Subir Roy: A medicine that will work

VALUE FOR MONEY

Both Ram Vilas Paswan's attempt to extend the ambit of price control for essential drugs and the pharmaceutical industry's reaction to it are predictable. Equally predictable is the outcome. At the end of the day, the poor and very poor, who are hugely dependent on the public healthcare system, will remain where they are""critically deprived of the bare minimum healthcare, of which accessing essential medicines free or very cheaply is an integral part.

Paswan's agenda is obvious. He will do what he feels will give him maximum political mileage, not necessarily what will work. For its part, the pharma industry, which does not want to be branded as anti-poor, first goes along with the minister, announces significant action and is then accused of taking action which looks good on paper but is ineffective.

The Indian pharma industry is a "for profit" setup and that is the only way in which it can be organised in this day and age. The industry is also among the most technically competent in the world in producing cheap generic medicines of adequate quality. Plus, it is hugely fragmented and survives under intense competition. For the country to have come thus far and be significantly unable to deliver where it matters the most is a shame.

To remedy this, first, here is an example of what civil society can do. A leading global non-government organisation recently requested Cipla to bring down the price of an anti-retroviral drug to fight HIV/AIDS""a drug which it manufactures and supplies under a global programme""and Cipla obliged by cutting the price by half. It obviously made a trade off between margins and public image. Civil society in India has to be informed, credible and tenacious, not like Paswan, who is seen to have a personal populist agenda and therefore considered all right to play games with.

The Cipla head has also made a valid point. The government should remove all duties on the import of ingredients and manufacture of vital medicines. Devi Shetty, an iconic evangelical doctor, makes the startling point that "22-25 per cent of the money spent by a person in pain goes to the government. Every policy of the government is made looking at corporate hospitals in Delhi, Madras." This is clearly an area where the government can and must act. By all means tax the incomes of corporate hospitals but why levy indirect taxes on medicines for the poor?

The supply of essential medicines through the public healthcare system is so inadequate and often scandalously non-existent primarily because the healthcare machinery is in the hands of the state governments and is mostly rotten. This can be addressed by setting the system right. Every state can try to follow what Kerala and Tamil Nadu does. But officialdom in Bihar, UP and West Bengal is probably not listening.

There is a way out. Pass on some funds for buying medicines to the panchayats, which can buy them from the market in accordance with an approved list of formulations, manufacturing firms and special prices for state procurement. The state administrations will howl if they are coerced to do this. So the Centre can pass some additional funding straight to the panchayats.

There is a key weapon in the hands of the government in controlling the prices of essential medicines. It, on behalf of the public healthcare system, is the biggest buyer. It can negotiate huge volume discount item by item, fully taking into account the costs in each case. The data and expertise for this kind of price negotiation reside with the central drug pricing authority. In fact this is a quiet, methodical and probably more effective way of achieving the same results as is sought to be done through a publicly declared price control policy. It has one disadvantage. It does not offer the minister a chance to grandstand.

There is also another serious issue which has not been focused upon at all in the current dispute between minister and industry""the widespread prevalence of spurious and substandard drugs in India. There is no point beating down prices if many of the medicines supplied through the public healthcare system have low and inadequate potency. This is mainly because state government procurement is subjected to enormous pressure to favour local small-scale units. There can be no compromise on quality. State governments that deviate from the centrally approved procurement list indicating formulations, prices and manufacturers following good manufacturing practices will automatically stand condemned in the public eye.

Sri Lanka and Bangladesh have made great headway in putting in place an effective public healthcare system that addresses the needs of the poor. For this both go by their lists of essential medicines. India also has one. The medicine part of public healthcare policy can be built around this list and the procurement of these medicines from approved firms at negotiated prices. Administrative price control can then go out of the window.

Civil society can play an important role in this. It can start testing and taking public positions on the quality of drugs available under the public healthcare system in the same way as cola drinks have been examined for pesticides. It can also make a public noise when state governments buy the wrong kind of medicines from the wrong kind of firms.

In all that has been suggested, the Centre has to spend more on healthcare"" both to pass on funds to panchayats directly and subject firms and formulations (this needs more laboratories and inspectors) to rigorous examination. The UPA government in its common minimum programme has already promised to spend more on healthcare. And the good news is the economy and the government's tax revenues are booming. So what are we waiting for?

sub@business-standard.com