Harinder S Sikka: A win-win drug policy

Chemicals and Fertiliser Minister Ram Vilas Paswan's acceptance of the pharma industry's proposals vis-à-vis the new drug policy, if implemented, would pave way for an exciting future for the industry. At the same time, patients would benefit significantly from low-cost, high quality drugs as a result of competition in the industry.

After India became IPR compliant, most pharma companies suffered heavily because of numerous ill-timed policies such as MRP-based excise duty, constant reduction of drug prices by the NPPA, regulatory issues, patent-related legal battles and unmanageable R&D expenses. Bringing more drugs under price control, as was earlier proposed, would have completely demoralised this sunrise sector.

Research-based pharma companies hope to be the biggest gainer as they can now focus significantly on researching India-specific diseases. The pharma industry's offer of capping generic-generics profits at 50 per cent of the cost, has only helped in soothing ruffled feathers.

The new policy would now consist of five main elements:

There would be a public-private partnership to help poor families.

Industry would offer drugs at concessional prices to government-run hospitals.

The government, on its part, would promote competition to contain prices.

The chemicals ministry would move from cost-based to a price-monitoring system.

The ministry would set up a 14-member committee, including 11 members from the industry to work on the interim order of the Supreme Court.

Paswan has also announced a Rs 200-crore cancer rehabilitation fund to provide free/subsidised drugs. Price control will also be removed for all drugs priced up to Rs 3. In addition, he also agreed to push for increasing the healthcare budget from the existing 0.9 to 3 per cent of GDP.

Arriving at this win-win situation was tough with both sides sticking to their stand. At the centre of it was the Supreme Court interim order directing the ministry to keep a close watch on the prices of essential drugs. Tensions eased once Justice Khare, former Supreme Court Chief Justice and author of the order, gave detailed interpretation of his order stating that "to read this order of the SC as a 'diktat' to the government to place all essential drugs under the price control as was listed in the National List of Essential Medicines, in 2003, thereby bringing the 354 drugs identified as essential up to May 2003, under price control is not borne out of the order of the SC. Such a direction does not and cannot anyway flow from the SC order dated March 10, 2003."

Having reached at a broad agreement, the 14-member committee is now expected to put in place the fine print for the five-point agreement. Patients can now get unbranded generics at rock-bottom prices. Simultaneously, it would also unshackle R&D and provide it with the freedom to further consolidate its position in the global arena. Cost-based price control is the last bastion of the dreaded licence raj. On paper, drug prices are controlled, but in reality, it puts a question mark on both the availability and quality of drugs.

For instance, over 20 million Indian women and 80 per cent of children suffer from anaemia. Similarly, thousands of flood-affected people suffer from Leptospirosis. Their sufferings are only further compounded due to non-availability of related drugs, due to their being placed under the price control system. By capping margins in generics, on one hand, and promoting R&D, on the other, the chemicals ministry is sure to kill many birds with one shot.

The writer is director, corporate affairs, Nicholas Piramal India Ltd