Cost of medicines will continue to rise despite policy change

Cost of medicines is a major cause of expense in a family budget. With most people having no insurance, they are compelled to pay from their pockets to purchase medicines.

The World Health Organisation’s study had earlier said that 3.2 per cent  Indians would fall below the poverty line because of high drug bills with about 70 per cent of spending their entire income on healthcare and purchasing medicines. The Planning Commission says 39 million Indians are pushed to poverty every year because of ill-health.

Also medicines perhaps are the only commodity in the market where the consumer has almost no choice. The vulnerable consumer is often at the mercy of the prescribing doctor.

Taking note of these existing serious and detrimental effects, the government designs policies so as to regulate drug price through its drug policy, which is done by The National Pharmaceuticals Pricing Authority (NPPA), under Ministry of Chemicals and Fertilisers. The NPPA recently announced its National Pharmaceutical Pricing Policy (NPPP) 2012. This policy comes into effect in phases during the current year. Earlier to this, there was the Drug Price Control Ordinance (DPCO) of 1979, 1987 and  1995. The drug manufacturing companies have always opposed price regulation on the excuse that market forces will bring down prices.

 There are two major changes in policy which affect the consumer. First, the NPPP policy puts 348 drugs in the National List of Essential Medicines (NLEM 2011), under price control. It is hoped that the cost of most of these medicines will be reduced as they will be under price control. Yes, prices of some of these medicines may be reduced marginally but there are other problems. Earlier, the method of calculation of drug price regulation was  cost-based pricing. That is, the cost of raw materials plus cost maximum allowable post manufacturing expenses (MAPE) of 100 per cent which included the profit of manufacturer and others. But from now on, the cost will be determined by the Market-Based Pricing (MBP).Thus, the cost-based pricing policy will be replaced by MBP. This method will fix the ceiling prices of medicines by calculating simple average of prices of brands of medicine having more than one per cent market share.

Major flaw

This is second major shift in the policy and the major flaw in this mechanism is that the government will depend on using private data - that of IMS Health. IMS Health is a private company and mostly provides data for the  profit-making industry. The big question is can prices of medicines, which effect lives of millions, be determined by data that is not only not reliable but also not accessible to public and researchers. The indications are that drug prices will go up. One example : Atorvastatin 10 mg (used for reducing blood cholesterol), for 10 tablets, the price as per CBP would be Rs 110 whereas the same under DPCO of 1995 would be Rs 5.60.

 Consumer groups have been highly critical of this because:

nA large number of medicines that are lifesaving are  not in the NLEM list. Like among the medicines needed to treat asthma –only salbutamol has been included. Other medicines to treat asthma like doxophylline, salmeterol, montelukast are missing. The WHO’s EML includes 21  vaccines, the Indian NLEM includes only nine. Out of the half a dozen commonly used essential medicines to manage diabetes, the Indian list contains only three. So it is evident that a large number of medicines which play an important role to treat various common health problems are missing in the list of medicines to be covered under price control and the hapless consumer would be at the mercy of the drug manufacturer to fix the price.

nMedicines are usually classified depending upon their action. For example, medicines to manage high blood pressure are classified under one group or category. Under the current drug price regulation, only one medicine among the various others in group or category would be under price control: among medicines for treating high blood pressure only enalapril will be under price control. All the other medicines in the same category will escape price control. Hence, drug manufacturers will migrate from enalapril to others. To prevent this, the Pronab Sen Task Force had suggested that price control of medicines  should be for various categories rather than individual medicines.

n Also only one particular dosage of the medicine would be under price control. For example atorvastatin 10 mg would be under price control, whereas other non-standard dosages of 15 mg, 20 mg and 40 mg would remain out of price control. This holds good for most medicines.

nThe Indian market will be flooded with plethora of fixed dose combination (FDC), most of which are non-existent in any standard text book of medicine. Like a fixed dose combination of paracetamol with ibuprofen. Again not all FDC are unscientific like vitamin D with calcium, or iron with folic acid but the vast majority of FDC in the Indian market are irrational. If the total domestic Indian market is estimated at Rs 68,000 crore, at least one-third of this is wasteful and unnecessary. The price regulating policy is mostly silent on these wasteful FDCs.

It is obvious that reports of medicine prices would be slashed by  50 to 80 per cent were only  media hype. The consumer will continue to suffer from the onslaught of high medicine price.

(The writer is president of drug action forum, Karnataka)

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