Only a price controller

Pharmaceuticals department has achieved little

The list from the department of pharmaceuticals of its achievements in the two years of the National Democratic Alliance (NDA) government is in fact more of a self-indictment. The list displays both skewed priorities and inadequate attention to what should be areas of foremost concern. It kicks off with what the government considers to be its greatest achievement in the sector: expanding the scope of price control. This is a throwback to the mindset of the days of licences and controls. The aim of the government must be to make available quality medicines at affordable prices to all. Now, if in the first place there are serious concerns about drug quality control in India, then the battle is lost right at the outset. The pharmaceuticals department can argue that it is the Central Drug Standard Control Organization (CDSCO) under the Union health ministry and the state-level drug authorities that have to address the issue of substandard drugs in India - but that merely reduces the relevance of the pharmaceuticals department where things really matter.

If the pharmaceuticals department is somewhat irrelevant then that has not prevented it from becoming a nuisance, by seeing its role foremost as that of a drug price controller. Merely placing price caps on drugs can be counterproductive as this deters the drug industry to produce more to meet demand and encourages it to find clever ways of dodging the system. The way to take care of the expense of drugs to regular Indians is to have an efficient public procurement system under which the state negotiates for bulk discounts with the producers of drugs of adequate quality. For this, it is critical to have an approved list of quality drug manufacturers. The Pronab Sen committee recommended over a decade ago that "malpractices" be curbed in bulk purchase mechanisms but little has been done since then. One reason why European health care costs are lower than the US' is that the former negotiates bulk procurement of drugs for the public health care system whereas the latter does not. If price control is managed through negotiated public procurement, then there is no need to issue notices and chase claims for charging excessive prices. The department has proudly listed that it "has issued 638 demand notices for Rs 2,260.56 crore" to companies for overcharging and they have already deposited Rs 44.55 crore. Imagine the amount of paperwork and time that will have to be expended before a reasonable part of the amount claimed is recovered.

Where the pharmaceuticals department also admits to a serious failure is in its inability to revive prosperity in public sector pharmaceutical companies. The list of achievements says that during 2015-16 Indian Drugs and Pharmaceuticals (IDPL) achieved its highest in-house production in the last 20 years; but there is no mention of its finances, which obviously are far from an achievement. IDPL was the mother institution from which scientists came out to craft India's generics revolution, like Anji Reddy who founded Dr Reddy's Laboratories. The achievements list several steps for expanding the footprint of the National Institute of Pharmaceutical Education and Research. But what is the roadmap? When can the country expect to see the fruits of expanded research? As for the robust private pharma sector, it can only keep growing fast if there is greater ease of doing business. For this it is critical to have a smooth, transparent and predictable approval procedure for new drugs. This again comes under the CDSCO. If this is the picture, then it may be a good idea to disband the pharmaceuticals department and consider options such as placing drug price control under the Tariff Commission into which the Bureau of Industrial Costs and Prices has already been merged.