs 30,000 crore. This figure also is of review of decisions or appeal against them by those affected. ACTA ignores and bypasses exist- government system – so there is none of the pri- the same order as that of Gupta et al who use ing multilateral processes provided like WTO and vate sector waste. Or at best negligible . Chittorgarh procurement rates. the World Intellectual Property Organisation (6) We assume from a calculation of N Lalith a (10) Of course, if the Government of India does (WIPO), and its enforcement level beyond the not rationalise the kinds of medicines produced minimum mandated by TRIPS. of Gujarat Institue of Development Research See also European Commission (EC)'s comments (personal communication) that the utilisation in in India or regulates their prices, we would on the "Opinion of European Academics on Anti- Tamil Nadu of public health facilities is around suggest then that in this business as usual sce- Counterfeiting Trade Agreement" at http:// 40% – a figure projected for 2005-06 from NSS nario, we will require only Rs 7,504 crore plus doc_ 147853.pdf, accessed 29 April 2011.
60th round figures (January-June 2004). 25% margin for retailer-wholesaler, that is a 30 "Investor-to-state" dispute mechanism is basically a (7) Therefore for complete utilisation the to- maximum of Rs 9,380 crore: because we expect provision that can enable EU corporations (as well tal medicine demand would work out to be that some distribution under a universal access as those of other countries like the US) who qualify (Rs 178.60 crore x 100)/40 = Rs 446.50 crore. framework will still need to be done through as foreign investors to take the Indian government to private arbitration panels over domestic health (8) For a population of 7.2 crore, it is Rs 62.01 private retail pharmacy shops who will retail policies like tobacco control legislations, banning per capita. For India's population of 121 crore, these low-priced generics as well as other cost- of dangerous chemicals and measures to reduce this would be Rs 7,504 crore. lier medicines, with the latter being their bread prices of medicines. Particularly, the tobacco, chemical and pharmaceutical corporations can (9) This seems a puny figure, but we need to and butter, and jam, as it is currently. easily challenge domestic laws and policies to sue and obtain damages of millions of euros or dollars against the Indian government through interna- tional arbitral proceedings if their investments (profits) are allegedly impeded by Indian environ- mental and public health policies and legislation. Source for this formulation: Briefing Note of Delhi Network of Positive People (May 2011): "Invest- ment Provisions in the EU-India FTA: Impact on Access to Medicines" (New Delhi: DNP+).
Annexure 1: Estimating Drug Requirements
of India unde r Universal Access to Health for All
(1) We have used utilisation figures of the
Tamil Nadu government, from the Tamil Nadu
budget documents, and its procurement agency
the Tamil Nadu Medical Services Corpora-
tion (TNMSC). We do not define utilisation but
we use it here as some rough indicator of the
percentage of total population of the state us-
ing the services of the Tamil Nadu public health
system where "using" means attendance at
an outpatient department per year and/or in-
patient services per year when otherwise the
person seeking treatment would have had the
option to go to the private practitioner/private
sector. We also assume for all those who seek
June 11, 2011 vol xlvi no 24 EPW Economic & Political Weekly


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