New pharma policy will make drugs cheaper but accessibility remains a concern

Earlier this year, Prime Minister Narendra Modi had indicated that his government may bring in a legal framework under which doctors will have to prescribe generic medicines, which are cheaper than equivalent branded drugs, to patients. Modi had said his government brought in a health policy after 15 years and capped the prices of medicines and stents, which angered some pharmaceutical companies. According to the newly proposed draft national pharmaceutical policy, the government plans to cap trade margins to make drugs cheaper, replace brand names with names of salts or generic drugs, clamp down on unfair marketing practices and give a boost to local manufacturing to reduce dependence on imports.

One aspect that is critical to this policy, pharma experts feel, is the boost that it is going to give to generic medicines. As stated in the draft policy: “Institutions receiving supplies directly from manufacturers distributors or retailers will also be covered under the trade margin reforms.” In its effort to promote generic medicines, the draft proposes public procurement and dispensing of medicines will be of generic drugs in salt names.

Rajiv Gulati, former President, Global Pharmaceuticals Business, Ranbaxy, told Firstpost that the key challenge to generics has always been that the quality varies.

“Globally, brands survive as long as patents last. In developed countries such as USA, Canada, Australia, and Western Europe, there are no brands after patent expiration, and retailers are free to dispense products of any pharmaceutical company that they desire. The key element here is that all the generics are of acceptable quality and fully bio-equivalent to the patented product. In the US, the Food and Drug Administration (FDA) and other regulatory authorities do their bit to ensure that quality. Hence, brands and generics become substitutable, both legally and emotionally. This is what we need to establish in India,” says Gulati, who is a member of the Indian Pharmaceutical Alliance and the Organisation of Pharmaceutical Producers of India.

India is an out-of-pocket country unlike the US, Europe, Canada and Australia, where insurance policies or governments pay for the medicines. Here, he points out, a proliferation of brands results in consumers from different economic strata pay the same price for a better brand, which is basically just a better packaging of the same salt.

One big concern about generics is that power of discretion will shift from the physician to the retailers. The retailers might then make oversized profits, while consumers will continue to shell out a high price. Such a scenario has played out in countries like France and Australia, where retailers have the power to influence.

“It is significant to note here that central and state governments are expanding Jan Aushadhi stores in large numbers to ensure that consumers can buy reasonably priced medicines. Also, competition is a great leveller. I won’t be surprised if retailers begin offering prices less than Jan Aushadhi. Additionally, the advent of online pharmacies is bringing a significant amount of transparency to the advantage of consumers,”Gulati explained.

If generic medicines become a reality, it will help retailers streamline their inventory. Today, there are more than a thousand brands of the single molecule Atorvastatin. A good retailer easily carries 10-12 brands of any fast-selling molecule. If reduced to one SKU (stock-keeping unit) per molecule, working capital, storage, labour cost and man-power cost will also reduce. Theoretically, this can make retailers more financially viable, enabling them to offer better prices to remain competitive.

The negative impact of emptying this pipeline can be severe on the Indian pharmaceutical industry. Switching to ‘one brand one retailer’ situation might lead to reduction in primary sales, even as tertiary sales increase. The biggest deterrent to implementation remains shortage of pharmacists in the country. For instance, in the state of Uttar Pradesh, there are 20,000 pharmacists for 72,000 retail pharmacies.

Bijon Kumar Misra, Founder, Partnership for Safe Medicines India initiative and consumer policy expert told Firstpost that price control alone cannot ensure accessibility. A new umbrella of social security must be opened and offered to those who die every year of rare and chronic diseases, he added. For instance, on 16 August, the National Pharmaceutical Pricing Authority (NPPA) capped the price of various models of knee implants, reducing the cost of knee replacement and revision surgeries, after the prime minister’s 2017 Independence Day declaration to reduce prices.

“Don’t prescribe a price, prescribe a standard because a simple slash in price will undermine the patient’s safety. My contention is that if the patient is unable to access a medicine or a method of treatment, the government should procure it a lower price and then enable the patient to access it,” explained Misra, whose initiative aims to serve as a coalition of organizations and individuals seeking to protect consumers from spurious or contraband medicines in the country.

The new draft, he feels, looks good in the first reading. “The challenge will be to implement it in the shortest possible time. The government is now talking about tracing and tracking the supply chain. There should be proper portals and robust data procuring systems,” he adds.

The draft states that e-prescriptions will be operationalised, whereby the prescriptions will be computerised and the medicine name will be picked up from a drop-down menu of salt names.

Sources in the Health Ministry revealed that e-pharmacy will soon be regularised after the government held a closed-door meeting with members of the All India Druggists and Chemists Association on 18 August. The government is convinced that modern technology will be an enabler to improve accessibility to save medicines in the country and is looking at amending the existing Drugs and Cosmetics Act 1940.

“The Act was framed at a time when e-retail did not exist. We need to foster an environment where tech based distribution systems can thrive. There must be a robust tracing and tracking system to identify the medicine before it reaches the consumer. We should be able to find out which drug was sold online without a prescription and in what quantity. Critical trends in self-medication and anti-microbial resistance will also become available to the health ministry,” the source stated.

But what about medication in villages, where doctors and patients do not have consistent access to the internet, asked Arun Khanna, chairman and managing director of Uth Healthcare Ltd, a pharmaceutical marketing company. In rural areas, there should be training programs for chemists in understanding prescriptions based on salts. A nationwide chemist training programme will be now necessary, he said.

“I am in the industry for 44 years and looking at the new draft policy, I can say that the step is not wrong. What we need is a reinforced commitment towards quality in the domestic market. Prescribing salts instead of medicines means there needs to be greater awareness about chemicals and salts in the people as well as the chemists,” he believed. Khanna added that generic medicines could surely work in a country like India, which has been able to scale down the price of drugs — ranging from Active Pharmaceutical Ingredients (APIs) to finished products — from Rs 100 to Rs 10. India is now a key supplier to emerging markets and Africa. In India, the cost of cervical cancer vaccine is Rs 2,000. The same vaccine will cost around Rs 16,000 in the US and the UK.

Doctors also believe that the theory that generic drugs cannot be quality controlled is pathetic and mostly in the interest of large corporations. For instance, the price of the injectable iron ampule come down from Rs 156 to Rs 18 because doctors realised that lakhs of ampules need to be ordered for women suffering from anaemia.

“Five years ago, when we scaled up the use of the medicine, the next step was to bring down the cost because that was the only limiting factor. Because of our emphasis on the drug, 15 players in the market recognised the value of the product, competition was generated and the prices fell,” said Dr Hema Divakar, former president of FOGSI (Federation of Obstetric and Gynaecological Societies of India).

The draft policy also laid down several other policy prescriptions that include enhancing quality standards, keeping a check on unfair trade practices, faster approvals, giving a fillip to indigenous manufacturing and encouraging Research and Development. To explain the urgent necessity of the implementation of such a policy, experts pointed to the National Drug Survey (2014-2016), conducted by the National Institute of Biologicals. These were some of its shocking findings:

Out of the 47,012 samples tested, 13 samples were found to be spurious and 1,850 samples were found to be NSQ (Not of Standard Quality). Therefore, the estimated percentage of NSQ drugs in India was 3.16 percent, while spurious drugs amounted to 0.0245 percent. A total 1,011 samples out of the 33,656 samples tested from retail outlets were found to be NSQ and 8 samples were found to be spurious. The estimated percentage of NSQ formulations from retail outlets in India is three percent and is not expected to be more than 3.19 percent (the upper 95 percent confidence limit), and the estimated percentage of Spurious drugs from retail outlets is 0.0237 percent. State wise, NSQ percentage estimates for Retail outlets varied from zero to 8.82 percent (with the exception of Lakshadweep); Three States/Union Territories — Andaman and Nicobar Islands, Dadra and Nagar Haveli, Goa — had zero percent NSQ. Fourteen States/UTs had NSQ percentage below the national average of three percent for retail outlets. Eighteen States had NSQ percentage above the national average of 3 percent for retail outlets.

The total number of non-compliance out of all tests of all samples from retail outlets was 1,251. Out of 69 tests performed on these samples, they failed in 28 tests, of which, Dissolution and Assay accounted for 56.4 percent of the non-compliance. Total 839 samples out of the 8,369 samples tested from government sources were found to be NSQ and five samples were found to be spurious. The estimated percentage of NSQ formulations from government sources in India was 10.02 percent and the 95 percent confidence interval for the same is 9.38 percent to 10.68 percent and the estimated percentage of spurious drugs from government sources is 0.0597 percent. State wise, NSQ percentage estimates varied from 0 to 17.39 percent with the exception of Sikkim. Four Union Territories — Chandigarh, Dadra and Nagar Haveli, Daman and Diu and Lakshadweep — had zero percent NSQ. Eighteen States and Union Territories had NSQ percentage below national average of 10.02 percent.

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