Post duty removal, drug prices to shoot

The withdrawal by the finance ministry of customs duty exemption for 76 imported drugs will lead to an increase in the prices of all these drugs. They include 14 life-saving drugs and are used in the treatment of major ailments like cancer, HIV, diabetes and haemophilia. They also include drugs for a range of diseases like those relating to kidney problems, arthritis, allergies and lupus. Forty-seven of them are part of the national list of essential medicines (NLEM). The government says it has withdrawn the concessions ‘in public interest’ because its action may give a boost to the domestic drug manufacturing industry which also produces these medicines. Many Indian companies have produced these medicines in the last 15 years when the exemptions have been in force. They will have a price advantage over imported medicines which will be costlier now. It is argued that the possible higher demand for the domestically produced drugs will give a fillip to the Make in India programme.

But the plan may not work out the way it is expected to. It is estimated that there will be an increase of 22 to 35 per cent in the prices of these medicines. But patients may not benefit much because they do not choose the medicines. It is doctors who prescribe the medicines and they may not prescribe the Indian medicines even if they are cheaper. Prescription of medicines is based on many considerations other than price. There may also be a mental bias in favour of imported medicines. A common notion is that the prices are higher because the quality is better. This is especially true when it concerns health, because people feel that they should go for the best medicine even if the price is high. Money may not be the sole consideration in such decisions.

Public interest may not therefore be served by the government’s decision. It is likely to increase treatment costs and even reduce access to medicines. In the case of haemophilia, the drugs are not produced in India and so patients will have to buy the costlier imported drugs only. The government may want to rationalise duty exemptions. A regime of exemptions may not be economically sound, but there is the need for more caution in taking decisions concerning public health. Most people are not able to bear the health expenses which include not only drug prices but the costs of tests and treatment. They should not be further burdened. The government’s decision is not in the line with the aim to provide affordable health care to people.