Complex Task in Hand
Recent revelations in an office memorandum of the National Pharmaceutical Pricing Authority (NPPA) sufficiently makes it clear that the government will have to work on two fronts if it wants to provide relief to the patients from the high drug and medical equipment prices. Controlling the drug prices is the first front on which the government has already initiated few steps by regulating prices of some drugs. But preventing hospitals from earning huge profits from sale of the drugs and pass on the relief of controlled drug prices to the patients is the second and the most complex front on which the government will have to work.
The issue of hospitals overcharging the patients for the medicines has come to forefront when patients complained to NPPA about the overpricing. NPPA did analysis of the bills of four hospitals and found out how the hospitals are playing tricks in not passing on the benefit to the patients despite the government capping the prices. NPPA in its office memorandum has explained how the hospitals are exploiting patients by various methods with very high drug and consumable prices and earning huge profits, which runs up to even 2000 per cent in some cases.
This is important because access to affordable medicines and treatment is not merely a market issue but an important social issue. It is more so in a country like India which has a large number of poor population. The issue is so sensitive that the Doha Declaration also recognises concerns of the effect of intellectual property on prices and affirms that “the TRIPS Agreement does not and should not prevent Members from taking measures to protect public health”. The declaration reaffirms the right of the World Trade Organisation (WTO) members to use safeguard provisions in Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement to enhance access to medicines for poor countries.
Acknowledging that the pricing and accessibility of patent-protected drugs in low and middle income countries is a contentious issue, Ernst Berndt, Management Professor of MIT and Iain Cockburn, Professor of Economics at Boston, highlight the importance of IPR. In an article in Health Affairs based on their study from 2000 to 2009 of 184 US Food and Drug Administration (FDA) approved drugs sold in India, 50 per cent of them “went on sale in India only after lags of more than five years from their first worldwide introduction.” Over 50 per cent of the drugs that became newly available in the same period were produced and sold by multiple manufacturers indicating weak patent protection and sharp competition, which are disincentives. They concluded that modest patent and regulatory reforms would make the faster availability of new drugs with limited impact on prices.
While analysing bills of some hospitals from Delhi, NPPA found that out of the total bill amount only 4 per cent is for schedule formulations while over 25 per cent is for non-schedule formulations and over 10 per cent is of non-scheduled devices and consumables. Only 4 per cent of the total bill amount has a price control. In case of other 35 per cent non-schedule formulations, devices and consumables there is no control over prices. NPPA has concluded that doctors prefer prescribing non-scheduled medicines instead of scheduled medicines to earn higher margins. This is diluting the purpose of putting the drugs under the list of price control, NPPA has observed.
Currently there are 871 drugs under the price control drug list (National List of Essential Medicines - NLEM). The growth rate of non-NLEM drugs is double than NLEM drugs in 2017 clearly indicating the trend of migration from scheduled to non-scheduled category. While controlling the prices of essential drugs at one level, the government will have to find ways to stop the migration from scheduled to non-scheduled practically making it ineffective and controlling all charges for consumables etc.