Drug pricing and affordable healthcare

Dr. Arun Mitra

In the National Health Policy (NHP) 2017 document the government has admitted that every year nearly 6.3 crore people go below poverty line because of out of pocket expenditure on health. About 70% of this expenditure is on drugs and other consumables alone. There has been talk of producing cheap bulk drugs, use of drugs under generic names and also there have been fixation of price of some medicines by the government and opening of fair price medical shops. But the issue still remains as before. The government also admits that the public spending on health is very low. Therefore it is important that the issue is addressed seriously and in right spirit.
Supply of cheap drugs involves their manufacture, supply chain, proper pricing and quality control. National Pharmaceutical Pricing Authority (NPPA) was established in 1995 to fix/revise the prices of controlled bulk drugs and formulations and to enforce prices and availability of medicines in the country, under the Drugs (Price Control) Order 1995. Medicines were split into two parts the essential and nonessential medicines. The NPPA fixed the prices of essential medicines on the basis of National List of Essential Medicines (NLEM) provided by the government.
Despite all this there is lot of anomaly in the prices of the drugs. There is no trade policy that would fix the price of the drugs. The wholesale trader/dealer should earn the profit of not more than 10% and the retailer 20%. But this does not hold true in the actual practice. The generic drugs actually mean that they have to be prescribed as pharmacological name. But in our country the generic drugs have become the branded generic drugs which means they are sold in a different name instead of the actual branded names.
The price difference between the actual price and the Maximum Retail Price (MRP) in the case of the branded generic drugs is some times as high as 600 to 700%. The cost of the actual branded drugs includes the cost of production and promotion in addition to the profit margin by the traders. But here also it has been seen that the dealers supply the drugs to the health providers at a rate sometimes up to 700 to 800% less than the MRP.
The government cannot be unaware of this enormous difference between the actual price and the MRP of the product. But non-intervention of the government to check this raises scepticism. It is important to make it clear to the public as to who fixes the ceiling price and the MRP. How can the companies/dealers afford to sell the products to the hospitals at much lower the amount mentioned as the MRP? Money for all these comes from only one source, that is the patients.
Several organizations including All India Drug Action Network (AIDAN), Alliance of Doctors for Ethical Healthcare (ADEH), Indian Doctors for Peace and Development (IDPD) had been taking up the issue of price of coronary stents since long. It was after a PIL filed by Advocate Birender Sangwan that the government was forced to reduce the price of the stents after a court order. 
Therefore it is required that:
*The price of the drugs & implants used in healthcare should be calculated as per the costs only.  No other method can lead to justifiable fixation of prices of drugs.
*The profit margin on the cost thus calculated should not be more than 10% for the wholesaler and 20% for the retailer. No other profit should be given to the health provider.
*The difference between the actual price of the drugs and the MRP should not be more than 20% because at present it is up to 700-800% in some cases.
*The generic drugs here should mean the pharmacological formulations and not the branded generic medicines. To make use of pharmacological formulations, compulsory mechanism should be evolved for its application because it cannot be left to the chemists to give medicine of their choice.
*Price of same salt by different companies should be same.
*Quality control of all types of medicines should be ensured. 
*All the drugs should be labeled as essential because once a chemical is named as medicine, it automatically becomes essential because no one takes the medicines by choice. (IPA)

Saturday, 29 July, 2017