Not what the doctor ordered

Many aspects of the new pharma policy need to be improved

The draft pharmaceutical policy, released last week, seeks to balance the interests of patients and the pharmaceutical industry, and makes the right noises about improved quality, greater affordability and ‘Make in India.’ It is true that there is much in the policy that represents a significant step forward. For one, the insistence that manufacturing of drugs be subject to World Health Organization standards is an important improvement. This will, of course, require beefing up the cadre of inspectors under the Drug Controller General of India. And it is welcome that the policy says that the Drug Price Control Order will be “reoriented to move from price control to monitoring of drug prices, their availability and accessibility”.  Direct price control is a backward-looking strategy that cripples choice, quality and innovation, and hurts patients as much as it does companies. Further, it opens the door to lobbying and rent-seeking with all the attendant dangers for competition and for corruption. 

It will be better if price monitoring focuses on essential drugs (about 200), and avoid strict price control that makes a drug unviable and discourages production, as has happened in the past. Imports are almost always more expensive, so it is better to have domestic production even with some price cushion. The government should also consider specific steps against price gouging, as has been seen in stents though these are not drugs, but such a provision should be used rarely.

Much work needs to be done on the draft policy. For example, many pharma companies have suffered, and exports with them, because of poor standards at production facilities, and fudging of efficacy data; this needs to be addressed. It should not need the US FDA (Federal Drug Administration) system to inspect and show up the problems. It is proposed that “loan-licensing” be deprecated — this is when manufacturing is sub-contracted. The Department of Pharmaceuticals fears this reduces quality. But the structure of the industry (with many small units) makes it more difficult to monitor quality as well as the rampant problem of fakes. Sub-contracting is therefore a good system, as it brings small units under the quality control of large companies. The other issue that should be looked at closely is the fact that there is zero effective control of chemists, most of whom do not ask for prescriptions when selling schedule drugs; this facilitates the sale of fakes. It would help to encourage the setting up of large drug store chains, to make the distribution system more organised and quality conscious.

Finally, despite its initial protestations, the draft policy seeks to give bureaucrats more power when it comes to controls, at the expense of independent regulators. Instead of an appellate authority examining regulatory orders, as recommended by the National Pharmaceuticals Pricing Authority, the draft says appeals will go to the department directly. This is an unfortunate power grab. In general, the best way to keep life-saving medicines affordable is through the government being a big and active consumer, and bargaining collectively with companies as part of an overall healthcare strategy. In other words, drug availability and affordability are a subset of better public provision of healthcare.