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Cheap drugs or just cheap tricks?


Updated: October 4, 2012, 3:45 PM IST
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I still remember meeting a young man of 26 who ate only once a day, to save money to pay for his mother's cancer drugs. And for me... that's what the new pharma pricing policy is all about.

Given a country full of bursting cancer wards, TB, HIV/AIDS... and more poor people than we can afford...lets get this clear - no amount of charity is going to save us. But a policy in the right direction is a different matter.

For the past 5 years, a group of ministers headed by Mr Pawar have been rethinking the whole concept of how much lifesaving drugs should or should not cost. After a Supreme Court deadline this year, at least some ideas saw the light of the day...

The proposed pharma pricing policy, has expanded the National Essential Medicines List from only 74 drugs (all these years) to 348 essential drugs. We are talking about 27 different types of essential drugs going cheaper. A price ceiling would be set. It almost sounded like the 'power-eccentric' ministers had finally grown a heart. And that definitely made headlines.(http://ibnlive.in.com/news/drug-experts-say-there-are-loopholes-in-pharma-price-control-policy/297620-37-64.html)

But a closer look at the story... and sigh... here's what is wrong with it. Horribly wrong with it.

1. I am not an economics student but I can tell you this - you can manufacture a toothpaste for 10 rupees - and can sell it for anything bwn the range of 20-100 rupees. But that doesn't mean the right price for it is average of 50 rupees. Ten rupees is all that its worth, rest is profit.

The pharma pricing policy wants to set a price ceiling just like that. It is going to pick up each medicine listed with them and pick up ALL brands which have more than 1% of market share. (How exactly do we determine that, no one can tell!) And then, take an average of the highest price of - lets take for e.g. Ibuprofen - and the lowest price - take a simple (or complicated) average of both the figures - and say this is the highest price you can go up to.

Just how much does it take to manufacture a strip of ibuprofen anyway? What if it's less than 50, 60, 70% of this proposed cost? No matter.

Really, Ministers?

2. The new list includes only specific drugs and specific 'mgs' and not a class of drugs. It's like saying - oh yes, toothpastes are essential...you have a problem with the cost? Ok I'm going to reduce the price of one particular brand. And the same goes with drugs.

But unfortunately, in case of drugs, the brand you choose is dependent on your doctor, not you.

Almost all the 348 drugs listed have effective alternative medicines available. And so if I were a pharma company, just what stops me from selling an alternative product B that would make mew more money than a cheaper product A? And escape the price control? After all both drugs work just the same.

For example, Enelapril is used to treat high blood pressure and whose price will be controlled since it is in the new list. But there are eight other 'similar' 'prills' - Syndropill, Penedrol etc. They are as effective as Enelapril. And costlier. So pharma companies can simply choose to produce the other 'prils' and sell for more. And it is no secret that doctor-pharma friendship runs deep in this country. Simple, simple, simple.

3. Thirdly, the new pharma pricing policy covers only some combination drugs. While the drugs listed under price control will have to sell for less, but if the combination is changed, they can escape the price cap. Its like saying that the chosen toothpaste will only be sold for ten bucks...but if the company adds lets say a mint flavour to it... it is out of price control again.

No drug is a pure chemical. It is always a combination. And even if you are purely an economics student, you'd know that. Now the govt. tells me I can't sell a drug A or Drug B or combination of AB for more than a certain price. But what about a combination of ABC? Or ABCD? So I am free to change the formulation, add any other irrational ingredient and I'm off the radar.

Really, Ministers? This is the policy for cheaper drugs in the country?

4. And lastly here's is something 'economic' about the policy! The pharma pricing policy - instead of reducing costs - could lead to an increase in the minimum prices in the long run. A complete disaster in waiting.

Let us say there is a drug A, the highest price of which is 20 rupees a strip and the lowest is 4 rupees. So the average price will be roughly around 12 rupees. Now the moment you set a price ceiling of 12 rupees, then the company which is selling it for 20 rupees, will have to reduce it to 12 rupees but the company, which is selling it for 4 rupees will also increase it to 12 rupees. At least 3 times higher than the cheapest option available right now.

So as experts put it, the most expensive drug will be cheaper but the cheaper drugs will become more expensive. Take a bow policy makers, but you've just made our medical bills go higher in the long run. It almost looks like you've worked extra hard to make life easy for the industry, providing more escape routes than regulations.

So where are the cheap drugs, dear Ministers? And who are you benefitting anyway? The 26 year old man I was talking about? No kidding!

(Tell us what you think about it... what do you think of the new policy? And what would you want it to be like? We'll get your voices heard. Leave your comments here or write to me directly at shalini12in@gmail.com.)
First Published: October 4, 2012, 3:45 PM IST

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