7.

Fragility the Publ Health of IC Sector Growth the Drug and of Market India in
An evil does not only come with its ellies, it also breeds - and with tremendous rapidity' Nothing exemplifies this better than our health systemthat leadsnot only to highly unsatisfactory health achievement of the people, but also creates a clear dividing line between them on the basis of their ability or inability to ,buy, health. !?hile this dir.rsion - an outcome of growing privatisation of healthcare jeopardises the prospect of overall well-being of the poor and the socially disadvantaged,it also contributes to terible exploitation of the sick. only a small part of this exploitation comes from fees,hospitalisarion costs etc. The bulk comes from the price of medicines.The lack of public health facilitiesgivesway to a private health market, that in turn promotes a disease-centricview of health, because diseases need curing with medicines. And medicines can be commodified, at very high prices. Thus the primacy given to curarive health createsa huge - and almost unregulated - drug market, visible even in remote corners of the country. The number of pharmaceutical companies with new dtugs and nev/er formulations is getting larger - the number v/as over 20,000 in 2002 and has steadily increased since. The growth rate achieved by the Indian pharmaceutical Industry (9 per cent) has far outpaced the international figure (6 per cent). Again, some of the big companies are achieving 20 to 37 per cent growth ratel which is much higher than the ^ver^ge national figure (9 per cent). A mere Rs.10 crore annual turnover of the Indian pharmaceutical industry in 1950, has gtown to Rs.54,000 crore in 20072.85 per cent of the total pharmaceutical product is consumed domestically. This implies a huge perceived need for medicines, although there is no way to measure whether these medicines were actually needed, or whether they cured the ailment they were used for. our concept of

,s1ga1sl,- requirement for drugs for good health, therefore, the actualversus the remains sPeculative at best' Nevetheless,itisnotiustthevolumeofproductionandconsumptionthat at the process of drug pricing in India has boosted this growth. i .lor. look and uncontrolled nature' ^ tuther under-studied sheds light on its vir;ly destructiveaspectofthenationalhealthsector,Itisnotonlythatthestateremains under_activeaSthepfoviderofbasichealthc?lfe,^saregulatortooitremains ineftandineffective.Theauthoritieshavegtaduallydecontrolledthepriceof the number of drugs falling under Price medicines in India by both reducing Controlandbyincreasingthellane6ua*imumAllowablePostManufacturing control' Expenses) foi formulations under price various Drug Price Control Orders Even a cursory Iook at the history of arm and 1995' reveals how the regulatory (DPCO), issued \n 1970,1979'1987 ofthegovernmentvts-i-visthepharmaceuticalmanufactufersofthecountfy time giving them newer concessions and has become increasingly weaker,'each industry a free hand in profiteering' allowing the ."ay_triri-ring pharmaceutical "t

HtsroRv A lN DnucPntctt;c INDIA: Bnirr

post Manufacturing Expenses (\,{ApE) is the mark-up Maximum Alrowable o n m a n u f a c t u r i n g c o s t s t h a t a l l o w s p h a r m a c e u t i c a l m a n u f a c t u f e f the sto DPCO that restricted other exPensesand their profit' The accommodate DPCO 1979' The entire basket of amount of profit thos m"dt was into three categories' form,,lations then available was divided fh"r-u...rucal calculate the ceiling of profit for each and a simple formula was devised to for all subsequent DPCOs till date' was: group. The formula, which was used = (I{aterial Cost * Conversion Cost } Packing Maximum Retail Price (1+MAPE) *Excise Dury Material Cost * Packing Charges)x profits in a specific.ratio on the above formula, manufacturers made By thr-rs the DPCO 1979' allowable profit on capital invested i.t -unof"ctoring' By investmentwas40,55andl00percentrespectively,forformulationcategories into one' and increased DPCOs collap"d iht categories I, II and III' Sobseq,,ent currently placed under ptice control allowable MAPE ..it,,g', *tn that alfdrugs pttil lnvestecl' make at least 100 per cent profit on c to about to34i for^ulations'which amounted In1979,price control apptied time. Hovrever' the number g0 per cent of the entire foi-rrl^tio.r basket ^t tLl?it of these restrictions was progressively of formulations placed within the scope every time' In 1987' the number of reduced, while the MAPE increased down to 142' and further fell to 74 in formulations under price control came 3 - excluded from price control after 1995 shows iq9i. fh. case of imikacin is' and how retailers make enormous what the consequencesof this practice profitsoffvitalarog*e-'k^tittl'alife-s.avingantibioticusedtotreathospital acquired,multi-drugresistant,gram_negativeirrfections.Thepricetoretailetand are given belorv' Rttail Prilce; of 'o^t brands of Amikacin the MRP p{r*r-.,nl from highly reputed companies' It should be noted that all brands are

**-

A Vrrivrrior,,r a.xn [rsr Noxn [,rsl

Table 7.1. Margin

of profit for various brands of Amikacin,

a Life-saving Drug

Let us now look at the formulations still under price control. Many of the currendy controlled 74 formulations are either not available,or scarcely available (ike Benzathin Penicillin, TheophylJin etc). cleady, the manufacrurers do not find even the 100 per cent mark-up ^n attractive incentive to manufacture them. Rather, they concentrate on formulations which do not fall under the Dpco, and therefore provide unlimited possibility for profit. The other - more dangerous - way of flouting the DPCo is to remove the ingredient in a brand which falls under the DPCo, and replace it with another, without changing the brand. This is probably the worst practice, as the following things can happen becauseof it : (r) The doctor tends to prescribe the brand without being informed about the changed composition of the actual product. (ii) It introduces aflother unscientific, irrational combination in Indian pharmaceutical market vrhich is already flooded with irrational combinationsa. (iii)Above all, it widens the informaional asymmetry between those who manufacture and prescribe drugs, and those who are at the receiving end of such 'irrational' and 'misdirected' care. Not that the policy makers are Ltrtaw^reof the situation. The issue of high drug price and its burden on the people has been discussed in detail in the Report of the National Comnitsion of Macroeconomics Healtb. ,\lso, the remedy for the and same was prescribed in unambiguous terms: Only 76 drugs accounting for around one-fourth of the drug market are under price control. An examination of the price trends of 152 drugs (consisting of 360 formulations) reveals that, antibiotics, anti-tuberculosis and anti-malaial drugs, and drugs for cardiac disorders,etc. registeredprice increasesfrom lper cent-15per cent per annum during L976-2000.Indian households spend 50per cent of their total health expenditures on drugs and medicines. Reducing this burden and ensuring access can be achieved by: (i) bringing all drugs under price control to ensure lower prices for the households; (ii) streamrining

of and putting in place a system of centtalized pooled procurement drogs so that the public health system can save almost 30per cent to 40per cent on costs; (iii) weeding out irrational drugs and irrational combination drugs; and (iv) encouraging ISM drugs for treating diseases for rvhich efficacious and low-cost drugs are available. Price control, the as is the practice in several countries such as canada,is iustified on basisofthedrugpticesoutstfippinglffrPl.Second,thisw.illaddress about 90per cent of the health needs of the community and reduce be household spending on these services. Price control should not switch its limited to essential drugs as the industry can then simply of access production to the non-controlled categories,depriving people to essentialdrugs.s DPCO was Six years have passed since this repoft was published. The last out of irratiqnal drugs and issued sixteen years ago. Yet the iob of "weeding there is stfong irrational combinations of drugs" has not even started. while this needs to be need for raising voice for the rationali z tJon of drug policy' and stfengthen the public health combined with resilient action to universalize system. health From this fleeting glance at one particular asPect of the privatized but deep messagethat can be drawn market, namely the drug market, a simple a socio economic is that health and health care in ouf countfy is embedded in we have only field of power, hierarchy and inequality' Although in this rePort' we afe certainly indirectly alluded to such stfuctufal determinants of health, public action to mindful of the need for public discussion and democratic In the next section' counter the effects of such background inequalities on health. in the media and in we tufn to a discussion on the weightage accorded to health electoral politics.