Healthy Skepticism Library item: 18565

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Publication type: news

Nagarajan R
Cap profits on drugs, says MPs panel
The Times of India 2010 Aug 9
http://timesofindia.indiatimes.com/india/Cap-profits-on-drugs-says-MPs-panel/articleshow/6277568.cms

Full text:

The parliamentary standing committee on health and family welfare has suggested a series of measures like increasing the number of drugs under price control, a blanket cap on profit margins of all medicines and promoting the use of generic drugs to make drugs more affordable and accessible to the common man.

The measures, which seek to tackle the problem of the rising price of drugs, which now account for up to 80% of total healthcare costs, are bound to raise the hackles of the pharmaceutical industry.

These recommendations were made by the standing committee in a report tabled in Parliament on August 4, urging immediate measures to bring down the cost of medicines, because healthcare costs were the second biggest reason for rural indebtedness.

To add to the worries of the pharma sector, the committee has also sought regulation of pharmaceutical companies caught bribing doctors, with stringent punishment such as cancelling their drug manufacturing licences.

Making a reference to TOI’s reports on the issue, the committee noted that the Medical Council of India could only regulate doctors, as it had no jurisdiction over companies and suggested that the penalisation of pharma firms be done through the Drug Controller General of India (DCGI) or the income tax department.

The committee pointed out that the legal framework to put a cap on profiteering from medicines was available with the government under the Essential Services Maintenance Act (ESMA). It also noted that in the original Drug Price Control Order there was a proposal for a cap on overall profitability of drug manufacturers to discourage them from shifting from price-controlled (less profitable) to uncontrolled (hugely profitable) medicines. The proposal was never implemented.

“The Committee recommends that the department of health and family welfare in coordination with the department of pharmaceuticals immediately move the inter-ministerial coordination committee and initiate a process of examining the issue of putting a blanket cap on profit margins of all medicines across (the) board,” the report added.

“The Committee is shocked to note that despite there being irrefutable evidence of a strong link between high prices of medicines and poverty as also despite the fact that one of the avowed objectives of the Eleventh Five Year Plans is to include all essential drugs under a system of price regulation, the number of drugs under price control still remains a pathetic 74,” stated the report.

The committee sought an explanation for restricting the number of price controlled drugs to a mere 74 and said in this regard: “Prescription of irrational and useless drugs by many of the doctors with ulterior motives is rampant. The committee is, therefore, convinced that there is no other alternative but to include more essential and life saving drugs under price regulation.”

The report also pointed out that since the National Pharmaceutical Pricing Authority (NPPA) had no jurisdiction over the pricing of new patented medicines, they were being sold at exorbitant prices, many of them by importers. The committee urged the government to address this issue at the earliest.

All categories of medicines, whether imported or manufactured, are required to comply with the standards specified in the Drugs and Cosmetics Rules. Therefore a generic medicine is equivalent to the branded product, meeting the same standards of quality, noted the report. It asked the government to make efforts to give wide publicity to this fact, so that the apprehensions of the general public fuelled and fanned by interested quarters about generic drugs not being of good quality could be dispelled.

It suggested that both the central and state governments eliminate middlemen by procuring generic drugs in bulk straight from the manufacturers and dispensing them directly to the patients through health centres.

With just 46 Jan Aushadi (people’s dispensary) stores opened till now across the country, the report pointed out that the government scheme of running Jan Aushadi stores to make affordable drugs available to the public was unlikely to make a significant dent in a country of over 110 crore people. The committee has urged more proactive intervention by the government to help people procure life saving medicines at affordable prices.

The pharmaceutical sector looked after by five different ministries has a new inter-ministerial coordination committee as per the recommendations of the department-related standing committee on health and family welfare.

The manufacture and distribution of medicines are looked after by five different ministries – import and export policies under the Commerce Ministry, fiscal matters under the Finance Ministry, the policy effects on small scale pharma units dealt with by the Ministry of Small and Medium Enterprises, pricing of drugs by the NPPA under the Ministry of Chemical and Fertilisers and quality of drugs monitored by DCGI under the Health Ministry.

Expressing concern over the lack of any inter-ministerial mechanism for checking corrupt practices in the pharmaceutical sector, the standing committee had asked the department of health and family welfare and the department of pharmaceuticals to constitute an inter-ministerial committee, which was done earlier this year.

The composition of the newly constituted High Powered Inter-Ministerial Coordination Committee is:
1. Secretary (Pharma) Chairman,
2. Chairman, NPPA Member,
3. Drug Controller General, India Member
4. Secretary (Health & Family Welfare) Member or Joint Secretary level representative
5. Secretary (MSME) or Joint Secretary Member Level representative
6. Joint Secretary (Pharma) in charge Member of NPPA

The standing committee hoped that this committee would result in better coordination between the office of the DCGI and the NPPA.