Why Medicines are so Costly in India [HTML version]

CONTENTS

I. WHY MEDICINE PRICES SHOULD BE REGULATED  II. TOKENISTIC REGULATION OF MEDICINE PRICES  III. PHARMACEUTICAL COMPANIES CAN AFFORD TO SELL AT MUCH LOWER PRICES  IV. BRANDED MEDICINES, IRRATIONAL FDCs, ‘ME-TOO MEDICINES’, AND EVER-GREENING OF PATENTS  V. POLICY MEASURES TO MAKE MEDICINES AFFORDABLE

 

I. WHY MEDICINE PRICES SHOULD BE REGULATED 

Modern medicinal formulations have had a transformative effect on society in many ways, most of all by reducing mortality, particularly in diseases that were once considered “fatal”. To make this gift of science and technology a truly universal social good, all individuals should have access to free or affordable medicines as and when required. This is an achievable outcome in India, which has gained for itself the epithet, “pharmacy of the world ”. However, a paradox remains: despite its strong global presence as a producer of low-cost generic medicines, expenses on medicines remain a significant burden for many Indians. “Large production volumes and relatively low [international] prices of Indian generic formulations have not resulted in reliable access to essential medicines of good quality for all Indians.” ^[1] Millions in India do not get the medicines they need, and, at the same time, are prescribed irrational or inappropriate medications. 

This Policy Watch explains this paradox and explores possibilities to resolve it. From a broader perspective, after Independence, there were great improvements in health care services in India. However, after 1980s health care for ordinary, poor people became increasingly problematic as public financing of healthcare declined, and private medical care became increasingly commercialised and corporatised. This has meant that patients in India bear two-thirds of healthcare related costs themselves, referred to as out-of-pocket (OOP) expenditure, making it one of the countries with high levels of OOP healthcare spending. ^[2] According to the Standing National Committee on Medicines, “out-of-pocket expenditure constitutes over 60 per cent of total health expenditure, with a substantial 40 per cent being incurred on medicines.” ^{[3], [4]}

The production of medicines in independent India has been increasing rapidly especially after 1970. From a near total dependence on MNCs in a nascent India after Independence, the pharmaceutical industry grew rapidly after the enactment of the Indian Patent Act, 1970 which freed the Indian pharma industry from the clutches of the product patent regime. While there were only two indigenous firms in the top 10 in terms of retail sales in the 1970s, this rose to six by 1996 and to eight by 2001. ^[5] The annual turnover of the Indian pharmaceutical industry, which was Rs. 82,200 million in 1993-94 ,^[6] increased to Rs. 4.17 lakh crore in 2023-24 ^[7] (both current prices). Despite this growth in domestic manufacturing capacity, “purchase of medicine contributes the most to the OOP health payments by households and pushes more than three per cent Indians into poverty every year”.^[8] Drawing attention to the debilitating effect of the costs of medicines in India, a 2022-report published by the World Health Organization (WHO) observed:

“Sustained underfunding of public sector facilities, and the rapid growth of private sector providers has contributed to rising OOP costs on health care for households. Of this, a significant share, almost two-thirds of OOP expenses, are for purchasing outpatient care, especially medicines. Oversupply of health services in the form of excessive prescription of drugs, and unnecessary procedures and tests, has been one important consequence of such a payment system. Because households bear the burden of the high OOP health expenses in India, more than 55 million people are impoverished each year on account of expenses for ill health.” ^[9]

According to the National Sample Survey Organisation’s Survey on Social Consumption of Health (75 ^th Round), 61.4 per cent of hospitalisations ^[10] and only 30.1 per cent of treated ailments are in government/public hospitals. This implies that close to 70 per cent of healthcare for ailments are provided by the private sector. ^[11] Therefore, public health services, where treatment , including medicines , is generally free, serve only 30 per cent to 40 per cent of the population. This is a direct fallout of governments adopting pro-market policies to the detriment of state-provided healthcare. Consequently, the growth of public health services has stagnated and declined since the 1980s. Barring a few States such as Tamil Nadu, Kerala, and Rajasthan (for reasons discussed later), the supply of medicines through Public Health Facilities (PHFs) is inadequate, forcing patients to buy a large proportion of the medicines they need at prices that are unaffordable for many. 

In addition, over the past 30 years, the government has granted pharmaceutical companies more freedom to produce all sorts of medicines - both rational and irrational - including irrational Fixed Dose Combinations (FDCs), with little regulation. This has allowed companies to maximise profits, to market medicines under any fancy brand name, using various marketing strategies, including questionable ones, and at prices that the market can bear. Despite medicines being essential—and often life-saving—only about 10 per cent of those sold in the retail market are under price control, and even this price-regulation is largely perfunctory. The resultant unnecessary deprivation and distress could be prevented with scientific, pro-people changes in India’s pharmaceutical policy. How did India find itself in this situation, why does it persist, and what are the policy-measures required to radically change this scenario are important questions that need to be addressed. 

At odds with market economics

Medicines are not only essential commodities. They are also unique ‘products’ in that they are at odds with factors that determine ‘rational’ consumer behaviour: knowledge of the market, choices among products, the choice to purchase or not, and the willingness and desire, backed by the ability to buy. As purchasers of medicines, patients or carers are especially vulnerable: they immediately have to buy the medicines prescribed and at whatever prices they are available. ^[12] There is no option to delay or negotiate. In short, their freedom of choice is either non-existent or extremely constricted. 

Additionally, the prescriber, the doctor, is not the payer, and the buyer is not the decision-maker about the choice of medicine. Information asymmetries in knowledge of the prescribed medicine, its alternatives/substitutes, technical complexities surrounding medicines, and fear of adverse outcomes confound healthcare consumers more than those in other sectors. This unique vulnerability of patients, coupled with widespread poverty, underscores the urgent need for price control over this essential commodity. Manufacturers of drugs are structured either as monopolies or oligopolies, thereby giving them an advantage in price-setting. ^{[13], [14]}

Ideally, medicines should be available free of charge at the point of care. However, as this is not the case in India, medicines alone account for 29.1 per cent of inpatient and 60.3 per cent of outpatient OOP expenses , respectively. ^[15] (In contrast, in developed countries, the overall OOP expenditure itself is low, as a large part is covered by public-funded provisioning, including insurance mechanisms. ^[16] Hence, in these countries, OOP spending on medicines, which is a part of the overall OOP expenditures, is comparatively low.) Moreover, the pharmaceutical industry has, to a large extent, influenced and incentivised doctors, resulting in the unnecessary prescription of medicines .^[17] Many of these prescribed drugs have questionable value, and a significant number contain FDCs that are “irrational” i.e. those not recommended by standard medical textbooks and other such literature. Doctors are often swayed into prescribing high-priced brands marketed by large pharmaceutical companies. State agencies and doctors’ organisations frequently turn a blind eye to these practices, with some even participating in these unscientific, exploitative activities.

Due to ineffective regulation, the Indian pharmaceutical industry has a track record of huge profiteering. ^[18] In addition to the patients’ special vulnerability, profiteering is fuelled further by weak market competition. In many cases, about half of the market share is dominated by the top 3-4 leading brands. Return to Contents

II. TOKENISTIC REGULATION OF MEDICINE PRICES 

The Essential Commodities Act, 1955, empowers the government to “control production, supply, distribution etc. of essential commodities for maintaining or increasing supplies and for securing their equitable distribution and availability at fair prices”.^[19] The government took some steps through periodic Drug Price Control Orders (DPCOs) issued by the Government of India to regulate the prices of essential medicines. (See the box for a brief history of the regulation of pharmaceutical prices in India). This chapter analyses the effects of the DPCO-2013, which continues to be the basis for price-setting in India. It explains this new, Market Based Pricing (MBP) of medicines in India which was adopted from 2013; analyses which medicines were brought under this new price-control regime, which were left out , and what was the impact of this new DPCO-2013 on medicine prices then in India. (This fundamentally flawed DPCO-2013 regime still continues, the overall situation remains the same , and hence this Policy Watch does not get into the current situation of medicine prices and its analysis.)

According to the WHO, “essential medicines are those that satisfy the priority health care needs of a population”. In 2013, the prices of all 348 essential medicines listed in the National List of Essential Medicines (NLEM)-2011 were brought under price control through the DPCO-2013. This marked a significant increase in the number of medicines under price control compared with the DPCO-1995, which covered only 74 medicines. ^[20]

However, unlike previous DPCOs, ‘bulk medicines’ i.e. Active Pharmaceuticals Ingredients (API) which are the starting point for manufacture of various formulations like tablets, syrups, drops, etc., were not included in the DPCO-2013. Secondly, due to the deeply flawed nature of the DPCO-2013, only up to 24 per cent of the retail sale of medicines in India was brought under Market-Based Price Control (MBP) in 2013. By 2016, this proportion dropped to about 11 per cent. Prices of medicines which were brought under price control through DPCO-2013 were reduced merely by about 12 per cent in 2013. This reduction was minimal compared with the excessive pricing and profiteering by pharmaceutical companies.

Even this tokenistic price control by the Union government was a result of pressure from the Supreme Court in 2012, in the PIL case ( UoI & Others vs. AIDAN & Others, WP (C) 423/2003). (The All India Drug Action Network, or AIDAN, to which the author belongs, is a group of volunteers advocating for a rational, pro-people pharmaceutical policy in India since 1981.) The case is yet to come up for a final hearing in the Supreme Court. Meanwhile, in March 2024, the Department of Pharmaceuticals constituted a ‘Committee for Reforms in the Pricing Framework for Medicines and Medical Devices’. ^[21] From the point of view of ordinary people there are no great hopes from this Committee for any substantial relief to the common people. This is because this Committee has to work within the framework of the DPCO-2013. It will give recommendations about how better to operationalise the functioning of DPCO-2013, to overcome some of the problems pointed out by stakeholders. Towards this end , the pharma industry has made representations to this Committee. The report of this Committee has not come out almost eight months after it was set up though this was to be done in three months. The cost-plus formula, which is widely used to fix rates for essential services (such as telephone/cell phone charges, electricity) should apply to medicines, which are special and often life-saving commodities. Indeed, this was the practice between 1979 and 2013, when all DPCOs used some form of the cost-plus approach for the price control of medicines. For example, under the DPCO-1995, the ceiling price of 74 bulks and their formulations ^[22] was brought under price control with a cost-plus formula. The ceiling price was set at the manufacturer’s cost of production plus a margin of 100 per cent. However, pharmaceutical companies opposed limits on profitability and lobbied with the government to replace cost-plus ceiling pricing with MBP. When the government was forced to include all essential medicines under price control, under pressure from the Supreme Court, it brought all medicines in the NLEM-2011 under DPCO-2013. However, it adopted the MBP regime, replacing the cost-plus based approach of the DPCO-1995. According to this DPCO-2013, the ceiling prices for all medicines listed in the NLEM-2011 would be the simple average of the prices of all brands which have a market share of 1 per cent or more. The market share would be calculated on the basis of moving annual turnover. In the DPCO no reason was given for this change over to MBP.

The MBP regime effectively legitimised the already exorbitantly high prices of essential medicines that were prevalent at the time. For example, in the case of diclofenac 50 mg tablets, which are used to reduce inflammation and pain, the revised price under DPCO-2013 should have been Rs. 2.81 per 10 tablets (see col. 4, row 1, Table 1) if Cost-Based Pricing (CBP) of DPCO-1995, with a 100 per cent margin over the cost of production, had been continued for those essential medicines. However, the Maximum Retail Price (MRP) under DPCO-2013, worked to be Rs. 19.50 for 10 tablets (see col. 5 row 1, Table 1) as it was based on the average of the prices of all brands with a market share of 1 per cent or more plus a 16 per cent retailer’s margin. This price decided by MBP as per DPCO-2013, reflects brand value rather than the actual cost of production. This meant an unnecessary burden on the consumers ranging from 290 per cent to 1,729 per cent in case of some commonly used medicines (Table 1). 

Leading pharmaceutical companies continued to engage in unrestricted profiteering. One estimate by the Small and Medium Enterprises Pharmaceutical Industries Confederation suggests that large companies made excess profits amounting to Rs. 1,01,750 crores over the past 10 years [as of 2014], primarily because most medicines were excluded from price control.^[23] These profits are often the result of questionable marketing practices in the name of brand promotion, including unethical tactics such as sending medical professionals on sponsored holidays and a whole range of other unethical inducements. The expenses on these promotional activities are also borne by the patients in need of such medicines.

The DPCO-2013 was structured in such a way that although it did reduce the highest prices, it did not affect the prices of the majority of brands that were already below the ceiling price. As a result, it failed to lower average prices. From the viewpoint of the common people, price reduction should not be limited to the maximum price alone, but there should also be a reduction in the prices of all excessively priced brands. Available data showed that the total sales for a sample of 370 medicines included in the DPCO-2013, was Rs. 11,233 crores. Due to DPCO-2013, the sales proceeds of these 370 medicines decreased by Rs 1,280 crores, about 11 per cent ^[24]. This decrease reflects tokenism as it could be more than made up in a year due to usual annual increase in sales year on year.

Adapted from: Phadke, A. and Srinivasan, S. 2014. op. cit. p. 62.

Data Source: For ceiling prices, NPPA website http://www.nppaindia.nic.in Accessed in June-Sep 2013. DPCO-1995 prices of all medicines, estimated by S. Srinivasan. Please note that the fourth column gives the price that would have been if the DPCO-1995 norms were to be used. Most of these medicines were not in the price control basket under DPCO-1995 regime.

Truncated list of price-controlled medicines

The second important problem with DPCO-2013 is that it covers only medicines included in the NLEM and excludes all others. According to WHO, “Essential medicines are those that effectively and safely treat the priority healthcare needs of the population. … While essential medicines cover a wide range of global health needs, they represent only a small proportion of the total number of medicines available globally.” ^[25]There are thousands of rational medicines which have been proved to be effective and relatively safe and , hence , included in the medical textbooks. Firstly, out of these thousands, Essential Medicines constitute only a part. Thus, in India, the NLEM-2011 contained 348 medicines. These were brought under DPCO-2013. (The NLEM-2022 contains 384 medicines.) Secondly, in the market, there were hundreds of formulations of various strengths of these 348 medicines. As pointed out below, out of these only those formulations included in the NLEM-2011 were covered under DPCO-2013. Thirdly, there are hundreds of irrational FDCs made up of Essential Medicines included in the NLEM-2011 whereas the price-control basket contained only those which were listed in the NLEM. The following paragraphs explain why and how only a small proportion of formulations of the essential medicines that were included in the NLEM-2011 were brought under price-control through DPCO-2013.

1. Important Life-Saving and Essential Medicines Out of Price-Control

The DPCO violated even the letter of the Supreme Court directive [See Box for the directive by the Supreme Court]by excluding several life-saving medicines from price control. For instance, while the WHO Model List of Essential Medicines (EML) mentioned capreomycin, cycloserine, ethionamide, kanamycin, and para-aminosalicylic acid for the treatment of Multi-Drug-Resistant TB (MDR-TB), the NLEM-2011 did not include any of these then. These medicines, which are crucial for treating MDR-TB - a condition with a very high mortality rate - were highly expensive, with an estimated cost of Rs. 8,340 per month for medicines alone at that time. The WHO Model List from April 2013 also includes five rational FDCs of anti-TB medicines. However, the NLEM-2011, and consequently the DPCO-2013, did not include any of these. 

For treating severe ‘falciparum malaria,’ which also has a high mortality rate, the WHO EML includes Artesunate tablets, injectable Artesunate, injectable Artemether, and a combination of Artemether and Lumefantrine tablets. Yet, the DPCO-2013 included only Artesunate tablets, omitting the other falciparum malaria medicines altogether. The DPCO-2013 interpreted the concept of ‘Essential Medicines’ in a convenient and minimalist manner. As a result, medicines listed as ‘complementary’ in the WHO EML were not included in the DPCO-2013. However, all editions of WHO Model List state the following about the core and complementary lists:

“The core list presents a list of minimum medicine needs for a basic health‐care system, listing the most efficacious, safe and cost‐effective medicines for priority conditions. Priority conditions are selected on the basis of current and estimated future public health relevance and potential for safe and cost‐effective treatment. The complementary list presents essential medicines for priority diseases, for which specialized diagnostic or monitoring facilities, and/or specialist medical care, and/or specialist training are needed.” ^[26]

The three keywords used by the WHO to define the core list—minimum, basic, and priority—are important to note. Additionally, it should be recognised that the complementary list also consists of essential medicines, making it unjustifiable and unreasonable to exclude medicines on the complementary list from price control. Due to this minimalist interpretation of the EML, other important omissions were made. Out of all anti-asthmatic medicines, only salbutamol was included in the NLEM-2011. Other essential medicines, such as doxofylline, salmeterol, montelukast (along with other members of the class like theophylline and zafirlukast), were missing from this list. Many of these are especially useful in life-saving situations. (Note: Montelukast was added to the later editions of NLEM.) ^[27]

India is the country with the second largest number of diabetics in the world ^[28] and diabetes is one of the most important causes of death in the country. However, in addition to insulins, the only anti-diabetic medicines on the NLEM-2011 list were glibenclamide (from the sulfonylurea class) and metformin. Instead of glibenclamide, many physicians prefer glimeperide, another medicine from the same class of medicines called “sulfonylureas”, because it has a lower risk of hypoglycemia (low blood sugar). But DPCO-2013 excluded it. The prices of different brands of glimeperide vary vastly. Thus, Amaryl 1mg was the costliest and the most promoted brand which was sold at Rs. 65 per 10 tablets (Oct 2012 sales for preceding 12 months: Rs 32.57 cr), whereas if CBP norms of DPCO-1995 were adopted, the price would have been Rs 2 per 10 tablets, (i.e.) almost 3,000 per cent less!! 

2. Exclusion of Medicines in the Same Chemical Class from Price-Control

Some medicines chemically almost identical to those included in the NLEM-2011 were not included in the same list. These “me-too” medicines which belong to the same chemical class, offer hardly any advantage in terms of efficacy or safety. For example, lisinopril is a ‘me-too’ variant of enalapril, and simvastatin is a ‘me-too’ variant of atorvastatin. Such costly ‘me-too’ variants are often introduced as ‘new medicines’ with a fresh patent just as the patent period of the original molecule is expiring. Pharmaceutical companies entice doctors to stop prescribing the ‘old’ original medicine and promote the ‘new’, “better” one which belong to the same chemical class, though it has no therapeutic advantage and yet carries a high monopoly price.

As the NLEM-2011 contained a list of only the original molecules, none of these ‘new’ medicines from the same chemical class were included in the DPCO-2013. By mechanically focusing only on essential medicines as listed in the NLEM-2011, the DPCO-2013 missed the bigger picture. Thus, for example, among anti-hypertensives, enalapril (an ACE inhibitor) has a price cap because it is part of the NLEM-2011. However, prices of other widely used ACE inhibitors which belong to the same chemical class such as captopril, fosinopril, imidapril, lisinopril, perindopril, quinapril, ramipril, and trandolapril were excluded from price regulation simply because they are not in the NLEM-2011. Moreover, there was a strong possibility that manufacturers, instead of focusing on the production of the much cheaper enalapril, would shift to producing ramipril and lisinopril. In fact, ramipril’s sales were already 3.5 times that of enalapril!

As recommended in 2005 by the Pronab Sen Task Force (set up to suggest measures for making essential medicines affordable), to prevent such “migration,” all medicines within the same therapeutic class should be brought under price control. ^[29] The government has no power to prevent the aforementioned migration to the production of ‘new,’ ‘me-too,’ costly medicines.

3. Exclusion of Existing Irrational FDCs from Price-Control

The list of 348 medicines in the NLEM-2011 contained 333 single-ingredient formulations and 15 rational FDCs. However, hundreds of other FDCs in the Indian market consisting of irrational combinations of two or more medicines escaped price control. It is important to note that in India, the sales of single-ingredient drugs are generally much lower than those of FDCs.

For example, before inclusion under DPCO in 2013, Paracetamol 500 mg tablets with at least 1 per cent market share had sales of Rs. 128 crore across 13 brands. After price control, 9 of these 13 brands, accounting for Rs. 105 crore in sales, were affected. In contrast, sales of all other paracetamol preparations (including those of different strengths, dosages, and combinations) amounted to Rs. 2,571 crore. Of this, preparations worth only Rs. 105 crore (about 4 per cent) were impacted by DPCO-2013. Such examples are common for most other medicines in the NLEM, revealing the tokenistic nature of price control under DPCO-2013 (data mainly from IMS, worksheets uploaded by NPPA).

According to the government’s own affidavit filed in the Supreme Court, only 18 per cent of the Rs. 71,246 crore market was under price control by November 2013. A staggering 82 per cent of the market slipped out of DPCO-2013 oversight. Out of the Rs. 13,097 crore covered under price control, Rs. 1,900 crore accounted for combinations, and Rs. 11,197 crore for single-ingredient drugs. By 2016, this proportion had dropped to 11 per cent.

The same affidavit also mentions the percentages of different therapeutic categories not covered by DPCO-2013: anti-diabetics (82 per cent), anti-malarials (86), anti-TB drugs (81), blood-related drugs (99), cardiac drugs (71), hepato-protectives (100), HIV-related drugs (71), pain/analgesics (90), respiratory drugs (94), vitamins/minerals/nutrients (99), and so on. ^[31]

4. Only ‘Standard’ Dosage Forms Brought Under Price Control

For a medicine to be under price control, it has to be included in the NLEM. Therefore, only the strengths and dosages mentioned in the NLEM were included in the DPCO. For example, the antibiotic combination of amoxicillin with clavulanic acid, marketed by GlaxoSmithKline under the brand name Augmentin, is available in several tablet strengths: 375 mg, 625 mg, and 1,000 mg. Of these, only the 625 mg tablet is price controlled under the pretext that only this is listed in NLEM-2011. In the top 100 selling products (PharmaTrac, October 2012), eight brands of atorvastatin (10 mg) had a sales turnover of Rs. 187.39 crore over the previous 12 months, whereas seven other products in other dosages of 15 mg, 20 mg, 40 mg, etc., had sales of Rs. 138.63 crore. In total, about half of all dosage forms were not under price control. For example, Paracetamol 650 mg, which had large sales, was not listed under the NLEM until 2022, and thus remained outside price control until then. 

5. Automatic Price Increase of Medicines under Price Control

Every financial year, manufacturers are allowed to increase the prices of all price-controlled medicines at the same rate as the increase in the Wholesale Price Index (WPI) regardless of changes in input costs. This is irrational. The WPI reflects prices of several unrelated commodities and is, therefore, a poor indicator of the actual cost increase for bulk medicines and other inputs. A cost-based formula would better reflect real changes in raw material costs and adjust the price ceiling accordingly. The DPCO-2013 formula does not benefit even manufacturers when raw material prices increase abnormally, as the government’s NPPA is neither designed nor equipped to respond quickly to such increases. The DPCO-2013 has no provisions for adjusting ceiling prices in such cases. In the absence of cost-based pricing, there are no guidelines on how and by how much the ceiling price should be increased in such circumstances.

The inevitable conclusion from the above discussion on DPCO-2013 is that it is seriously flawed and has allowed pharmaceutical companies to continue to indulge in exploiting the patients’ vulnerability. It remains to be seen whether in the ongoing PIL on this issue of regulation of medicine-prices, the Supreme Court will direct the government to return to cost-based pricing for all medicines in all dosage forms and strengths.

Note: This chapter draws from the author’s 2014 co-authored article, The New Drug Price Control Regime, published in Yojana. See Phadke, A. and Srinivasan, S. 2014. The New Drug Price Control Regime, Yojana, April, pp. 61-65. [http://yojana.gov.in/2014/eng/Yojana%20April%202014.pdf].

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III. PHARMACEUTICAL COMPANIES CAN AFFORD TO SELL AT MUCH LOWER PRICES 

The fact that pharmaceutical companies can sell medicines at prices that are well below current market rates is evident from two significant examples. Firstly, the prices at which pharmaceutical companies sell medicines to the Tamil Nadu Medical Service Corporation (TNMSC) and similar organisations in Rajasthan and Kerala. Secondly, the prices at which medicines are sold by the government-sponsored Jan Aushadhi (Medicine for People, in the Hindi language) ^[32] retail outlets across India.

In 1995, Tamil Nadu established the Tamil Nadu Medical Service Corporation (TNMSC), an autonomous corporation with adequate budget, staff, and autonomy to purchase medicines in bulk for all its public health facilities in a completely transparent manner through e-tendering. As a result, TNMSC pioneered the bulk purchase of quality medicines at extremely low prices in India. For example, in 2023, the TNMSC’s purchase prices for commonly used anti-diabetic medicine, Metformin, and blood pressure medicine, Amlodipine, were a mere Rs. 2.77 and Rs. 0.94, respectively, per strip of 10 tablets. ^[33] These prices were less than one-fifth and one-tenth of the retail prices of these medicines in the general market, respectively. The TNMSC model was adopted by Kerala in 2008 and by Rajasthan in 2011.

As shown in Table 2, the retail prices of some medicines, as per DPCO-2013, are compared with the purchase prices of the same medicines by Rajasthan Medical Service Corporation Ltd (RMSCL). Retail prices are consistently much lower than the prices of medicines when procured in bulk. However, the difference highlighted in Table 2 is staggering, illustrating the huge profiteering by pharmaceutical companies when they sell medicines to individual consumers.

Source: http://rmsc.health.rajasthan.gov.in/content/raj/medical/rajasthan-medical-services-corporation-ltd-/en/Approved-Rate-Lists/DrugsRC.html. Thanks to T. Srikrishna of LOCOST for this table. 

The Manmohan Singh government started the Jan Aushadhi Scheme in 2008 under which the Union government provides retail pharmacists an incentive of up to Rs. 2 lakh for furniture and other initial establishment expenses. Additionally, there is an incentive of 15 per cent of monthly sales, capped at Rs. 15,000 per month, to run the Jan Aushadhi pharmacies, with the condition that they sell medicines only under generic names and at prices fixed by the government. Generic medicines with assured quality are supplied to these outlets at controlled, much cheaper rates by the government, leaving a 20 per cent margin for owners. (For retailers in India, pharmaceutical companies typically leave a margin of up to 16 per cent.) However, the budget for this scheme was too little and this scheme remained a tokenish one. 

The Bhartiya Janata Party (BJP) government renamed this scheme as Pradhan Mantri Bhartiya Janaushadhi Pariyojana (PMBJP) and these shops as Pradhan Mantri Bhartiya Janaushadhi Kendras (PMBJKs) and made some changes in the scheme like increasing the budget, allowing private companies to supply medicines for this scheme etc. Table 3 compares the DPCO-2013 ceiling prices with the Jan Aushadhi prices. It is evident that the DPCO prices are two to five times the prices in Jan Aushadhi shops! This huge difference between the prices of Jan Aushadhi shops and those in other shops cannot be explained by the small subsidy enjoyed by the Jan Aushadhi shops or by the bulk buying of medicines by the government from pharma companies to supply these to the Jan Aushadhi shops. The inescapable conclusion is that pharmaceutical companies can afford to sell medicines at prices much lower than the regulated prices under DPCO-2013, and that the ceiling prices of the very limited number of essential medicines covered under DPCO-2013 leave unjustifiably high margins for these companies. Compared with about 12.40 lakh chemist shops ^[34] in India, there are only 13,113 Jan Aushadhi outlets ^[35]. The latter should be multiplied tenfold to become more widely accessible to the public and thereby provide a semblance of a source of quality generics at much lower prices. Their functioning should be improved with assured, timely supplies of all medicines and by reducing bureaucratic processes. Overall, from the perspective of a rational, pro-people pricing policy, the DPCO-2013 is deeply flawed on a range of issues and is effectively an eyewash. Going beyond the DPCO, let us now turn to factors that increase medicines prices unnecessarily.

Source for Jan Aushadhi Prices: https://janaushadhi.gov.in/ProductList.aspx.Thanks to T. Srikrishna of LOCOST for this table.

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IV. BRANDED MEDICINES, IRRATIONAL FDCs, ‘ME-TOO MEDICINES’, AND EVER-GREENING OF PATENTS 

Beyond the flawed DPCO-2013, there are other reasons for unnecessarily high medicine-prices in India. They are discussed briefly in the following paragraphs.

Brands, Branded Generics, and their Quality

When a new medicine is invented, an international committee affiliated with the WHO assigns a ‘generic name’ (i.e., an International Non-proprietary Name, or INN) to it. This generic name is used in all scientific journals, books, and international trade. However, the company that invents the medicine is allowed to have its own proprietary name, usually for marketing purposes. This proprietary brand name is registered under the relevant national and global laws, and registration is optional. The company has a monopoly over this brand name generally for 20 years, which is the validity period of the patent granted to the inventor.

For example, a common medicine for temporary relief from fever, headaches, and body aches is N-acetyl-para-aminophenol (APAP), which is given the generic name (or INN) paracetamol. The U.S. pharmaceutical company, McNeil, patented it in 1955, under the brand name Tylenol. From the date of filing the patent, this company, for 20 years, had a monopoly over the production and sale of this medicine under the brand name ‘Tylenol’. During this patent period, according to American law, no other company could produce paracetamol without permission and payment of royalties to the original manufacturer. After 20 years, any manufacturer could obtain a manufacturing license from the relevant authority in their country and could sell that medicine under the generic name paracetamol or under whichever brand name it chose.

Unfortunately, a medicine whose patent period is over and is thus classified as ‘generic’ is often sold by companies not under the generic name but under different brand names. This results in the creation of various ‘branded generics’. Such branding puts the generic name in the background, resulting in dozens of brands, if not more, of the same generic medicine. This creates an additional burden on doctors to remember the various brand names of different generics, as their training is based on generic names and all medical literature is in generic names. In India, for example, paracetamol, which has been off patent for many years, is sold in the domestic market under various brand names such as Crocin, Calpol, Metacin, Dolo, and other ‘branded generic’ names. 

According to the Union Ministry of Chemicals and Fertilizers, India produces “more than 60,000 [branded] generic drugs across 60 therapeutic categories” ^[36]. Although some generic manufacturers market their medicines under the generic name in the bulk market and sell these to some hospitals and government agencies, most companies in the generics business use different brand names for the generics. These multiple brands arise out of commercial competition, with each company trying to win over doctors—by fair means or foul—to prescribe their brands rather than those of their competitors. Such promotional exercises involve huge expenses, and larger companies, with more resources, can afford to spend more. Consequently, a handful of big companies dominate the market through advertising, expenses for which are ultimately borne by the patient.

Once doctors are convinced of the superior quality of a particular branded generic, its price can be escalated. Quite often, many doctors remain unaware of this price rise or simply turn a blind eye to it. As a result, the market price of such a brand can touch 10 to 20 times its production cost. The simple solution to this problem is for the government to weed out all brand names of medicines that have completed their patent period. This was suggested way back in 1975 by the Committee on Drugs and Pharmaceutical Industry (Hathi Committee Report) which recommended “abolition of brand names in a phased manner” ^[37] except, of course, for those currently under patent monopoly. Although the government of the day was initially responsive, even its minimal implementation was thwarted by legal action. As a report in the Economic and Political Weekly had noted a decade after the Committee tabled its 275-page report:

“Unfortunately, even where the Hathi recommendations have been accepted, their implementation has been unsatisfactory. Although the Committee had suggested that brand names for 13 products should be abolished, the new drug policy proposed abolishing brand names of only five drugs. But even while the intense furore caused by this move was being resolved, four multinationals went in for legal action and were able to force the government to withdraw the decision.” ^[38]

Quality of Generic Medicines in India

Weeding out of brand-names is opposed by big pharmaceutical companies and their supporters. They argue that the quality of their brands is assured and that their prices are higher because maintaining high standards incurs higher costs. They also claim that the “generics” or branded generics from smaller companies are substandard. Majority of doctors are brainwashed by this propaganda of big pharma companies. But as mentioned earlier, more than 90 per cent of medicines in the Indian market are “generic”, i.e. are out of patent. 

However, to compete with other companies, each company has given its distinct brand name to each of the generic formulations that are marketed. Hence all these out of patent, generic medicines are “branded generics” in the Indian retail pharma market. Only a small proportion of the renowned brands, brands which are popular among leading doctors are manufactured by the innovator, foreign MNCs. As mentioned earlier, thanks to the Indian Patent Act 1970, by 2001, the share of the Indian companies in the pharma business in India had increased to 80 per cent. Only a very small proportion of medicines in the Indian market are manufactured by the innovator companies. The rest are by Indian companies. Big Indian companies like Cipla, Reddy, Lupin, Torrent, etc., have been marketing their branded generics and these brands have been widely used, and are popular among a section of doctors. 

There is a wide-spread belief among many doctors that the brands of the foreign and renowned Indian companies are of assured quality and those of smaller companies are of poor or uncertain quality. However, this belief has no scientific basis. There are no scientific studies to back this belief, which is based on the oral propaganda by medical representatives of the big Indian and foreign companies that “generics are of low or uncertain quality”. The fact is all these medicines in the Indian market are generic in the sense that all of them are beyond the patent period. However, instead of marketing them under generic name, most of them are marketed under some brand-name or the other. In case of some medicines in the market, there may be the original brand of the innovator company and the rest of the market consists of ‘branded generics’. There are no studies which have shown that quality of the innovator’s brand or that of the brand of other leading, big companies is okay whereas that of the branded generics is low. Thus, there is no justification for higher prices of leading brands on the grounds that their quality is high and it’s costly to maintain high quality. 

Even big companies are not immune from quality related issues. For instance, the Central Drugs Standard Control Organization (CDSCO) periodically publishes lists of medicines found to be substandard (Not of Standard Quality - NSQ) along with the names of the companies that manufactured them. Although spokespersons from large pharmaceutical companies and some doctors point to these lists as evidence of the low quality of products from small manufacturers, these lists include products from both big and small companies. For example, the CDSCO’s August 2024 list of 48 substandard medicines included products from well-known companies. The list of “Not of Standard Quality Alert for the Month of August – 2024” provides the details. ^[39]

In general, quality of medicines is a function of how strict the quality regulation is. For many years, many Indian companies have been exporting generic formulations worth hundreds of millions to different countries, including European countries and the U.S., and there are hardly any reports of low quality in these exports. This is because in these countries the pharma quality regulatory system is very strict. On the contrary , in some third world countries where quality regulation is very weak, some Indian pharma companies have earned notoriety because of supply of sub-standard medicines. For example, the infamous cough syrup exported by an Indian company to Gambia which caused deaths of at least 70 children. ^[40]

It is important to note that in India, on an average, proportion of medicines of NSQ has declined and is at a relatively low level. According to the last National Drug Survey conducted by CDSCO between 2014 and 2016, 3.16 per cent of randomly collected samples across India from thousands of retail shops were found to be NSQ^[41]compared with 7.5 per cent in 2004-05. To bring this proportion closer to zero, the Food and Drugs Administration (FDA) in each State, which is supposed to monitor and ensure quality of medicines marketed by pharma companies in the respective States, should be strengthened substantially. Way back in 2003, the Raghunath Mashelkar Committee endorsed the earlier recommendation of 1982 that there should be “one drug inspector for 25 manufacturing units and one for 100 sales premises” ^[42]. But this has not been done till today! For example, a 2014 study revealed that Maharashtra had 80,417 drug stores and 1,513 manufacturing units. These were being covered by only 124 Drug Inspectors actually appointed against the sanctioned 161. ^[43]

What about the anecdotal reports that medicines supplied to the government health care system (which are always in generic name) have been found to be of low quality? This is partly true as shown by the National Drug Survey mentioned above. In this survey , it was reported that the proportion of NSQ medicines in the government supplies was 10.02 per cent. This survey report says,

“The fact that the NSQ from Government sources are 3.17 times higher than in the retail highlights that there is something amiss in the existing procurement processes especially in states where the NSQ is much higher than the National average.” ^[44]

This shameful fact is not because medicines are bought under generic name for the government health care system but because of corruption in some states in the procurement system. But corruption may or may not be there. There are contrary examples also. For example, in Tamil Nadu, on arrival of medicines from the manufacturer , the Tamil Nadu Medical Service Corporation (TNMSC) sends samples for quality check and releases the medicines to the health centres only after satisfactory report from the laboratory. In any case , there is no organic connection between medicine being generic or otherwise and it’s quality. 

The big pharma propaganda also claims that “generics are not of standard quality because they are not bio-equivalent.” ^[45] A generic formulation is bio-equivalent to the innovator formulation when after absorption in the gastro-intestinal tract, the blood level of the generic formulation is the same as that of the innovator formulation. (Obviously this issue of bio-equivalence (BE) arises only in case of solid dosage forms like tablets, capsules and in case of those medicines which have low solubility and low permeability.) In India , till 2017 , bioequivalence of generic formulations was not mandatory. Hence nobody bothered about it. Even innovator MNCs did not establish bioequivalence of their formulations manufactured in India vis-a-vis the original formulations. But the MNC propaganda kept asking for bio-equivalence of Indian formulations. In April 2017, the relevant legal provision was changed, making it mandatory for any new generic medicine with low solubility to be bio-equivalent to the innovator formulation. It is thus not applicable to only the new generics after 2017, which is a miniscule proportion of the total generic market in India. In short, the issue of BE does not arise in case of more than 99 per cent of formulations in India but MNCs and big pharma have brainwashed doctors and others to believe that “generic medicines” in India are not up to the mark because they are not bio-equivalent. 

Overall, there is no basis for the claim that “generics are of poor or uncertain quality whereas the formulations of big companies are of standard quality.” There is, however, a need to greatly strengthen in terms of resources, transparency, and accountability, the pharma quality regulatory system in India in order to achieve the goal of ensuring that all medicines in the market are of standard quality and that the proportion of ‘NSQ’ medicines becomes nearly zero. 

I belong to a non-profit entity, a Charitable Trust called Locost Standard Therapeutics^[46] (LOCOST) which has been involved for more than 30 years in manufacturing essential medicines of standard quality for primary care and selling these only under generic name to non-profit, charitable health NGOs at very low prices by keeping a very low margin for ourselves, enough for sustenance of our manufacturing plant and it’s upgradation. 

Even though LOCOST is a small enterprise and , hence , its cost per unit of medicines is comparatively high, its prices are half to one fourth or even less than the prices in the commercial market. Yet this organisation has survived and grown. It follows all the rules and regulations for manufacturing of medicine formulations, pays above-sector-average wages to its workers, does not indulge in any short cuts, corrupt practices. Based on this experience also it can be said with confidence that it is certainly possible to produce generic formulations of standard quality in a sustainable manner at much lower rate than rates in the commercial market. (LOCOST also tries to foster rational, ethical use of medicines by contributing to continuing education of lay people and health care professionals on rational use essential medicines). 

The highly technical job of manufacturing the medicines as such is done by the bulk manufacturers. Only some of these are known as pharma companies and in India only a handful of pharma companies manufacture APIs. The rest are known as chemical companies! Small formulators like LOCOST buy these APIs from the bulk manufacturers in kilos or even in tonnes and convert these into formulations like tablets, capsules. This entails, for example, adding different excipients, ingredients of standard quality like binders, diluents, anti-caking and emulsifying agents, suspending agents, etc., in requisite quantities and converting the powder into tablets or capsules. This is to be done with the help of requisite machines by following standard procedures and monitoring of the quality by conducting required tests. If this is done properly, the result is standard quality formulation. This is no rocket science but mistakes, deficiencies, do occur and it is the duty of the manufacture to avoid these. 

Many manufacturers do their job with due competence and diligence. But the State FDA should keep up the required vigilance to ensure standard quality. Since in India, State FDA’s functioning is grossly deficient, corrupt, and opaque, a few careless or unscrupulous owners do indulge in sub-standard production. However, it should be clear that small manufacturers can and do produce standard quality of medicine formulations. Quality is primarily a function of the intent and competence of the manufacturer and of the quality of pharma quality regulatory system of the government. Quality does not require huge investment and in India hundreds of small generic manufacturers have been producing quality generics for decades at a relatively low cost. 

Many renowned brands of some renowned big pharma companies are in fact manufactured by small pharma companies. In such case, the label says: “manufactured by--------, marketed by----”. The fact is high prices of medicines in the Indian retail market are not because it is so costly to produce standard quality medicines. High prices are because despite the widely known special vulnerability of patients, the Indian government has chosen to abdicate its responsibility of protecting these hapless people. Pharma companies, especially the big pharma companies and the pharma trade together have been taking undue advantage of this situation and continue fleecing hapless patients with exorbitant prices by co-opting a large section of doctors in this unethical profiteering. 

Medicine prices could be reduced by half or one-third simply by abolishing all brand names, as recommended by the Hathi Committee in 1975, and as a result, could be sold only under their generic names. Brand names create unnecessary confusion as there is often no connection between the fancy brand name and the medicine it contains. An additional problem with brand names is that there is always the risk of a patient receiving the wrong medicine, as some brand names sound and look alike while containing entirely different drugs. For example, “A to Z,” “AZ-A,” and “AZ” are brand names for a vitamin, an antibiotic, and an anti-worm medicine, respectively. Moreover, given that hand-written prescriptions by doctors could be often notoriously difficult to read, misinterpretation by pharmacists could have serious consequences. 

Irrational FDCs 

Medical textbooks and authorities favour combining certain medicines into a single tablet or liquid preparation when it is more beneficial than administering them separately. Such preparations are called FDCs. For example, textbooks recommend treating iron deficiency anaemia with a preparation containing both iron and folic acid because iron deficiency is often accompanied by folic acid deficiency. Similarly, adding vitamin D to a calcium tablet is more effective, as it enhances calcium absorption in the intestines. These rational FDCs can be more expensive than single-ingredient medicines, but the extra cost can be justified if there is greater cost of production and greater effectiveness. 

Combinations of two or more drugs that lack scientific rationale are known as irrational FDCs. These irrational FDCs are not only more expensive without added benefits but also come with more side effects than single-ingredient preparations. Assessing their quality is also more challenging due to the presence of multiple ingredients. Of the 348 medicines in the NLEM-2011, only 16 (5 per cent) were FDCs. However, more than 40 per cent of the formulations in the Indian market are FDCs. ^[47] They are more expensive and have more side-effects due to unnecessary ingredients. These irrational FDCs are a very important reason why medicines in India are unnecessarily costly. Hence only those FDCs recommended by standard medical textbooks, and medical authorities should be allowed. Hundreds of irrational FDCs currently on the market should be banned. This would reduce unnecessary medicine expenditures and lower the risk of additional side effects caused by these extra, unwarranted ingredients. ^[48]

“Me-too Medicines”

Pharmaceutical companies often find it more profitable and easier to develop a “new medicine” which is a mere chemical variant of an existing, older medicine. These chemical analogues of existing medicines generally offer no significant therapeutic advantage over the original. Such ‘new medicines’ are known as “me-too“ medicines. Pharma companies focus on such ‘me too ’ medicines rather than choosing the more difficult and costly path of developing a medicine belonging to a different chemical class, which has a distinct advantage over the existing medicines. ‘Me-too medicines’ are generally introduced into the market when the patent period of the original molecule is about to expire and are marketed at much higher prices, with claims of being better options. Sometimes[ these claims are partly true, but through clever, aggressive marketing, these “new” medicines become popular with doctors regardless of whether they offer significant improvements. In most cases, the prices are much higher than whatever additional benefits (if any) justify. This is because the new analogue is claimed to be a new medicine and is under patent monopoly.

For example, angiotensin receptor blockers (ARBs) are a class of medicines used to treat high blood pressure. Enalapril is one of the oldest and cheapest ARBs. However, five other medicines in this class have since been developed by pharmaceutical companies. Similarly, the Indian market now has seven types of statins, eight types of ACE inhibitors, and nine types of quinolones. Are so many costlier “me-too” medicines really needed? Why should patients pay more for either non-existent, or at best, marginal additional benefits?

“Me-too medicines” cannot be banned, as they have been shown to be effective and safe like the original medicines. However, claims of superior effectiveness and safety should be rigorously examined by independent experts. Pharmaceutical companies’ promotional material for these “me-too medicines” should be scrutinised accordingly.

Product Patents on Medicines

The Indian Patents Act, 1970, replaced the product patent regime with a process patent regime, which led to a boom in the production of generic medicines in India. This also significantly reduced the prices of medicines, enabling India to emerge as the “pharmacy of the developing world ”. Quality generics were exported even to developed countries, and now up to half of India’s medicine exports go to these markets.

However, things began to change after India became a member of the World Trade Organization, (WTO). The Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) ^[49]covers a wide range of topics, including product patents. The TRIPS Agreement requires WTO members to provide patent protection for products and processes that meet certain criteria, while allowing for some exceptions. On the grounds being of less developed, India could delay the adoption of the product patent regime. But finally, under pressure from big pharma and their governments, the Indian government in 2005 reintroduced product patents in pharmaceuticals. This meant that, as in the pre-1970 days, new, patented medicines cannot now be manufactured in India for a maximum of 20 years after being invented, unless permitted by the innovator company. Thus, these new medicines, which are fruits of modern science and technology, are monopolised through the product patent regime by the innovating company and are sold at exorbitantly high prices—far beyond the reach of even middle-class families. However, thanks to the ‘Doha Declaration’, ^[50] India could keep in its modified Indian Patent Act 2005 a provision for “compulsory licensing” through which , if needed in public interest, it could be mandated that an innovator company must permit other companies to manufacture a particular medicine for which the innovator company has product patent.

Currently, these new medicines make up a small proportion of the total market, but they are a matter of life and death for patients suffering from ailments like multi-drug-resistant tuberculosis, certain cancers, and hepatitis C, because of their very high prices. In the coming two to three decades, far more effective and safer medicines are likely be developed for both existing and new health problems affecting large populations. Therefore, it is crucial that the Indian government plays an active role in building international political pressure against the product patent regime by collaborating with like-minded forces. The goal should be to amend international laws and return to a process patent regime.

In the meantime, as agreed upon in the Doha Declaration by all countries, the Indian government should make full use of the “compulsory licensing” provision and other such “flexibilities” allowed in the modified ‘Indian Patent Act’-2005. 

This “compulsory licensing” provision empowers a government to mandate a pharmaceutical company holding a patent to allow an Indian company to produce its patented medicine in the national public interest, particularly in times of public health crises. Unfortunately, due to pressure from multinational corporations, especially American MNCs, the Indian government has hardly used this provision. This must change. Return to Contents 

V. POLICY MEASURES TO MAKE MEDICINES AFFORDABLE 

This Policy Watch has discussed how and why medicines in India are unnecessarily too costly. It now spells out the policy measures to ensure that medicines in India are reasonably priced and hence become affordable to the vast majority of the Indian people. This chapter first will look at a couple of policy-measures not discussed so far in this article and then simply list out measures that have been discussed in this Policy Watch.

The ‘Open Source Drug Discovery’ system was initiated in India with the goal of developing new technologies, including new medicines, in a way that they will not be patented. It is built around a web portal based on the Wiki model, allowing participating agencies to easily contribute to or modify the website’s content. The information uploaded can then be peer-reviewed. India should invest more in this system, even though there have not yet been major breakthroughs in the field of medicine. There is a dire need for new medicines to be invented outside the patent system.

Generalisation of the Tamil Nadu Model

Traditionally, for supplying medicines free of charge to patients who visit PHFs, government authorities procure these medicines in generic form and in bulk at significantly lower prices compared with retail market prices. However, this was often done in an unprofessional and non-transparent manner. Tamil Nadu pioneered a radical improvement in the procurement and distribution of medicines to PHFs. In 1995, the Tamil Nadu Medical Service Corporation (TNMSC), an autonomous non-profit corporation, was established to handle the procurement and distribution of medicines in bulk for PHFs through transparent e-tendering.

A capable officer was appointed to lead the initiative, and autonomy, sufficient funds, and staff were ensured. The transparent e-tendering process helped eliminate corruption in the procurement of medicines. Additionally, since one government agency was responsible for purchasing medicines in generic form for all PHFs in Tamil Nadu, TNMSC could negotiate much lower prices due to the larger volume of purchase. Pharmaceutical companies offered significantly lower prices in the competitive bidding process. As a result, TNMSC’s purchase prices of medicines have been, for example, about half of what the government in Maharashtra pays for.

Moreover, TNMSC set up air-conditioned warehouses for medicines in every district. Upon the arrival of stock at these warehouses, samples are sent to both a private empanelled lab and a government lab. Medicines are only released to health centres once the lab reports give the green light. Lastly, TNMSC implemented a passbook system, where, within the allocated medicine budget for each PHF, the medical officer can order any required medicines from the EML based on local needs, ensuring minimal wastage.

This model was adopted with modifications in Kerala in 2008 and Rajasthan in 2011. It should be replicated across all States, with necessary adjustments, improvements if any, but without diluting its five core components. These five core components are – autonomous corporation endowed with sufficient funds and staff; bulk purchase through transparent e-tendering; district-wise quality warehouses; quality control; computerised ‘passbook system’. If this is done, the use of essential medicines in generic form will become more popular nationwide, and this will create some pressure on pharmaceutical companies.

Policy Measures to Achieve “Medicines for All”

Based on the account above, let me summarise in a sentence each, the various corrective measures that have been outlined in the above pages to ensure that medicines are not priced unnecessarily high and that only the most effective, standard quality medicines are available in the market. These corrective policy measures have been formulated as a set of demands to be made to the government: 

1. Implement cost-based price control on all medicines marketed in India.

2. Abolish brand names; medicines be prescribed and sold only under their generic names.

3. Ban all irrational medicines and irrational fixed-dose combinations, i.e. medicines not recommended by standard medical literature or by a national expert committee.

4. Strengthen the Central Drugs Standard Control Organisation and State Food and Drugs Administration (FDAs) while making their functioning transparent and accountable.

5. Do large-scale, manifold duplication of Jan Aushadhi stores across India.

6. Generalise the Tamil Nadu model of procurement and distribution of generic medicines in all PHFs across India, with necessary modifications if required.

7. Use the provisions of compulsory licensing, as permitted in the Doha Declaration, along with all other “TRIPs flexibilities” when necessary.

8. Engage in international diplomacy, in collaboration with like-minded forces, to revert to the process patenting system.

9. Adopt the Open Drug Discovery approach for developing new medicines bypassing the patent system.

(The author is thankful to S. Srinivasan of LOCOST and AIDAN for detailed comments and suggestions on the draft of this article.)

Return to Contents

[ Anant Phadke, a medical graduate, has been a full-time volunteer since the 1978 for the cause of public healthcare and the People’s Health and Science Movement. He is the author of Drug Supply and Use (1995), by Sage, and the award-winning Marathi book, Healthcare for All? Yes it is possible!” which has been translated into two languages. An active member of collectives such as the All India Drug Action Network (AIDAN), LOCOST, Medico-Friend Circle, and Jan Aarogya Abhiyan (JSA), Dr. Phadke has contributed more than 100 and 300 articles in English and Marathi, respectively, on issues related to people’s science and health, especially on different aspects of India’s pharmaceutical policy. He can be contacted at [email protected]]. 

Endnotes:

[All Urls are last accessed on December 2, 2024]

1. Lofgren, H. 2013. The Pharmaceutical Industry and Access to Medicines in India, in Lofgren, H (Ed.) 2013. The Politics of the Pharmaceutical Industry and Access to Medicines – Word Pharmacy and India, Social Science Press, New Delhi, p.2.

2. According to the World Health Organization’s data on Out of pocket expenditure as percentage of current health expenditure, OOP in India is 49.82 per cent (2023). The WHO also notes that “High out-of-pocket payments are associated with catastrophic and impoverishing household spending.” [https://www.who.int/data/gho/data/indicators/indicator-details/GHO/out-of-pocket-expenditure-as-percentage-of-current-health-expenditure-(che)-(-)] [For data and explanation, see tabs “Data” and “Metadata”, respectively.] 

3. Standing National Committee on Medicines. 2022. Report of Standing National Committee on Medicines (SNCM) for Revision of National List of Essential Medicines 2022, p.12. [https://lms.thsti.in/wp-content/uploads/2024/04/National-list-of-Essential-Medicines-NLEM-2022.pdf].

4. For a disaggregated analysis of OOP expenses in India, see, Ambade, M. et. al, 2022.Components of Out-of-Pocket Expenditure and Their Relative Contribution to Economic Burden of Diseases in India, Jama Network [ Open.doi:10.1001/jamanetworkopen.2022.10040]. 

5. Rangnekar, D. 2006. No pills for poor people? Understanding the disembowelment of India’s Patent Regime. Economic and Political Weekly, February 4, p.411

6. Joseph, R.K. 2016. Pharmaceutical industry and public policy in post-reform India, Routledge, p.37.

7. Department of Pharmaceuticals. n.d. Annual Report 2023-24, Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Government of India, p3. [https://pharmaceuticals.gov.in/sites/default/files/English%20version%20of%20Annual%20Report%202023-24.pdf]

8. Lavtepatil, S and Ghosh, S.2022. Improving access to medicines by popularising generics: a study of ‘India’s People’s Medicine’ scheme in two districts of Maharashtra, BMC Health Services Research, May 13. [https://bmchealthservres.biomedcentral.com/articles/10.1186/s12913-022-08022-1].

9. Selvaraj S, et. al. 2022. India health system review, World Health Organization, Regional Office for South-East Asia; New Delhi, p79.

10. National Statistical Office. 2019. Key Indicators of Social Consumption in India: Health, (See Statement 3.10. Percentage break-up of hospitalisation cases by type of hospital), Ministry of Statistics and Programme Implementation, Government of India, p14. 

11. Ibid. Statement 3.6, p11. 

12. Down to Earth. 2024.Pharma companies determine what patients buy, July 2. [https://www.downtoearth.org.in/environment/pharma-companies-determine-what-patients-buy-1657]

13. For an economic perspective on the high costs of medicines and market structure in India, see Tayde, V.B. 2007. Indian Pharmaceutical Industry – Some Aspects of Market Concentration and Pricing, Himalaya Publishing House, Mumbai.

14. Selvaraj, S. 2016. “In 50% of the Indian pharma sector, oligopolistic conditions prevail”, Interviewed by Kaushal Shroff, Governance Now, December 21. [https://www.governancenow.com/views/interview/drug-pricing-health-sakthivel-selvaraj-dpco-pharma-companies]

15. Ambade, M, et. al. 2022. Components of Out-of-Pocket Expenditure and Their Relative Contribution to Economic Burden of Diseases in India, JAMA Netw Open, May 2, 5(5): e2210040. [https://pubmed.ncbi.nlm.nih.gov/35560051/].

16. Wagstaff, A. et. al. 2020. Out-of-Pocket Expenditures on Health: A Global Stocktake, The World Bank Research Observer, August, Volume 35, Issue 2, pp 123–157. [https://doi.org/10.1093/wbro/lkz009].

17. See, Mani, M.K. 2018. Corruption in Everyday Medical Practice, in Samiran Nundy, Keshav Desiraju, and Sanjay Nagral (Eds). 2018. Healers or Predators – Healthcare Corruption in India, pp. 141-155.

18. See Srinivasan, S. 2018. The Unholy Nexus – Medical Profession, Pharmaceutical Companies, and Regulatory Authorities, in Samiran Nundy, Keshav Desiraju, and Sanjay Nagral (Eds). 2018. Healers or Predators –Healthcare Corruption in India, Oxford University Press, pp. 227-254.

19. India Code [online] The Essential Commodities Act 1955. [https://www.indiacode.nic.in/bitstream/123456789/7053/1/essential_commodities_act_1955.pdf].

20. Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers. 1995. The Gazette of India – Extraordinary, PART II – Section 3 – Sub-Section (ii) – ORDER. [https://www.nppaindia.nic.in/uploads/pdf/DRUG-PRICE-CONTROL-ORDER-1995pdf-5e45c7337de4e634a4136ef20418e9d7.pdf].

21. The Terms of Reference can be found at: Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, Government of India. 2024. Constitution of a Committee for Reforms in the Pricing Framework for Drugs and Medical Devices, March 12. [https://pharmaceuticals.gov.in/sites/default/files/Reforms%20in%20the%20Pricing%20Framework_0.pdf].

22. “Formulation means a medicine processed out of, or containing without the use of any one or more bulk drug or drugs with or pharmaceutical aids, for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease in human beings or and, but shall not include” bonafide Ayurveda, Siddha, Unani, and Homeopathic medicines, and “any substance to which the provisions of the Drugs and Cosmetics Act (1940) do not apply.” See Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers. 1995. op. cit. 

23. Phadke, A. and Srinivasan, S. 2014. The New Drug Price Control Regime, Yojana, April, Page 62. [http://yojana.gov.in/2014/eng/Yojana%20April%202014.pdf].

24. Ibid. Page 63.

25. World Health Organization [online]. Essential Medicines. [https://www.who.int/news-room/fact-sheets/detail/essential-medicines].

26. World Health Organization. 2023. World Health Organization Model List of Essential Medicines – 23rd List (2023). [https://iris.who.int/bitstream/handle/10665/371090/WHO-MHP-HPS-EML-2023.02-eng.pdf?sequence=1].

27. Central Drug Standards Organisation. [online]National List of Essential Medicines – 2022, p79 [https://cdsco.gov.in/opencms/opencms/system/modules/CDSCO.WEB/elements/download_file_division.jsp?num_id=OTAxMw==].

28. International Diabetes Federation. IDF Diabetes Atlas 2021 – 10th edition, p.37. [https://diabetesatlas.org/idfawp/resource-files/2021/07/IDF_Atlas_10th_Edition_2021.pdf].

29. Government of India. 2005. Report of the Task Force to Explore Options other than Price Control for Achieving the Objective of Making Available Life-saving Drugs at Reasonable Prices, Department of Pharmaceuticals, Ministry of Chemicals and Fertilisers. [https://pharmaceuticals.gov.in/sites/default/files/Dr.%20Pronab%20Sen%20Committee%20Report1_0.pdf]

30. Bhaskarabhatla, A. 2018. Regulating Pharmaceutical Prices in India - Policy Design, Implementation and Compliance, Springer, p. 132.

31. Srinivasan. S and Aisola, M. op cit. 

32. Joshi, S.S., et. al. 2019. Generic drugs – The Indian scenario, Journal of Postgraduate Medicine, Apr-Jun; 65(2):67–69. [https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6515776/].

33. Tamil Nadu Medical Services Corporation Limited. Online tender for the Supply of Essential Drugs and Medicines to TNMSC Ltd. [https://www.tnmsc.tn.gov.in/linkfiles/news_events/N2307369.pdf].

34. According to the All India Organization of Chemists and Druggists. See: Perappadan, B.S. 2024. Druggist association opposes Centre’s move to sell over-the-counter medicines without license, The Hindu, April 27. [https://www.thehindu.com/sci-tech/health/druggist-association-opposes-centres-move-to-sell-over-the-counter-medicines-without-licence/article68113378.ece].

35. Department of Pharmaceuticals. 2024. Jan Aushadhi Kendra (Lok Sabha Unstarred Question No. 3132). [https://eparlib.nic.in/bitstream/123456789/2980433/1/AU3132_cO0toF.pdf].

36. Department of Pharmaceuticals. 2023. Production of Generic Medicines (Lok Sabha Unstarred Question No. 3697). [https://eparlib.nic.in/bitstream/123456789/2502025/1/AU3697.pdf].

37. Ministry of Petroleum and Chemicals. 1975. The Report of the Committee on The Drugs and Pharmaceutical Industry, (Hathi Committee Report) 1975, April, p.252. [https://pharmaceuticals.gov.in/sites/default/files/Hathi_Committee_report_1975_0.pdf].

38. Economic and Political Weekly. 1985. Pharmaceuticals – Hathi Report: A Decade After, Vol. 20, Number 7, December 7, p.2136.

39. Central Drugs Standard Control Organisation. [online] Not of Standard Quality Alert for the month of August – 2024. [https://cdsco.gov.in/opencms/opencms/system/modules/CDSCO.WEB/elements/download_file_division.jsp?num_id=MTIwMTA=].

40. Reuters. 2023. The Indian cough syrups they bought were toxic. Now Gambian parents seek justice, The Hindu, July 14. [https://www.thehindu.com/sci-tech/health/the-indian-cough-syrups-they-bought-were-toxic-now-gambian-parents-seek-justice/article67079074.ece].

41. National Institute of Biologicals. [nd] National Drug Survey 2014-15, Ministry of Health & Family Welfare, p.216. [https://mohfw.gov.in/sites/default/files/Chapter11Sumarry.pdf]. 

42. Ministry of Health and Family Welfare. 2003. Report Of The Expert Committee On A Comprehensive Examination Of Drug Regulatory Issues, Including The Problem Of Spurious Drugs, Government Of India, p.27. [https://pharmaceuticals.gov.in/sites/default/files/MashelkarCommitteeReport.pdf].

43. Chokshi, M. et. al. 2015. Drug Quality and Safety Issues in India (see Table 2), Indian Council for Research on International Economic Relations, p.7. [https://icrier.org/pdf/PolicyBrief_%202_health.pdf].

44. National Institute of Biologicals. Op. cit. p.216.

45. Chow, SC. 2014. Bioavailability and Bioequivalence in Drug Development, Wiley Interdisciplinary Reviews. Computational Statistics, Vol. 6, No. 4, pp.304-312. [https://pubmed.ncbi.nlm.nih.gov/25215170/].

46. Low Cost Standard Therapeutics [online]. Rationale: Why we do what we do. [http://www.locostindia.in/Rationale_why_we_do_what_we_do/].

47. Srinivasan, S. and Aisola. M. op. cit. p.167.

48. AIDAN is involved in a case in the Supreme Court, advocating for this demand.

49. World Trade Organization (WTO). n.d. TRIPS: ISSUES: TRIPS and public health. [https://www.wto.org/english/tratop_e/trips_e/pharmpatent_e.htm].

50. World Trade Organization (WTO). 2001. Declaration on the TRIPS agreement and public health, November 14. [https://www.wto.org/english/thewto_e/minist_e/min01_e/mindecl_trips_e.htm].