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Pharmacy market calls for urgent intervention


All the machinery employed to regulate the pharmaceutical market of India is a total failure,  as judged by the parliamentary standing that conducted a study of the sector.  The report presented to Parliament on 13 February by the committee underlines the need to revamp the entire official mechanism, including the National Pharmaceutical Pricing Authority (NPPA),   and also the need to revisit the current laws that govern their functioning. 

It is clear from surveys including that of the National Sample Survey that 60 to 70 per cent of an individual's health expenses is consumed by medicines and allied medical equipment.  This report reveals how such a big amount is required to be set apart for medicine alone.   Whereas in earlier times drug prices were determined in proportion to their production cost (cost-based pricing),  later on the basis turned to be their market value and saleability.  It is this transformation that caused such a big spurt in drug prices even amidst the controls by  NPPA.   And this issue has been highlighted by the country's health workers and several voluntary organizations for years,  and the matter was a subject of judicial interventions too on several occasions.  Still,  the action to bring the pharma industry under control,  was confined to paper.  Further,  officers who ventured to take action got into a situation of being subjected to disciplinary action.  Former  NPPA head Bhupendra Singh,  who had made a serious intervention to check the prices of artificial stent used in the treatment of cardiac diseases – and was successful to a great extent in that – was transferred to a different role,  to find a solution to the 'crisis' related to that.   It would not be an exaggeration to say that the phama lobby is fattening the market under the cover offered by a regime of toothless legal mechanisms and corrupt officialdom within that framework.  Things have come to such a bad state.

NPPA exercises control over medicine prices in line with the Drugs Price Control Orders (DPSO) issued  issued by the Government, in exercise of the powers conferred under section 3 of the Essential Commodities Act, 1955.    NPPA is charged with ensuring that drugs are not sold on prices higher than what is fixed by price control committee and that people have access to life-saving medicines as per their need.   As part of the price controls,  over 800 medicines are listed under 'National List of Essential Medicines' as a means of ensuring their availability.  The pharmaceutical companies producing them do not have the right to increase their prices unilaterally.  On the other hand,  NPPA  has authorised increase in prices of medicines not included in the essential medicines list (de-controlled formulations) by 10 per cent a year.   NPPA is also authorised to examine whether essential medicines are sold at the fixed prices,  and to impose fines if it detects violations.  But in actual fact,  only nominal inspections are conducted.  During the last financial year,  although fines of Rs 930 Cr were imposed,  the actual collection from erring manufactures was a mere Rs 148 Cr.   During the previous year,  the fines imposed were for Rs 520 Cr and actual collection a mere Rs 12 Cr.   This speaks for the tight hold of the drug manufacturing comppanies over the ruling establishment.  A report prepared by Bhupendra Singh in last March, a few weeks before he was transferred also draws attention to this fact.   The report,  supported by several relevant hospital bills, revealed the fact that medicines and medical equipment are sold to the patients by private hospitals at an alarming profit margin of 1,700 per cent.  Nothing more is needed to see why over five crore people of India slipped below the poverty line under the stress of medical expenses.

Probably because the central agency was convinced that it was not able to function independently,  NPPA has now sought the assistance of state governments in this matter.   The Centre itself had demanded a few months ago that for the effective enforcement of Drugs Price Control Orders,  states should,  toeing the line of NPPA,  set up their own machinery.   Kerala,  which has always walked ahead of the country in the health sector,  has wholeheartedly embraced the proposal.  Accordingly,  in order to ensure price control and quality control of medicines, the state Drugs Control Deprtments has decided to set up a society with the nomenclature, Kerala State Pharmaceutical Price Monitoring and Resources Unit (KSPMRU) and launch its functioning.  This society will be authorized to conduct inspections in drug stores and hospitals.  Laudable as this new initiative is,  action should not be limited to that.  The government has an obligation to wrest the reins of drug marketing from the private individuals and establishments.  The entitites like Neethi, Karunya and Maveli which sell medicines at lower prices by eliminating the intermediary wholesalers  and purchasing medicines directly from manufacturers,  should have an expanded role in the market.   And at the central level,  Jan oushadhi outlets should also be opened in all the places.  Only then can the ordinary man get access to medical assistance at an affordable price.  All this is about medicines that are sold legally.  Outside that,  there is a whole body of fake medical mafia thriving right under the shade of government.  Only when this drug lobby is also reined in,  can a comprehensive health model become a reality.

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