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Impoverishing the Poor: Pharmaceuticals and Drug Pricing in India

This book is now available free on the internet:
Srinivasan S and A Bhargava A. (2004), Impoverishing the Poor: Pharmaceuticals and Drug Pricing in India, Low Cost Standard Therapeutics (LOCOST), Vadodara/Bilaspur, India.


We are happy that India can boast of a pharmaceutical industry that is one of the largest in the developing world. It has demonstrated the ability to provide low-cost but quality generic drugs for HIV and other diseases to the world outside and has the capacity to meet our entire drug needs. The Indian Patents Act 1970 ensured the growth of an indigenous pharmaceutical sector and the Drug Price Control Order protected the consumer from irrational drug prices. We would like the Government to safeguard the precious pharmaceutical sovereignty that we have won over the last three decades rather than sacrifice it at the altar of international agreements. We would have been however happier if the conditions, which compelled the publication of this book, had not existed:
• if it were true that India were  shining in the field of health
• if Indians really had access to the cheapest medications in the world
• had competition in the absence of regulation been the consumer’s best friend in ensuring low prices
• had the drug industry, as much a  knowledge-based industry as any other, had been able to unleash its creative potential for the benefit of the people
• if the national pharmaceutical policies, over the years, cared as much about public health as the profitability of the pharmaceutical sector.

The reality is very different and grim. Severe and growing inequities across classes and regions ensure that India’s health indicators are anything but shining.

Drugs are overpriced and unaffordable – let there be no mistake about it, even though some of them may be ‘cheapest’ in the world. The margins are extremely high as we show in the following chapters.  We even show that the same Indian drug companies, in an ironic twist, sell the same medicines cheaper in neighbouring Sri Lanka.

More ‘players’ have not resulted in lower prices of drugs in India or for that matter lower cost of health services. So what have the people of India gained by a world-class (or soon to be one) drug industry? Asking this question is as infuriating as asking why are many people going hungry to bed when our food godowns are overflowing and food stocks have to be destroyed every year.

Chaos Unbound

 The Indian drug industry is the freest in the world in a wholly negative sense of the term.It is okay to conduct clinical trials of an anticancer drug with embryotoxic potential as an ovulation inducer in infertile women without permission. Consider some other facts:
• Hazardous drugs, long since banned in the rest of the world, continue to find place in our shops.
• Tonics of dubious therapeutic value abound that fritter away the patient’s hard-earned money, leaving none to buy real medicines.
• Drug controllers in different states go on giving licenses to irrational preparations that add only cost but no value to the prescription.
• The Drug Controller of Karnataka (and it might be true of most other states)passes substandard drugs, looks the other way when violations of price control occur, and even collects bribes on a regular basis from his own subordinates.
• Nearly 40 children die of renal failure after consuming paracetamol syrup contaminated with ethylene glycol, the same substance that killed fourteen people in Mumbai twelve years ago, and this time too the drug-testing laboratory doesn’t find anything amiss.
• Companies are free to set the margin of profits for themselves and the pharmaceutical trade. Doctors are free to prescribe medicines as they wish with no concern for indication, cost or rationality.
• The Medical Council of India and the Indian Medical Association cannot yet decide whether it is appropriate for a doctor to receive a car or an airline ticket or an air conditioner from a drug company. Chemists without the most elementary qualification are free to sell all kinds of drugs without a prescription.

Importance of Price Regulation

Price regulation in the pharmaceutical sector is an important instrument of public policy of promoting equity in access to health care. That instrument of policy is now being sought to be abandoned in the name of liberalization. The Pharmaceutical Policy (PP)2002 of the Government of India wants to dilute drug price control – the last fig leaf of governmental concern -- by suggesting criteria for price control that will reduce the basket of price control to a bunch of irrelevant 30 or so drugs. Which has good historical precedents: from 347 essential drugs in the late 1970s to seventy-four by the late nineties and now probably to around 30 if the 2002 policy is implemented.  The kinds of drugs that would be left under price control are mostly irrelevant to public health. Even the Drug Price Control Order of 1995 conspicuously omitted drugs for anemia, diarrhoea, the majority of drugs for tuberculosis, hypertension and diabetes, and all drugs for cancer. We have appended certain documents in the
section quoting chapter and verse literally from Government Committees that reinforce views expressed by the authors even as the PP 2002 tries to sing a different tune.    

Hope in a New Government
It is hoped the new UPA government would examine the matter afresh and reformulates anew pharmaceutical policy that gives hope to poor Indians that they too matter.  Indeed the Common Minimum Programme (CMP) of the new Government in the country says,inter alia, “the UPA Government will take all steps to ensure availability of life-saving drugs at reasonable prices. Special attention will be paid to the poorer sections in the matter of health care. The feasibility of reviving public sector units set up for the manufacture of critical bulk drugs will be re-examined so as to bring down and keep a check on prices of drugs.”
The new Government must mean business and see wisdom in keeping essential drugs outside the vagaries of market forces and vested interests. It would be in good company if it indeed did so. Price control and/or some form of strict regulation of drug prices are the norm in all developing countries (with the possible exception of the USA).
Context of this Publication

The immediate context of the booklet is the case pending in the Supreme Court in whichLOCOST, Jana Swasthya Sahyog (JSS), All India Drug Action Network (AIDAN) and the Medico Friend Circle (mfc) are co-petitioners. We have filed a series of affidavits in the matter questioning the wisdom of the criteria for drug price control in Pharmaceutical Policy 2002 (PP 02). It is our submission that the policy will increase the price of medicines and therefore have a long-term effect, for the worse, on the health of people, especially poor people. The related SC order of 10/3/2003 says, “… We direct that the petitioner shall consider and formulate appropriate criteria for ensuring essential and life saving drugs not to fall out of price control..."  This litigation is also occurring at a critical juncture where India’s state of public health is still grappling with old diseases while new ones like HIV/AIDS, diabetes and cardiovascular problems have got added on to the disease burden. Complicating this issue is the impending regime of WTO/TRIPS effective Jan 2005. While final hearings are slated for sometime later in the year 2004, we felt it necessary to share with the wider public the grave issues in the matter affecting all people in India.These issues stand whatever be the outcome of the litigation.
This publication addresses pricing and related issues of the drug industry in India. It draws upon the experiences and insights of people, who have, over the past 25 years, consistently engaged the government to ensure access to less expensive, safer, and more rational medicines. We hope that it would enlarge the circle of public-spirited individuals and organisations that are concerned about these issues and drive them to do something about it. In this sense, it is not a book. It is a plea for action to do something.  


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