Irrational formulation

The task force on drug prices has done itself an injustice. Its report contains loads of common sense and indicates the extent to which newer notions have been absorbed by official thinking.

But by paying almost ritual obeisance to two hobby horses""price control and debranding of dominant products""it has raised the hackles of the pharma industry and laid the ground for a lot of acrimony and lobbying. The latter will suit a politician like Ram Vilas Paswan (he is the minister in charge) but will bring no benefit to India's poor. The Indian pharma industry carries a lot of clout: drugs found to be dangerous and banned in regulated markets keep selling in India freely.

So it is necessary that the industry's energies are directed along channels which will promote better health as well as help the industry survive and even prosper.

To keep things in focus, it is necessary to remember certain basics. Indian drug prices remain among the lowest in the world, though they have gone up quite a bit since the early nineties. Low prices are a great legacy from the licence control era and as much of it as is practicable should be retained.

This helps the industry too. It would have never become globally competitive had Indira Gandhi not done away with product patents, encouraged indigenisation and enforced price controls.

At the same time, Indians also end up consuming a horrendous amount of spurious and substandard drugs, drugs procured by state governments from "local" small- scale units are sometimes sub-standard, and large-scale corruption in many states prevents most of the free medicine from reaching the poor.

It is a cruel irony that Indian pharma companies are global suppliers of low-cost anti-retrovirals that are bringing new hope to HIV-AIDS victims but India has not the system or the inclination to make available the same drugs to its own afflicted poor.

At present, the Indian pharma industry is marked by intense price competition and pressure on margins. The Indian public machinery simply does not have the competence to manage a price control-cum-procurement system which will bring down drug prices even further, particularly when there is a need to stay away from substandard drugs. One of the sensible recommendations of the report is that procurement should only be from pre-qualified manufacturers, they should comply with good manufacturing practices and help should be given to small-scale units to enable them to become schedule M-compliant (follow good manufacturing practices).

Significantly, no limit appears to have been specified for becoming schedule M-compliant. The recommended debranding of drugs which have over 70 per cent market share will also not affect poor people. A company's name itself is a brand. Ranbaxy, for example, has been popularising the 'R' in the US where it is a generics player.

The report speaks about educating the public. If debranding eventually takes place then educated people may well take to insisting that the chemist supplies them the generic product of a well known company. Controversy over branding and price control is likely to divert attention from sensible suggestions like reducing excise duty on pharma products from 16 per cent to 8 per cent, setting up a settlement commission to speedily resolve overcharging claims and completely exempting HIV-AIDS and cancer drugs from every kind of state levy. What a pity!