Ever since the Drugs (Prices Control) Order or DPCO was put in place in May 2013, the pharmaceutical industry and some sections within the Government of India have made efforts to scuttle it. Ironically, this is being done even as Prime Minister Narendra Modi grandstands at every opportunity about how the government has reduced prices of medicines and stents and launched the world’s largest healthcare initiative Ayushman Bharat to make healthcare affordable. Any initiative for large scale healthcare coverage cannot succeed without reasonably priced medicines and medical devices.
The latest effort to undermine drug price control has been a move to weaken the drug price regulator, the National Pharmaceutical Pricing Authority or NPPA. On January 2, the Department of Pharmaceuticals issued a notification announcing the constitution of a Standing Committee on Affordable Medicines and Health Products (with the unfortunate acronym SCAMHP) under the chairmanship of the Member (Health), NITI Aayog. The notification said that the committee will make recommendations on the prices of drugs and health products to the NPPA and has powers to take up issues suo moto or on recommendations of the Department of Pharmaceuticals, the Ministry of Health and Family Welfare or the NPPA. In effect, the committee will take over the function of the NPPA and, to some extent, the Department of Pharmaceuticals. The committee incidentally has no representation of the NPPA or the Department of Pharmaceuticals.
This is similar to other moves by NITI Aayog to involve itself in the functioning of government bodies like the National Sample Survey Office and the National Statistical Commission.
Pressure on the NPPA
NPPA chairpersons have had to face immense pressure from the pharmaceutical lobby while doing their jobs. Such was the case in 2015 when NPPA chairperson Injeti Srinivas used DPCO’s Para 19 powers to put important drugs, previously left out of the National List of Essential Medicines, under price control. The Indian Pharmaceutical Alliance went to court protesting but lost the case, both in the Bombay High Court and the Supreme Court. However, Srinivas was in due course and after a very short term as chairman sent to head the Sports Authority of India.
Foreign pharmaceutical companies were alarmed when, in February 2017, NPPA chairman Bhupendra Singh fixed ceiling prices of medical devices starting with stents and knee implants. Singh was routinely bypassed by the secretary of the Department of Pharmaceuticals and his joint secretaries, with NPPA pricing decisions being overturned by the former. Singh was then transferred to the National Authority for Chemicals Weapons Convention in the Cabinet Secretariat.
Since the NPPA was constituted as a part of the Department of Pharmaceuticals, its officers can claim that their interventions in the NPPA’s functioning is legitimate even if their actions interfere with the agency doing its job.
Meanwhile, the Department of Pharmaceuticals has been behaving like a rogue elephant, making suo moto gazetted amendments to the DPCO 2013, without consulting either industry or civil society, to allow no price control on patented drugs for five years and on orphan drugs. The price control exemption of five years on patented drugs will tie India in knots and make it difficult to use flexibilities under the TRIPS agreement. For instance, it undermines the argument for compulsory licensing, which allows governments to authorise the use of patented products without the consent of the patent holder and is an important tool for affordable access to drugs. The price exemption is, therefore, a violation of right to access to healthcare.
Bad price control method
The government, particularly the Prime Minister’s office, rushed in to cover up the mistake to say that the health ministry will prepare a list of orphan drugs and cancer drugs whose trade margins will be fixed and whose maximum retail prices will be decided by adding the trade margin to the price at the first point of sale. This method of setting an illusory ceiling price is in itself a bad idea. What if the price at the first point of sale is itself very high? Who is going to foot the bill for patients with rare diseases needing expensive orphan drugs?
As a trial balloon, on February 27, the Department of Pharmaceuticals issued a notification with the formula to be applied to the pricing of 42 anti-cancer drugs. The formula basically ensures that the maximum retail price (before GST) of a brand will be 43% more than the price to the stockist. An initial investigation shows that this will not have much effect on bringing down the already very high anti-cancer drug prices for the patient. This bad idea is likely to be extended to the vast majority of drugs (about 90% of the market) not under price control.
Amid all the brouhaha, there is an important case pending in the Supreme Court on the shortcomings of the DPCO 2013 – a price control mechanism that covers only 10% of the pharmaceutical market. When a case is pending in the Supreme Court, the government should either tread carefully on a matter that is sub judice or hasten to appear in court and cooperate in finishing a long pending matter. It has done neither so far.
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