[india-drug] Drug Pricing (9) ****************

["Gopa Kumar" <gopa.kumar@centad.org>]

 Drug Pricing (9)
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1. Operation Eye-wash: Voluntary "Reduction" of Drug Prices 

Early this month, with much fanfare a euphoric Minister of Chemicals and Fertilizers Ram Vilas Paswan invited the capital's press corps to make a dramatic announcement: thanks to his persuasive skills, the nation's 11 pharma companies had voluntarily agreed to "reduce prices of 886 formulations by anywhere from 0.26 to 74.53 per cent." 

The Minister did not tell the media that there are over 26,000 pharmaceutical manufacturers in India that produce more than 60,000 formulations. Thus purely in arithmetic terms prices are to be reduced on less than 1.5% of drugs. But this is a relatively minor point. An analysis of the list shows that:

The actual number of brands is 499 and not 886. Various strengths of the same brand have been counted separately and repeatedly. Thus Amurol brand of Alembic has been repeated 6 times; Zocef of Alkem has been counted not once but as many as 7 times. Four Ayurvedic products were included in the list to make it look larger. There has never been any discussion, debate or concern on the pricing of herbal medicines.

With the sole exception of a minuscule number, no doctor has ever heard the names of brands of which prices are to be reduced. These brands are not promoted, not prescribed and not sold by retail chemists! Some examples: Vigreks, Zebicom, PeeCeeO, Antem, Sicor, Lopidus. Over 95 per cent of the brands are actually meant for bulk buyers like ESI, state governments etc. which purchase medicines on competitive tender basis. Generally the actual price charged is 10 to 25% of printed retail price.

Some price reductions are ludicrous: there is a grand reduction of 1 paisa in the price of Ranbaxy's Amitil 1ml (prochlorperazine) injection: from Rs. 4.99 to Rs. 4.98! A patient will have to hunt for a retail chemist who will be kind enough to return 2 paisa coin. Such coins are not being minted any more.

Some brands contain medicines already under government price control such as streptomycin. Drug industry has been clamoring for price rise complaining that there is hardly any profit on such price-controlled medicines. If so, how can one reduce the price of streptomycin from Rs. 10.68 to Rs.8.56? Apparently even on price-controlled medicines there are large enough profit margins to enable a company to reduce the price by 20%.

The list contains several brands of cetirizine such as Cetral (Alembic), Stanhist (Ranbaxy) etc. As per Chemical Ministry's own calculations, the profit margins on this medicine are astronomical: as high as 1,000%. The producers have generously agreed to reduce the price by about 25 to 30% thus continuing to reap 970% profit!

Some companies such as Nicholas market the same medicine under two or more brand names such as Orthobid and Embulide. Both contain nimesulide 100mg. Orthobid with a retail price of Rs. 29.19 for 10 tablets is one of the top 10 popular brands of this medicine with sales in excess of Rs. 2.85 crores per year. Yet the price of Orthobid has not been reduced while the price of never-heard-of Embulide brand has been reduced from Rs. 22 to Rs. 18. How does the company explain the price difference of over 160% between two brands of the same medicine? Cipla sells the same medicine (Nicip) for less than Rs. 4 to chemists!
. Some of the "reduced" prices are higher than the normal market prices. For example Levoflox (levofloxacin 500mg) of Cipla is retailing at Rs. 74 for 10 tablets while Medley has very kindly agreed to reduce the price of its Quinocin brand from Rs. 90 to Rs. 80. Who on earth will buy Quinocin? Incidentally Centaur Lab. is selling the same medicine for Rs. 34.

In some cases prices are being reduced on formulations with negligible sales while there is no reduction in high selling forms. Example: Cipla is ready to reduce price of hardly- ever-used Spasmonil injection but not on widely used tablets of the same medicine.

There are other glaring examples of dubious voluntary price "reductions." It is not clear who is trying to fool whom. But one thing is obvious: there will be no loss to the industry and no benefit to the patients. The whole exercise is meant to divert attention from the real issue: exorbitant profiteering in the business of making and selling of life-saving, essential medicines.

        
2. Bitter medicine 

On one hand, Indian pharmaceutical companies export the cheapest drugs. On the other, drugs in India are unaffordable. Yoga Rangatia looks for answers to this strange paradox 

Consumers are more likely to be cheated while buying medicine than food and other durables. Take for instance the anti-clogging ingredient Clopidogrel, which cardiac patients need to take for a lifetime. Zydus Cadila's Noklot sells for Rs 78.25 per 10 tablets while the same molecule, sold as Aventis' Plavix, sells for Rs 1,530 per 10 tablets - a difference of 1,850 percent. The more commonly used antibiotic Ciprofloxacin costs Rs 39 if your doctor prescribed Zoxan, but Rs 89 if he prescribed Cifran. Such instances abound in the drug market. This wide disparity in prices of the same product is unique to the pharmaceuticals industry. 
           
     
Cost of medicine is crucial to making healthcare affordable and accessible to millions in India. Drugs form almost 80 percent of the cost of treatment. Public healthcare is non-existent and a vast majority of the poor access treatment from private practice, incurring substantial out-of-pocket expenses. In fact, government surveys have pointed out that medical expenses is the prime cause of indebtedness in rural areas. 
     
    
On one hand, Indian drug makers supply the cheapest medicine to the rest of the world and have been credited with bringing down the cost of antiretroviral treatments. On the other, medicines in India are overpriced and unaffordable. Drug companies have turned the logic of "free market brings down prices" on its head, making profits unheard of in other sectors of the industry. 
     
     
In fending any move to control escalating drug prices, the powerful pharmaceuticals lobby argues that competition is the best regulator. The industry that claims to be on its way to reaching world-class standards feels price control takes the industry back to the license-permit era and will stifle its growth. 
     
     
These arguments would have been powerful had consumers had the right to chose their own treatment. Patients, a vast majority of them illiterates, buy what doctors prescribe. Drug companies offer doctors incentives and expensive gifts to prescribe their brands. The aggressive marketing of medicines through doctors skews the dynamics of competitive drug prices. What else can explain wide disparities in drug prices of the same molecule? Even if companies were investing in R&D of new molecules, does that justify arbitrary profit margins of anything between 100 to 2,000 percent? Whatever happened to the consumer's right to affordable healthcare? It was precisely for this reason that the Supreme Court set aside the 2002 draft of the National Pharmaceuticals Policy and asked the government to take measures for bringing down cost of medicines. Price regulation is the norm all over the world to keep medicines within affordable range. 
     
     
Hopes were raised when the UPA Government promised a re-look at making drugs affordable and accessible. The ministry of chemicals and fertilizers appointed a secretary-level committee to implement the Court order. The Sandhu Committee recommended the price range for each therapeutics category. Worried the suggestions will impact their profit margins, the pharma lobby took their case to the Prime Minister's Office, which gave not only gave them a sympathetic hearing but virtually overruled the chemicals ministry's suggestion. The PMO went on to set up another task force headed by a member of the Planning Commission "to suggest measures other than price control." Ironically, the Pranob Sen Committee, too, said that without the stick of price regulation, the cost of medicines could not be reduced. It suggested negotiating drug prices with the manufacturer before these were approved for the market. The government took no action on the committee report. 
     
     
In the meanwhile, the industry struck a so-called deal with the government saying it will voluntarily reduce drug prices. The apparent large-hearted deal received wide publicity. It was only when activists pointed out that none of the oft-prescribed 300 drugs were part of the list that Chemicals Minister Ram Vilas Paswan said he felt betrayed at the pharma industry going back on its commitment to bring down drug prices. The list of 886 medicines handed over to the minister with much fanfare were either from the lower rung of the market or moved slowly at the chemist's counter. Moreover, the revised prices were pegged at percent of existing market prices, overlooking the fact that these are already overpriced and had no relevance to cost of manufacturing. Health activists argued the episode smacked of industry sleight to direct public attention away from the disproportionate profits they earn from drug sale, and stave off moves towards drug price regulation. 
     
     
Despite the activist stance he has adopted, Paswan must take the blame for being taciturn with the issue of price regulation of drugs. Soon after taking over he appeared to talk tough with the industry over the issue of drug price. The socialist politician seemed keen to implement measures to put in place price monitoring and regulation and sought industry cooperation. His initial enthusiasm soon waned, for reasons best known to him, and he now argues precisely the opposite of what he said a few months ago. 
     
     
The tough talking minister at a recent press conference said that the drug industry is beyond government's control. He argued that it is not possible for the government to cap trade margins because the industry does not reveal the cost of drug production. This is an insincere and unconvincing argument. Any drug making public sector CEO can tell him what it costs to produce drug. Even otherwise, he can take action based on the wide variation in prevailing market prices. The government seems unwilling to use drug licenses as an instrument for price negotiation in the absence of industry unwillingness to regulate itself. Talk of a new drug law is perceived by activists as yet another pretext for not taking any action. Paswan's idea of a sarkari drug bank is also far-fetched: which patient needing urgent medical care and attention will have time or the resources to travel to the district headquarter to fetch free medicine? 
     
     
Complicit in the costly inaction is the health ministry, the Medical Council of India (MCI) and Indian Medical Association (IMA). The otherwise-voluble Health Minister Ambumani Ramadoss is conspicuously silent on the issue of medicines. The UPA Government's ambitious health plan has little meaning if cost of medicines escalates the downward spiral of poverty. The MCI and IMA have shied away from framing and regulating ethical prescription norms for doctors. No doctor has ever faced stricture for pushing drug brands and earning holidays abroad or expensive gifts from pharmaceuticals companies.
     

From:
Gopa Kumar, CENTAD, Delhi
gopa.kumar@centad.org