Subject: A Balanced Pharmaceutical Policy

Dear Mr. Prime Minister,

Medico Friends Circle is a national body of health professionals, health workers, which has been for the last 35 years exploring and advocating appropriate health policy measures for the benefit of the Indian people.

We write to you at a time when a Draft Pharmaceutical Policy has been submitted to the Cabinet for discussion and approval. This matter was discussed during the national meeting of the Medico Friend Circle at Sewagram, Wardha on 7^th and 8^th July and we hereby share our concerns with you. Civil society organizations have represented the concerns of public interest and public health to a succession of committees, task-forces which have deliberated on the issue of pharmaceuticals and their pricing. We even approached the Supreme Court to intervene when the previous government virtually abolished the regulation of drug prices in its pharmaceutical policy. We would be happy to share with your office the detailed arguments we have put forth during these various submissions. Here we briefly summarize the rationale for price control of the essential drugs –

· Medicines are the only commodity in which the payer (the patient) does not decide what to buy and at what cost. The doctor prescribes and the patient pays.

· Unlike in case of other commodities the purchaser of medicines is extremely vulnerable as he/she is seeking immediate relief from suffering. This special nature of drugs is the reason why even in so-called market economies all issues related to drugs including their prices are the subject of regulation by their Governments. The only exception is the USA.

· In India, unlike in the developed countries, expenditure on medicines constitutes a large proportion (>50%) of total medical expenditure. 90% of this expenditure is out-of-pocket expenditure by the people since the government spends a very small proportion on medicine procurement

· Unlike in the developed countries, most Indians patients face the drug industry as hapless individuals because most are not covered by insurance or social security mechanisms.

· Majority of Indians are below or near poverty-line, yet they are forced to spend on unnecessarily costly medicines. This unnecessary expenditure on medicines is a very important cause for indebtedness after hospitalization.

· Lastly, the track record of the drug industry in India as regards to pricing is extremely reprehensible. The following examples would illustrate this point –

→ The same drug in the same strength manufactured by two trusted companies can vary from 2 times to 20 times in their prices, which has no credible explanation other than overpricing. Levofloxacin used in infections is sold by CIPLA is 7 rupees per tablet , while Aventis sells it at Rs. 95 per tablet. What is worse is that costlier drugs most often sell more because of more aggressive promotion.

→Committees constituted by the Government have clearly documented abnormal rises in prices of drugs after they were taken off the list of price-controlled drugs, e.g. price deregulation in 1995 the price of some TB drugs rose by 250%. Yet no action has been taken.

The pharmaceutical industry can afford to spend an estimated Rs. 5300 crores a year on drug promotion which actually means pampering doctors with gifts, big and small, and sponsoring lavish dinners and conferences in five star hotels, and even overseas visits.

When the pharma companies can afford to sell a drug at 10% of its MRP to the government and 20% of its MRP to the pharma trade why does it not question the abnormally high MRP itself? Even in quality conscious bulk procurement processes like in Delhi and Tamil Nadu, the tender rates of drugs are as low as 2-20% of the market rate When the government cannot provide essential drugs to the people, then is it not its primary responsibility to ensure that they are not being cheated with overpriced drugs in the market?

Thanks to the Indian Patents Act 1970, the Indian pharmaceutical companies have demonstrated that the western companies were vastly overpricing drugs. This has led to a worldwide questioning of drug prices. However, these same Indian companies which grew under Governmental protection are now joining the choir of MNCs in singing paeans to the free market and creating an uproar whenever protection of consumer interests in India is brought up. They are resisting any attempts to question drug prices at home.

We agree that the industry is involved in business and not philanthropy and is entitled to fair returns on its investment. However it is a myth that regulation of prices is incompatible with profitability of the pharmaceutical sector. Is a 150-200% margin on the post-manufacturing cost of a drug produced in India that is being contemplated in this policy less for any commodity by any stretch of the imagination. The industry with its clout is peddling myths, half-truths and what is worse, even threats in its attempt to abolish regulation of drug prices, and looking at the intervention being made by your office, seems to be succeeding.

The pharma policy has to balance the public interest with economic interest, at this juncture after being skewed in favor of the industry for over the last 3 decades over which the list of drugs under price control have steadily declined from 347 to the present 74. If, the government bows again to the industry and neglects public interest, it shall be labelled complicit in the rising graph of drug prices, healthcare costs and people’s miseries.

We hope you will give serious consideration to the above submission.

Thanking You,

Sincerely Yours,

Dr. Ritu Priya,

Convenor

Members of the Executive Committee, Medico Friend Circle	Other member signatories
1. Dr. Ritu Priya	Dr. Amar Jesani, Mumbai
2. Ms. Manisha Gupte	Ms. Neha Madhiwalla, Mumbai
3. Dr. Mira Sadgopal	Dr. Alpana Sagar, New Delhi
4. Dr. Abhay Shukla	Dr. Ulhas Jajoo, Wardha
5. Ms. N. B. Sarojini	Dr. S.P.Kalantri, Wardha
6. Mr. S. Srinivasan	Mr. Abraham Thomas, Bangalore
7. Dr. Anant Phadke	Dr. Biju Soman, Trivandrum
8. Dr. Anand Zacharaiah	Dr. Mala Ramanathan, Trivandrum
9. Dr. Binayak Sen	Dr. Anurag Bhargava, Bilaspur
10. Dr. Prabir Chatterjee
11. Dr. C. Sathyamala

* Convenor – Dr. Ritu Priya, 147-A Uttarakhand, Jawaharlal Nehru University, New Delhi-110067 ritupriya@vsnl.com

Regd Office: c/o Manisha Gupte, 11 Archana Appartment, Solapur Road, Hadapsar, Pune- 411028 masum@vsnl.com

Subject: A Balanced Pharmaceutical Policy

Dr. Amar Jesani, Mumbai

Dr. Anurag Bhargava, Bilaspur