BY IN­VI­TA­TION Not the right pre­scrip­tion for af­ford­able health­care

The steps mooted by the CCI to make the mar­ket de­liver don’t ad­dress ground re­al­ity

The Hindu Business Line - - PULSE -

In its re­cent pol­icy note on af­ford­able health­care (“Mak­ing Mar­kets Work for Af­ford­able Care”, Oc­to­ber 2018), the Com­pe­ti­tion Com­mis­sion of In­dia (CCI) has picked out four is­sues that it deems, in its wis­dom, as im­por­tant, but its pre­scrip­tions to these are prob­lem­atic.

The first is­sue fo­cuses on the enor­mous trade mar­gins in the phar­ma­ceu­ti­cal mar­ket and at­tributes them to in­ter­me­di­aries in the trade. How­ever, in­ter­me­di­aries in the pharma trade do not have much to do with this lais­sez faire. The MRP (max­i­mum re­tail price) is printed by man­u­fac­tur­ers based on their per­cep­tions of what they think the mar­ket can take. High MRPs, in turn, are be­cause of a lack of price reg­u­la­tion which, ac­cord­ing to the note, is a “sub­op­ti­mal reg­u­la­tory mea­sure”.

It is sub­op­ti­mal by de­sign. The cur­rent DPCO 2013 (Drugs Price Control Or­der) cov­ers less than 11 per cent of the pharma mar­ket of more than ₹1.2 lakh crore. The pol­icy note does not ad­dress the preva­lence of high mar­gins val­i­dated by the high ceil­ing prices due to the mar­ket-based ceil­ing price method­ol­ogy.

The so­lu­tion prof­fered in the note — pub­lic pro­cure­ment and more e-phar­ma­cies — does not solve the prob­lem, es­pe­cially when pub­lic health fa­cil­i­ties are in de­cay in most States and pri­va­tised health­care is the dom­i­nant model of care.

The sec­ond is­sue in­volves the “qual­ity per­cep­tion” of “branded gener­ics”. And as the note would have it, the “the root cause of brand pro­lif­er­a­tion is the trust-deficit in the reg­u­la­tory ap­pa­ra­tus for li­cens­ing and in­spec­tion, which needs to be ad­dressed through consistent ap­pli­ca­tion of statu­tory qual­ity control mea­sures across states and bet­ter reg­u­la­tory com­pli­ance.”

This is par­tially cor­rect. The rec­om­men­da­tion for the trust deficit al­luded to — “ef­fec­tive and uni­form qual­ity control of drugs and onecom­pany-one drug-one brand name-one price pol­icy” — is not even re­motely a so­lu­tion to brand pro­lif­er­a­tion nor can it pre­vent the same drug be­ing sold by dif­fer­ent com­pa­nies at widely vary­ing prices.

No choice, re­ally

The third is­sue raised by the note is “ver­ti­cal ar­range­ments” in health­care ser­vices and the lack of trans­parency. The rec­om­men­da­tion is, “strong reg­u­la­tory frame­work en­sur­ing trans­parency, data porta­bil­ity and stan­dard­i­s­a­tion of di­ag­nos­tic labs.” The note rec­om­mends, among other things, “manda­tory dec­la­ra­tion of vi­tal data such as mor­tal­ity rate, in­fec­tion rate, etc, by the hospi­tals” to help con­sumers make an in­formed choice.

Mor­tal­ity and in­fec­tion rate? Don’t peo­ple know this in a sense — which hos­pi­tal you come out worse than when you get into? And how can this help in in­formed Health and pharma mar­kets are con­gen­i­tally asym­met­ric choice when the choice is be­tween treat­ment in bad hospi­tals and none at all? Why not in­sist on a price cap on all med­i­cal pro­ce­dures, di­ag­nos­tic tests and med­i­cal de­vices and con­sum­ables? And stan­dard treat­ment guide­lines at least for rou­tine dis­eases — the treat­ment pro­to­col and pre­scrip­tion is more or less the same — as well as in­sist on adop­tion of an ap­pro­pri­ate Clin­i­cal Es­tab­lish­ments Act?

Fi­nally, the note talks of reg­u­la­tion of the phar­ma­ceu­ti­cal sec­tor and its com­pe­ti­tion. In In­dia “there are mul­ti­ple reg­u­la­tors govern­ing the phar­ma­ceu­ti­cal sec­tor” as a re­sult of which “im­ple­men­ta­tion of reg­u­la­tions is not uni­form across the coun­try. This has re­sulted in mul­ti­ple stan­dards of same prod­ucts and also dif­fer­ent lev­els of reg­u­la­tory com­pli­ance re­quire­ments….”

Al­most ev­ery sen­tence in this is prob­lem­atic. In­dia has one law, the Drugs and Cos­met­ics Act. The im­ple­men­ta­tion is non-uni­form be­cause the reg­u­la­tors, with few ex­cep­tions, tend to be lax and at heart, rent col­lec­tors, from top to bot­tom. No amount, as rec­om­mended in the note, of “har­mon­i­sa­tion of pro­cesses” is go­ing to solve the prob­lem. The law any­way, be­ing sin­gu­lar in In­dia, stands har­monised.

Health and pharma mar­kets are con­gen­i­tally asym­met­ric and come with built-in mar­ket fail­ure. No amount of straight­en­ing out the asym­me­try, like a dog’s tail, will make com­pe­ti­tion ‘work’. The prob­lem is not just one of in­ad­e­quate com­pe­ti­tion but the right reg­u­la­tion and po­lit­i­cal will that takes mar­ket fail­ure in its stride and de­liv­ers health­care at the low­est prices, prefer­ably free through the pub­lic sec­tor.

The writer is af­fil­i­ated with the All In­dia Drug Ac­tion Net­work (AI­DAN) and LOCOST, Vado­dara, a not-for­profit maker of es­sen­tial medicines. Views are per­sonal

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