Urgent need for drugs price regulation //Dr Arun Mitra

 25th August 2022 at 4:45 PM

Dr. Arun Mitra Wrote this writeup on 20th August 2022 

The news that the company producing Paracetamol in the trade name of ‘Dolo’ spent 1000 crore rupees as freebies to the doctors for the promotion of their drug is a matter of concern. It shows the total failure of the government in regulating the pharmaceutical marketing practices. It is well known that Pharma companies spend huge amount of money for promotion of their products. Much of this is spent in organizing medical conferences in the name of continued medical education programmes many a times at lavish scale. This ultimately adds to the cost of drugs and adds to out of pocket expenditure of the patients. The government framed Uniform Code of Pharmaceutical Marketing Practices  (UCPMP). A letter of the ministry of chemicals and fertilizers, department of pharmaceuticals dated 12 December 2014 had mentioned that this will be voluntary for a period of six months with effect from 1st January 2015 and will be reviewed thereafter.  Obviously the voluntary clause did not yield noticeable results.    

Admitting this fact, Shri H.N. Ananth Kumar, the then Union Minister for Chemicals and Fertilizers,  said in the Rajya Sabha in June 2016 that the voluntary code introduced in 2015 had not yielded desired results and that the government would make it mandatory because the Pharmaceutical companies did not take any tangible steps to implement the code. Clauses 6 and 7 of the code prohibit the Pharma companies from giving freebies to the medical professionals.  But despite several representations from the public health activists and civil society groups the practice has not stopped. The Indian Medical Council (Professional Conduct, Etiquette and Ethics) regulation also warns the doctors against such practices to receive financial benefits in any form including for attending education programs. Taking cognizance of the matter even the central board of direct taxes (CBDT) in its Circular No. 5/2012 [F. NO. 225/142/2012-ITA.II], Dated 1-8-2012 had said that any such expenditure by the Pharma company will not be considered for tax deductions.  After ten years the order has been reconfirmed by the Apex court.  

Expressing concern over pharmaceutical companies giving freebies to doctors, which push medicine prices up, the Supreme Court on 22nd February 2022 held that they are not entitled to claim tax exemption on the expenditure incurred in giving incentives to medical practitioners to promote their medical products and it would be considered as part of their income.  

As per the guidelines in the UCPMP the companies have to adopt stipulated procedures laid down by the competent authority for involving doctors in their research projects. These companies then use doctor’s reference including her/his photograph in their promotional literature. The UCPMP prohibits such work.      

Ironically statement by the Minister of Chemicals & fertilizers DV Sadananda Gowda  in the Parliament in September 2020 that the Union government has no plans to make the Uniform Code of Pharmaceutical Marketing Practices (UCPMP) mandatory is very disappointing. He said this in reply to a question by K. Muraleedharan, Congress MP from Kerala in the Lok Sabha.   

The u-turn on making UCPMP mandatory raises suspicion of lack of will on the part of the government to keep its commitment and smacks of some unfair deal between the government and the Pharma companies. When a delegation of the Alliance of Doctor for Ethical Healthcare had submitted its opinion to the drugs price regulating body, the National Pharmaceutical Pricing Authority (NPPA) in February 2020, they were told that the NPPA has no jurisdiction to check the companies. This has to be done through changes in the law at the ministerial level.        

The high cost of drugs seriously affects the healthcare of our population. As nearly 67% of out of pocket health expenditure in our country is on drugs. High out of pocket expenditure pushes 6.3 crore population below poverty line every year, a fact admitted in the National Health Policy document 2017.  But the government has not taken any tangible steps to control the excess trade margin in the sale of drugs and medical devices.       

A committee was formed to look into High Trade Margins in the Sale of Drugs on 16 September 2015. This committee took serious note of the excess trade margins. They pointed out that in some cases the trade margin is as high as 5000%. This committee submitted its report on 9 December 2015. But it is now almost 7 years that the government has been sleeping over it.  

The pricing of the drugs should be calculated on the basis of the cost involved in its production. The market based pricing, calculating the average of the highest selling drugs is totally a flawed approach.   

Therefore it is high time the government makes the UCPMP mandatory and comes out with an effective control on drug prices.    

Having sensed that private sector in the pharmaceutical sector would be exploitative, our first Prime Minister Jawahar Lal Nehru took initiative to produce the drugs in the public sector with the purpose to produce cheap bulk drugs. While inaugurating the Indian Drugs and Pharmaceuticals Ltd. (IDPL) in 1961 he said  “the drug industry must be in the public sector….. I think an industry of the nature of the drug industry should not be in the private sector anyhow. There are far too much exploitation of the public in this industry”. With this vision, IDPL was incorporated in April, 1961 It was established with main objectives of creating self-sufficiency in respect of essential life saving medicines, to free the country from dependence on imports and to provide medicines to the millions at affordable prices and not to make millions from the medicines. IDPL played a pioneering infra-structural role in the growth of Indian Drug Industry base. It played a major role in the strategic National Health Programmes like Family Welfare Programme & Population Control (Mala-D & Mala-N) anti-malarial (Chloroquine) and prevention of dehydration (ORS) by providing quality medicines. During the country’s calamity of outbreak of Plague in 1994, IDPL was the only company which played the sheet anchor role in supplying Tetracycline for the entire Nation. Similarly, company had made uninterrupted supply of Chloroquine to combat Malaria epidemic in different parts of the country. In 2005 to combat national emergency (leptospirosis) arising due to flood in Maharashtra, IDPL had supplied required Doxycycline Capsules within no time. IDPL has always supplied quality medicines and its presence has played a price balancing role in the competitive & business environment. World Health Organisation had made its observations on IDPL as follows:-“IDPL had achieved in 10 years what others have in 50. IDPL products have been examined for quality very carefully by the developed countries and many of them want to buy from here”. 

Similarly the foundation stone of Hindustan Antibiotics Ltd (HAL) was laid by Prime Minister Jawaharlal Nehru. Central Research Institute (CRI) Kasauli is pioneer in the field of vaccines not only in India but in the world. Founded on 3rd of May 1905  the institute was originally established with a mandate of research work in the field of medical and public health, manufacture of vaccines and antiserum, human resource development and to act as a national referral centre for public health problems.   

But when there was shift in the economic policies and there were changes in the patent rights laws under the WTO after it was founded on 1st January 1995, the whole scenario started changing. Indian companies had to bear the brunt and major impact was on the Public Sector Units (PSUs). The IDPL, HAL and Kasauli were financially constrained. Cheap vaccines produced by these companies now became very expensive and out of reach of common man.    

The Union Cabinet’s recommendation in its cabinet meeting dated 28th December 2016 to close down and sell the pharmaceutical PSUs is a big blow to the concept of the state ensuring affordable, and possibly free-of-cost, medicines for millions.  It is time to raise voice to build public opinion for strengthening the pharmaceutical PSUs if the country really wants affordable medicines for the people.  

As per the NPPA order dated 25th March 2020 there are 856 drugs whose ceiling price has been fixed by the NPPA. Since the drug (Medicine and medical device) is not a luxury there should be ceiling on price of all the drugs without exception. The public sector units should be rejuvenated and strengthened to ensure affordable drug prices.