FOR A RATIONAL SCIENTIFIC HEALTH-ORIENTED NATIONAL DRUG POLICY
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DRUG ACTION FORUM, TCR
S/3/5, Srabani, Sector-Ill, Salt Lake,
Calcutta : 700 091, India
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DRUG ACTION FORUM, WR
S/3/5, Srabani, Sector-Ill, Salt Lake,
Calcutta : 700 091, India
FOR A RATIONAL, SCIENTIFIC
HEALTH-ORIENTED NATIONAL DRUG POLICY
Several declarations have been made by
e.g., Hathi Committee, WHO, Non-aligned
responsible bodies,
Summit Confer
ence, etc. providing objectives and guidelines for
a rational
drug policy relevant for the countries like India.
Concerned
persons and organisations have been campaigning
for a ra
tional and scientific drug policy oriented towards the prote
ction and maintenance of health of the people, replacing the
present profit oriented drug market. For various reasons, the
Government of India is going to adopt a new
national drug
policy which, according to available information, neglects the
health approach and provides for more concessions ■
to the
industry and profit. It. is, therefore, necessary to identify the
basic elements of a health oriented drug
policy and to do
that one needs to be acquainted with the prevailing drug si
tuation of the country.
WHAT IS A DRUG ?
According to medical science, a substance is called
when it is so recognised in the text books of
Pharmacology
and Medicine and is recommended for some ailments.
number of drugs actually does not exceed 400,
a drug
The
but in India
the number of licensed drugs for sale in the market is more
than 60,000. The apparently unbelievable situation
from a number of reasons :
stems
*
I.
A single drug is allowed to be marketed
not by its Ge
neric name (universally accepted scientific name),
but by
a different ridiculous name (Brand name) by each
com
pany.
2.
A large number of substances having no scientific
at all, e.g., tonics, expectorants, drugs to
basis
increase vita
lity, growth promoters, etc. have been allowed to be ma
rketed as drugs. These ’drugs’ enjoy enormous profit mar
gin and a large market created by false propaganda.
3.
Combination Drugs: By irrational and unscientific
combi
nation of two or more drugs of both scientific
and .un
scientific nature, a large number of ’new drugs’
have
been created. These constitute the largest number
and
enjoy the largest market and high profit margin.
4.
Herbal Drugs: In the name of Ayurved,
ancient herbal
remedy and indigenous medicine, a large number of drugs
have been created and no authentic scientific
or experi
mental information is available regarding them.
This un
controlled unscientific practice draws enormous profit and
is a fast growing business.
5.
Distorted use of scientific drugs: A good number of scienti
fic drugs are recommended by high pressure sales
for ailments against which these are useless.
technique
In this way,
often essential drugs are wasted. For example, Streptomycin,
a valuable and necessary drug against tuberculosis
though in short supply, is wasted by
permitting its use in
combination with Penicillin for other bacterial
2
which,
diseases and
with Chloramphenicol for diarrhoea: both these practices are
not only against the principles of medical science
but
often harmful too.
SHORTAGE OF VITAL DRUGS
Why such unscientific practice prevails in such a vital matter
involving life and death of millions ? Because of
profit and
more profit which has now become the sole guiding force of
all social and economic enterprises.
According to the Drug
Price Control Order, 1979, profit margin for essential
and
life saving drugs is allowed in the range of 40% to55% while
in case of non-essential, unscientific and useless ’drugs', the
profit margin is from 100% to limitless. That is why the drug
companies engage most of their production
capacity in pro
ducing non essentials and neglect low profit
essential drugs.
Anti- TB, anti-leprosy and anti-blindness drugs,
though very
cheap, are always in perpetual shortage while tonics,
cough
syrups, gripe water, digestives, etc. are produced in
such
enormous quantity that crores of rupees have to be spent in
propaganda, incentive and commission to sell these products.
Even in case of life saving drugs the tendency
is towards
larger profit. For example, because of low profit, no com
pany is interested to manufacture the cheapest
anti-TB
drug INH but everyone is eager to import the costliest but
high profit anti-TB drug Rifampicin which is never in short
supply in the market.
HARMFUL PRACTICE
A large number of drugs which are banned in
different
countries because of negative benefit/risk ratio, are
3
being
manufactured and sold here under false pretenses.
ramphenicol-Streptomycin
Chlo-
combination, ClioquinoL, Anabo
lic steroid, high dose Oestrogen-Progestin combination, An
algin, Oxyphenbutazone, etc. are some of the examples. It
is inexplicable that while Ciba Geigy, the largest
manufa
cturer of Oxyphenbutazone, has stopped its production be
cause it is harmful,
many other companies are allow
ed to produce the same in India. More inexplicable
is the
fact that while Drug Controller of India has prohibited the
use of this drug except only for a couple of adult
diseas
es, syrup preparations of this drug for children are, at the
find
same time, allowed to be marketed. It is difficult to
a better example of anarchy.
THE PRICE QUESTION
Arbitrary pricing is a routine practice in India.
Tinidazole
is sold by different companies at different prices,
Biddle Sawyer (Rs.6.40), John Wyeth (Rs.7.80),
(Rs.8.90), Sarabhai (Rs.9.00) etc.
e.g.,
Unichem
Drugs of similar composition
are sold at different prices, e.g. Corbutyl (Rs.53.00)
Norgesic
(Rs.66.00), Proxyvon (Rs.75.00).There are innumerable examples
of such arbitrary pricing. The system of selling a drug
fferent ridiculous brand names is the chief cause of
in di
unreason
able high price of drugs. To sell its own brand
in competition
with a host of others, a company has to spend
a lot for pro
motion, publicity, incentive, commission, fancy packing,
addi
tion of irrational combination, bribery etc. All these expenditu
res are added to the ultimate price of the drug.
The multina
tional companies on an average spend 33% of their
total ex-
penditure on drug promotion and overhead while
allocate a
meagre 0.8% to research and development.
QUALITY CONTROL
The importance of strict quality control of drugs
cannot be
overemphasized. The state of inadequacy of our drug
authorities (DCA) first disclosed by the Hathi
control
Committee in
1975, has not improved. To deal with 8000 manufacturers,
60,000 drug items and innumerable drug shops
we have only
about 500 inspectors and 5 testing laboratories, all not so well
equipped. Only a sample survey (1980) has
revealed that 20%
of drugs in the market are spurious and
substandard; of the
218 samples of big multinational companies 135
were found to
be substandard. Moreover, there is no mechanism or facility in
the country to monitor and document adverse reactions to drugs.
The most important fact which has so long escaped
notice of
almost all concerned is that the DCA have no
facility or ca
pability to test and verify whether a substance
has the pro
perties of a safe drug for human beings. That is why,
when
ever a company applies for a drug license for a new substan ce alongwith the statements of efficacy, the DCA has to be
lieve these statements and issue license.
DRUG INFORMATION AND MARKETING
There is no control over the propaganda or promotion of drugs.
That is why the companies propagate with impunity, concoct
ed false claims, untruths and half truths in publicising
the
efficacy of their drugs. The doctors and the consumers
rely
on these information. There are a number of reasons and evi
dence that many multinational companies are
*
5
forced to ad-
vertise only
scientifically established facts in the developed
countries because of punitive regulations while they propagate
exaggerated, unscientific and imaginary benefits for the same
drugs in India. Here, there is no system of dissemination
of
scientific drug information by the Government to the medical
profession and health workers.
Control over the marketing of drugs is also
practically non
existent. One can purchase any number of dangerous
over the counter without prescription of a doctor.
drug
It is an
open secret that in the business centres of bulk
transaction,
there are separate parallel counters of standard
and substan
dard drugs.
ELEMENTS OF A RATIONAL SCIENTIFIC DRUG POLICY
It is a crime to deprive a dying person of the opportunity to
save his/her life and prevent avoidable death or disability with
the help of life saving and essential drugs. In India such de
privation appears to be routine. It is, therefore,
imperative
to draw the attention of all concerned for an
urgent action
in the matter in order to absolve the nation of
this crimi
nal conduct. We must adopt and implement a
rational sci
entific drug policy to serve the people in need.
From the
foregoing the following basic elements of such a
policy em-
enge :
1.
To allow manufacture and sale of only those drugs which
are recommended by the text books of Pharmacology and
Medicine.
6
2.
To prepare a list of ’’Essential Drugs” on the basis of the
recommendations of WHO, to achieve immediate self su
fficiency and eventual self reliance in the Essential Drugs
and to ensure their availability to all persons
in need,
particularly those who lack the purchasing power.
3.
To allow marketing of drugs only in their generic: names.
4.
To ensure strict quality control.
5.
To control,propaganda df drugs within the
tenets Of sci
entifically established facts; to provide for
dissemination
of all scientific drug information to the medical profession
and health workers and through appropriate
data in the
drug package in the relevant regional languages
. consumers.
7
for the
Drug Policy Old & New
India does not have any comprehensive drug policy in the true
sense of the term. What passes for drug policy in our country
is infact a drug pricing policy which is formulated
by the
Ministry of Chemicals & Fertilisers (now the Ministry
of In
dustry) not by the Health Mini stry. The existing Drug
Policy •
was announced in 1978 and this was followed by the
gation of Drug Prices Control Order in 1979.
Govt, has categorised
I,
promul
By this order
viz.
all the drugs into four categories
II, III and IV depending on the essentiality of the drugs and
fixed a limit to the profit margins (Mark u^),
which is 40, 50
<5c 100 percent respectively for the first three categories while
Govt.allowed unlimited profit margin for drugs
belonging
Category IV (decontrolled). The idea perhaps was
to
that drugs
belonging to Categories I & II (Essential & life saving
drugs)
would not fetch desired profit for the drug manufacturer^ which
they will make good by producing drugs belonging to Category
IV. The total number of drugs brought underCategories I to III
was 347 leaving the vast majority out side the price
control
basket. Drug manufacturers were not ready to be
under any
control whatever minimum it might be. They fought
back and
tried to foil the DPCO in several ways. Several (multinational)
companies cut down the production of essential <5c life
saving
drugs (Category I <5c II) and stepped up the production
of de
controlled drugs (Category IV).
8
Table I
Drug
Lisa need
capacity
Actual
1980
production
1981
(Metric
1982
Tormaa)
1983
PAS
110
1X5
13.78
5.7
N3
INH
80
73.77
54.00
71.5
NH
Protinex
110
254.86
252.15
278.59
not known
Data relate to Pfizer, a mutonationai company.
Through dubious means they have increased the
almost all drugs including essential ones -
9
price of
A couple'of years after the promulgation of the
DPCO,
(1979) the apex bodies of the drug manufacturers viz. OPPI
(Organisation of Pharmaceutical Producers of India, a mul
tinational lobby)
and IDMA(Indian Drug Manufacturers Asso
ciation, organisation of Indian large houses) started pressur
ising the Govt, on the plea that their business has become
unremunerative. They could collect and compile
favourable
data through NCAER (National Council of Applied
Econo
mic Research), a private organisation and submitted
them
to National Drug and Pharmaceutical Development
Council
(NDPDC), a body having several representions from the in
dustry and the chairman of the said council is the manag
ing director of a drug company. Naturally, NDPDC reacted
sympathetically and soon constituted three
working groups
to examine the situation. Recommendations of the
Working
Committees were considered by a steering committee
who
failed to reach any unanimity. The matter (draft new drug
policy) was then presented to the Parliamentary
Consulta
tive Committee (PCC) on drugs and pharmaceuticals.
PCC
differed with the views of the steering committee.
In the
mean time the said PCC has been disolved and a
new co
mmittee has been set up which does not include
any of
member of the former committee.
Following Tables will
show that the claim that ’drug business’ has become
remunerative is not true.
IO
non-
Table-Ill
WHO SAYS THE DRUG COMPANIES ARE INCURRING LOSSES?
COMPANY-WISE FINANCIAL DATA WITH PROFITABILITY RATIOS FOR" SELECTEO
30 PHARAMACEUTICAL COMPANIES
Name of Company
Financial
year
Total
assets
Net Seles
Gross
profit
X retun on total
capital employed.
I.
2.
June '83
95.75
136.1?
14.^8
14.8
Dec.
Dec.
Dec.
Dec.
Nov.
Dec.
Dec.
Dec.
Aug.
*83
*83
*83
*83
*83
*83
*83
*83
*83
62.04
49.70
41.81
33.08
37.50
31.29
37.53
15.18
29.05
101.18
80.67
63.17
56.26
52.08
41.30
37.06
33.69
32.68
10.89
9.00
6.56
5.99
5.99
5.98
3.83
3.48
4.55
14.1?
28.25
11.23
15.64
15.64
6.67
13.58
14.21
15.44
Dec. *83
Nov. *83
Nov. *83
20.99
17.76
8.85
31.77
27.55
26.08
4.39
4.95
2.51
22.13
15.55
13.14
Nov.
Dec.
*83
*83
8.55
18.52
25.45
23.18
2.53
2.12
15.55
19.^8
June
Dec.
Oct.
Sep.
Nov.
Dec.
Apr.
Dec.
June
Dec.
*83
*83
*83
*83
*83
*83
*83
*83
’83
*83
10.18
15.30
13.14
10.06
7.53
10.35
6.S3
7.01
9.84
5.88
23.30
22.30
20.54
19.56
15.28
13.52
11.35
12.49
11.31
9.42
3.15
4.50
■ 1.44
2.04
1.80
0.92
3.26
-0.47
1.29
0.64
20.21
28.34
5.42
12.09
• 14.09
12.07
29.40
21.25
12.20
22.18
June
Mar.
Dec.
June
Mar.
*83
*83
*83
*83
*83
14.81
4.25
4.92
3.09
8.81
1.08
0.50
1.01
0.05
0.50
3.
4.
5.
6.
7.
8.
9.
10.
ll.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
Glaxo Lab.
Hind. Ciba
Geigy
Hoechst(I)
Sandoz (I)
Alembic
Pfizer
May& Baker
Ranbaxy
Boots India
Burroughs
German Remedies
Cynamid(I)
Parke-DavisWarner
Hindustan
E.Merck (I)
Richardson
Hind.
Roche
CIPLA
Unichem Lab.
Abbott Lab.
Searle (I)
Boehringer
Duphar-Int
Nicholas Lab
Fulford (I)
Jayant
Vitamin
Amrutanjan
J.L. Morson
Chemo Pharma
Zandu pfiarma
8.52
0.12
4.94
4.47
.
■
20.44
21.59
17.93
7.93
16.27
CHEMICAL WEEKLY, MARCH 5, 1985
II
Table-IV
WHC SAYS THE DRUG COMPANIES ~ARE~TNCURRING LOSSES?
CHEMICAL WEEKLY & TIMES OF INDIA
March 5, l°M
Feb. kt, 1986
BOOK VALUE AND PRICE SHARE OF PHARMACEUTICALS
-------- xi-cmjii-ma sv-ir-fc "iffw
sr. N^e
No.
1. Glaxo
JtO.SO
2. Hindustan
3. Hoechst
28.00
4. Sandoz
5. Alembic
70.00
24.00
6. Pfizer
15.00
7. MSB
19.50
8. Ranbaxy
23.00
9. Boots
10. Burroughs
26.50
ll. German R.
29.00
12. Cynamid
13. Parke-Davis
14. Warner Hind
21.50
IS. E. Merck
16. Richardson
24.00
17. Roche
18. CIPILA
145.00
19. Unicheni
20. Abbott
42.00
21. Searle
16.00
22. Boehringer
30.00
23. Duphar
24. Nicholas
25. Fulford
6.50
26. Jayant
41.50
27. Amrutanjan
28. J.L.Morrison 13.50
29. Chemo-Pharma 32.00
100.00
30. Zandu
•
31. Bayer
32. ESKEY
33. CIOA
22.00
Si.OO
24.00
24.2!
24.25'
277.50
285.00
262.50
375.00
32.50
85.00
40.00
30.50
36.50
46.00
58.00
36.00
38.50
29.50
38.00
34.50
63.00
19.00
21.50
•
27.00
91.00
23.50
15.75
26.50
24.00
41.00
139.00
36.50
25.00
37.50
39.00
35.00
141.00
31.00
21.50
36.50
33.00
42.00
122.00
37.25
30.00
49.00
56.00
44.00
107.50
38.50
30.50
44.00
67.00
29.50
28.00
35.50
38.00
29.50
31.00
33.00
39.25
N.A.
31.00
26.00
23.50
28.00
28.50
38.00
32.75
34.40
30.00
37.00
31.00
64.00
36.25
41.00
33.00
36.00
34.00
35.00
12.75
20.00
140.00
61.00
68.00
18.50
31.00
145.00
22.00
59.00
14.50
• 25.00
180.00
24.00
47.00
18.00
49.00
167.00
27.50
44.00
17.75
41.00
21.75
5.00
40.00
13.00
18.00
100.00
—
34.00
9.00
36100
14.50
22.50
100.00
—
30.00
6.25
40.50
13.25
22.50
147.50
-
47.00
11 .SO
46.00
14.00
22.50
147.50
-
56.00
11.50 45.00
14.oo;
22.00
16.25
22.50
145.00
-
-
IOOO.CO
87.00
145.00
124.00
71.00
155.00
200.no
190.00
82.50
95.00
66.no
110.00
100.00
53.00
407.50
98.00
17.00
22.50
200.00
—
-
27.00
80.00
11.75
30.00
19.50
76.50
10.00
M.M ■
—
680.00
7io.nn
6on.m
Table- V
BUSINESS UNAFFECTED
incus try knows how to grow
GROWTH OF THE FIRST TWENTY RANKING PHaMACEUT I CAL CO«P ANTES
Company
Country of
Origin
Sales in 1979 Sales in I984
in Rs. Crores in Rs. Crores
U.K.
35.IO
I. Glaxo
US Colaboration 33.59
2. Sarabhai
U.S.A.
28.93
3. ' Pfizer
F.R.G.
4. Hoechest
I7.45
2I .66
5. Alembic
9.87
6. Cadi la
7. Burroughs
U.K.
Wellcome
I3.5I
U.K.
12.14
8. Boots
9.. Ranbaxy
8.75
10. German RemeF.R.G.
10.53
dies
11. Parke Devis U.S.A.
.11.85
11.69
(2. S.G.
Swiss
Chemicals
Colaborpt ion
9.89
13. Hay & Baker France
U.S.A.
14. SKFCESKAY)
8.23
I5i Raptakos10.06
Brett
F.R.G.
8.50
16. E.Rarck
9.10
17. IDPL
4.54
18. CIPLA U.S.A.
9.72
19. Warner
20. Unichem
9.76
Source:
Theraputic
Group
Streptonex
Sodium PAS
Protinex
Insulin CEG
Cadiquin
Dexorange
Anti TB
Anti TB
Neutrient
Antidiabetic
Antimalarial
Blood Tonic
Panzynorm
Enzyme
Tri redisal
Vitamin B^
Bfi Bl2
Chloramphemicol
Paraeetamol
Calpol
52.84
40.51
90.03
48.15
192.60
-
26.74
25.67
23.53
97.92
111.45
168.91
19.25
18.90
17; 90
82.8'
59.50
53.12
17.50
17.15
77.30
108.38
17.1.0
16.65
16.60
15.75
• 5.50
15.35
69.98
95.88
82.41
246.91
59.57
57.27
ORG, HAT Kay *84.
Name of the
Drug
Reehlor
54.55
51.34
40.65
33.16
32.09
28.88
Growth X
.•
PRICE HIKE IN DRUGS
Company
Rax. Retail
Price in *74
Rs.
•- .
Rax. Re
X of
tail Price Increase
in '86,Rs.
Pfizer
Pf izer
Pfizer
Boots.
Cadila
Francho
Indian
German Remidies
Each Vial 0.70 "2.77“
100GR
5.62 15.68
U5GR
5.20 13.37
10m Amp. 5.01 ll.10
Each Tab.0.17
0.28
296
180
157
121
‘ 64
7.50
16.50
120
Each Tab.0.20
0.68
240
Rerind •
Each Tab.0.14
0.32
129
Sarabhai
Burroughs
Each Cap.0.36 .
Each Tab.0.07
0.57
0.20
171
186
13
280ml.
The new drug policy document has been kept secret.
Reports
published in the press (Appendix I, II <5c III) definitely showthat
the new drug policy if passed in its present form
will surely
affect the consumers adversely. Some of the Outstanding cha
nges proposed in the new drug policy are -
1. The number of drugs under price control has been
reduced
from 347 to only 65.
2.
The profit margin has been elevated from 40 - 55% to
about 75 to 80%.
The drug policy both the existing as well as the new
one are
not drug policies at all because -
1. These are not based on the health needs of the people.
2.
These have been formulated by the Chemicals <5c Fertilisers/
Industry Ministry and not by the Health Ministry.
3.
These have only considered the health of the drug industry,
their production and pricing and not the health
of the
people.
4.
These policies are silent about the fates
of several thou
sands of ’non-drugs* and harmful drugs which
banned abroad but continue to be
have been
produced and marketed
in our country.
5.
No discussion about quality control of drugs.
6.
These policies have only discussed the production
and remained completely silent about the
of drugs
availability of
drugs to indigent people who do not have purchasing power.
7.
information
No discussion about the supply of unbiased
about drugs to the doctors as well as the consumes.
8.
The policies
do not mention about the fate of drug
com
panies who violet the policies and orders.
9.
Drug policies also do not mention the ways
and means by
which the leadership role of the public sector, as envisaged
by the Hathi Committee (1975) can be ensured
and the
country can be self sufficient in drugs L
10.
The new drug policy is going to introduce a new item viz.
broad banding which will open the flood gates of irrational
drug production further.
Appendix^I
Farce of Drug Policy
IT was in August 1984 that (he Steering Committee of the National Drug and
Pharmaceuticals Development Council (NDPDC) published its report which was sup
posed to form the basis of a new drug policy. It provoked much debate and sharp criticism
from both the industry and health activists and consumer.groups for very different
reasons. The announcement of the new drug policy has beenlmminent throughout last
year and the government has issued periodic statements about ‘finishing touches' be
ing given to it. The latest indications are that the policy is now ready and will be tabled
in the current session of Parliament.
All that has been forthcoming from the ministry so far indicates that the drug policy
is directed solely towards promoting the growth of the pharmaceutical industry and
facilitating a doubling of its capacity in the next five years; that there is likely to be
an all-round increase in drug prices; and that the price control basket will further shrink.
The minister has also repeatedly stated that companies with less than 40 per cent foreign
equity will be treated on par with wholly Indian companies.
As of now there is absolutely no sign that the drug policy has even considered such
issues as the preparation of an essential drugs list, the need to curb the vast array of
unnecessary formulations, the continuing availability of harmful, irrational combina
tion drugs many of which have been earlier banned by a government order. Nor do
the policy-makers appear to have taken cognisance of the Hathi Committee’s recom
mendations on introducing the use of generic names instead of brand names. Issues
such as the tightening of procedures for drug licensing, monitoring and quality control
too have apparently received scant attention. It is clear that the well-documented and
substantiated criticisms of health activists and concerned consumers aud doctors on
the Steering Committee’s report have fallen on deaf ears. On the other hand, the OPPI
and PAMDAL have been issuing pleas for a “total industrial approach" to drug policy.
Quite clearly the drug industry lobby has once again proved effective.
15
Organisations like the All India Drug Action Network (AIDAN), a forum of doctors
and health activists, have consistently pointed out the’importance of drawing up a need
based essential drugs list based on the incidence and prevalence of major diseases^The
WHO has since 1977 been promoting the idea of an essential drugs list based on its
own list of 200 drugs. The Hathi Committee had drawn up a list of 117 drugs. Various
groups in India have suggested even shorter lists for our needs. The fact that the Indian
pharmaceutical sector produces 40,000 to 60,000 formulations, most of which are
superfluous, some even harmful, has been underscored several times. In fact even the
Minister for Health has recently stressed the relevance of an essential drugs list. The
government itself has drawn up a list of 200 drugs for the Central Government Health
Scheme. The minister is also convinced that in the interest of the consumer the number
of formulations should be curtailed.
The Ministry of Chemicals and Fertilisers, which has the sole authority over the drug
industry, has, however, completely ignored all of these considerations. In fact, it has
cited the large number of drugs marketed and the consequent difficulties in imposing
the Drug Price Control Order (DPCO), 1978 as the justification for its new pricing
policy. In other words, instead of streamlining the process of implementing price con
trol by reducing the plethora of products, it has rationalised their manufacture and
sale by restructuring the pricing policy. Moreover, the absurdity of encouraging the growth
of the industry without stipulating changes in its skewed pattern of production appears
to have escaped notice altogether.
The Seventh Plan’s projected requirement of bulk drugs and formulations in 1980-90
is Rs 1.033 crore and Rs 3,775 crore, respectively. It is well known that these projec
tions are based on current sales rather than on disease patterns and their incidence rates.
Most of the large drug companies have well-established sales and promotion networks
which are capable of selling the most irrelevant drugs in large quantities. In the absence
of consumer education and awareness, if no controls are introduced on the number
of useless formulations, the pattern of production in the drug industry is likely to rapidly
become more irrational in future than it already is.
The Health Minister’s recent statements also bring into focus another aspect of the
drugs picture that has long worried health activists. Since the drug industry does not
come under the purview of the Health Ministry, the latter has no say in such matters
as pattern of production, requirement of drugs or even quality control. For instance,
there are only some 600 drug inspectors for the 6,000 odd manufacturing units and
thousands of sales outlets. Only two states have fully equipped testing laboratories.
No new plans have been mooted to remedy this situation. Given the tremendous influence
wielded by the drug industry it is not surprising that the drug policy’s main concerns
are for the health of the industry and not for the health of the people. Another vital
and urgent measure which would have ensured quality drugs at affordable prices would
have been the mandatory use of generic names and a gradual abolition of brand names.
Again, because of the ministry’s tilled perspective towards industry and its consequent
preoccupation with price structures it has ignored other comprehensive measures which
would have supported the implementation of any rational pricing policy.
If the indications are right and if these are really some of the main features of the
drug policy, its announcement would be
almost irrelevant to most people but for the
fact that the last year has seen a growing
of a counter-lobby to the drug industry and
consumer awareness on drug issues. The
a growing concern among people about the
tardiness of the government in introducing
high prices of drugs, spurious formulations,
the new policy may have been the emergence
non-availability of essential, life-saving pro
ducts and promotion of medicines banned
in many countries. The new drug policy may
□ EPW, 8-15.3.86.
thus be due for a stormy reception.
16
Appendix-II
Pharmaceutical Industry
discriminated against, supposedly in the interest
of the wholly Indian companies. Large Indian
companies are controlled by MR1P provisions.
The small-scale sector enjoys several benefits,
resulting in proliferation of manufacturers and
multiplicity of formulations without effective
monitoring of quality. Growth and innovation
have been sacrificed in favour of supposed
short-term social gains which have not
materialised.
The present plight of the drug industry b at
tributable largely to the government's pricing
policy which has resulted in continuous erosion
of its profitability. Unsatisfactory nature of
initial mark-ups apart, subsequent cost escala
tions without corresponding price adjustments
have sharply eroded earning levels well below
those prescribed by the government. New Delhi
has been unable to resolve the conflict in regard
to correct balance in pricing, between ensur
ing that benefits of competition are passed on
to consumers in the form of lower prices while
preserving incentives for further investment in
production and innovation. What the govern
ment has tried to do is to place its priority on
bringing down the cost of medicines, but not
promoting vigorous competition and not by
paying due regard to the returns required by
manufacturers.
Unquestionably, poor countries need good
quality drugs at the lowest possible* cost. But
this laudable objective cannot be achieved on
an enduring basis without continuous growth
of the industry and innovation which in turn
call for adequate returns to manufacturers and
innovators. The findings of an NCAER study
released last year bring out the various short
comings in the government's pricing policy.
The mark-ups allowed in respect of categories
I and II drugs—40 per cent and 55 per cent,
respectively—have been well below the break
even point of 63/64 per cent and those in
respect of category III drugs render production
barely remunerative. This explains the serious
underutilisation of capacity in respect of life
saving and essential drugs and their consequent
shortages.
New Delhi is by no means unaware of the
industry's declining fortunes. Three working
groups, fully representative of all interests, were
appointed by the Natkmal Drugs and Pharma.
ceuricals Development Council last year to
Not By Price Contrdi
A Correspondent writes:
THE pharmaceutical industry provides a
curious blend of many paradoxes. The industry
has been subjected for nearly two decades to
an increasingly stringent system of price con
trols, currently covering about four-fifths of its
production of drugs and formulations, but the
impression is still widespread that the prices of
medicines are on the very high side. The in
dustry has all along been complaining about
uneconomic pricing but its growth rate com
pares quite favourably with that of most other
major industries. Despite its apparently im
pressive overall growth rate of nearly 15 per cent
a year, the per capita availability of medicines
works out to only around Rs 30 a year—the
value of formulations is reckoned at Rs 1,660
crore—and the average for the rural areas is less
than. Rs 10.
The main objectives of the government’s
drug policy—production of medicines for the
masses, particularly life-saving medicines and
those required for the national health scheme,
and ensuring quality and fair prices—are unex
ceptionable. But in an attempt to reconcile the
conflicting interests of different sectors into
which the industry is divided, the policy-mix
the government has evolved over the years has
done considerable harm to the cause it seeks
to promote. Life-saving and essential drugs con
tinue to be in short supply and that again not
for lack of capacity but due to uneconomic
prices. Or so the industry claims. In any case,
one can scarcely blame the industry for con
centrating its attention on the production of
less essential medicines which are more
profitable.
Ironically enough, the industry which pro-'
duces drugs and lot initiations for the health
and life of the people is itself sick. This,
however, is scarcely surprising. The whole thrust *
of official action has been to promote objec
tives which haw no relation to efficiency. Public
sector firms have been promoted, protected and
subsidised but they command little reputation
for efficiency. Foreign companies are tightly
contained and even those which have reduced
their foreign shareholding to 40 per cent are
17
18
study in detail the various aspects of. the ex
isting drug policy, the need for review of the
policy and to recommend changes wherever
necessary. Their reports were later examined in
depth by the steering committee which submit
ted its report in August last.
The steering committee has made a number
of recommendations covering almost every im
portant aspect of the drug industry. It has sug
gested that price control should have a lesser
span than at present. The committee has iden
tified 95 drugs to be known as priority drugs
instead of life saving and essential drugs.
Only, these drugs with an estimated coverage
of anywhere between 50 per cent and 68 per
cent of the drugs currently listed in categories
I, II and in, are to be brought under price con
trol. Views on the mark-ups vary from 65-125
per cent and a common mark-up-of 75/80 per
cent. The final decision has been left entirely
to the government. All the drugs/fonnUlations
outside the 95 priority drugs are to be exclud
ed from the purview'of price control. The com
mittee has suggested that the restrictions on
licensing and production should be done away
with and that each manufacturer should be
compelled to produce 20 per cent priority
drugs.
Industry’s reaction to the steering commit
tee’s recommendations is mixed one. The in
dustry’s feeling is that the proposed switch-over
from the three-tier to two-tier structure, wel
come as it is, is unlikely to bring about any
significant improvement in its fortunes. The
priority drugs cover almost two-thirds of the
total production and the common mark-up sug
gested is 75/80 per cent. Under the existing
policy, almost half of the total production
comes under the 60-100 per cent mark-up area.
Besides, quite a good deal will depend on how
the government implements the recommenda
tions in regard to removal of curbs on licens
ing and production.
The industry is looking forward to the an
nouncement of new drug policy embodying the
various recommendations of the steering com
mittee. The view is widely shared that going by
the mark-ups indicated in the committee’s
report, prospects of a major breakthrough in
production of priority drugs cannot be rated
high. AH that is reasonably certain is that drugs
will become coatiicr and the rise in prices could
well be quite sharp in the case of medicines ex
empted from the purview of control. But there
is no getting away from the harsh fact that drug
prices can be held in check only by promoting
vigorous competition through increased pro
duction which in turn calls for adequate returns
to manufacturers and innovators.
□ EPW, 24.1 1.84.
Drug policy
'T' HE forthcoming national drug policy is likely to prove a
bitter disappointment to consumers unless the uovernment considers seriously, even at this stage, some of the
suggestions made by consumer and health activists. The
Government envisages a drug policy purely in terms of
pricing and production and has therefore only consulted the
drug industry. The consumers' voice has been entirely
forgotten. Yet in a country like India, with an inadequate
health care system, the issues raised by consumer activists.
such as the quality of drugs, the shortage of inexpensive
essential drugs, the excessive marketing and promotion of
irrational drug combinations which arc useless and often
harmful. <ind the availability over-the counter of drugs
banned in many countries, are far more relevant than just
profits and pricing.
Although a central issue in the debate on drug policy has
been the share of the market held by jhe multinationals and
indigene* drug companies respectively, the more relevant
fact is that both sections of the drug industry are guilty of
paying little heed to consumer interests. While the more
profitable non-essential formulations such as tonics and
restoratives are promoted and produced by them in everincreasing quantities, the country’s 10 million TB patients
are bard put to find adequate supplies of simple drugs and an
estimated 30.000 children go blind every year because of the
lack of Vitamin A. the production of which has actually
declined over the years. Even of this, a substantial percen
tage is diverted to multivitamin formulations, a favourite of
an overdosed urban populace.
The Government has yet to heed the suggestions of thi
Hathi Committee, made more than a decade ago, that brand
names be disallowed and that only generic names be used.
The Committee had also drawn up a list of 116 essential
drugs that should be produced in adequate quantities to meet
the needs of the people. A couple of years later the World
Health Organisation (WHO) came up with a list of 200
essential drugs and advised developing countries particularly
to draw up such lists and adopt a rational drug policy instead
of wasting up to 20 to 30 per cent of their already meagre
health budgets on importing expensive non-essential drugs.
In 1982 Bangladesh adopted a rational drug policy which
allows the production of only 150 essential drugs and their
marketing under generic names. These have replaced over
4.000 formulations that were flooding the market. This is an
example the Indian Government would do well to study.
Non-availability of essential drugs and vaccines has cnppled
efforts made by the Government and voluntary agencies to
reach health care to the poor in'the villages. A rational drug
policy is the very minimal contribution the Government can
make towards the goal of achieving health for all bv 2000
AD.
UWDIAM EXPRESS. HEW DELHI. Monday. March 17.
--- ------------------------------------------------------------------------------------ —
ALL INDIA DiWC, ACTION NETWORK
C-14/ Community Centre* S.D. A
New Delhi* March 21/ 1986.
all INDIA DRTTG ACTION NETWORK had discussion on
20.3.1986 in ’Delhi with several MPs from different
political parties including - Shri Balwant Singh
Ramoowalia* Shri Teja Singh* Shri Suresh Kurup*
Shri Unni Krishnan* Shri Vishvjit Prithvijit Singh*
Shri Wool Chand Daga* Shri Abdul Rashid Kabuli*
Prof, saif-un-din Soz* Dr. V. Venkatesh* Shri Piyus
Tirakey* Shri Chinta Mohan - regarding the need for
a rational drug policy..
The National Drug Policy must be integrated with the
National Health Policy fro«i the very planning stace
and not be limited to licensing and pricing policy.
After the discussion on the need for a Rational Drug
Policy* following statement was made :
statement
This meeting of the representative of the po
litical parties states:
THAT the National Drug, Policy (ND?) is essen
tially meant for the well being of the people and
as such it should be open for public discussion and
debate before it is adopted by the Parliament.
THAT the NDP should not be isolated* but taken
as an ingetral part of health policy and Health Edu
cation Policy and therefore considered in unison and
not in contradiction with the New National Health
Policy of 1984 as any shortterm changes implemented
now* cannot be properly integrated with the health
policy at a latex stage.
THAT as suggested by the Hathi Committee and
;<H0* there is an urgent need for formulation and
adoption of essential drug lists based on the actual
health needs of the people.
THAT the essential drugs be made available
in generic names.
Contd..•2
IS
( 2 )
THAT the production and delivery of essential
drugs should be so planned that sufficient essential
drugs at affordable prices ere available at all times#
at all places and to all the people.
THAT the production and sale of all hazardous#
irrational and therapeutically useless drug formula
tions should be immediately stopped.
THAT only unbiased scientific information should
be allowed to be given by the pharmaceutical firms to
the medical profession end that this information should
be approved by the government.
THAT the consumer caution on the product pack
should be simple# and in regional languages.
THAT the Health Ministry should independently
provide continued information in the sphere of drug
usage to the medical profession and to chemists through
appropriate measures.
THAT adequate minimum quality control measures
should be strictly enforced to give standard quality
products.
THAT no change should be made in the existing
patent Laws.
THAT the multinationals be made to produce
sufficient essential bulk .drugs from the basic stage.
Copies of this statement are being sent to the Prime
Minister# Ministries of Health# Industry# Drugs and
to the concerned officials.
Sd/- for Dr.Mira Shiva
Corrdinator .
ALL INDIA DRUG ACTION NEF.-JORK
BO
Published, printed and distributed by Dr. S.K. Das on behalf of Drug Action
Forum, West Bengal; S/3/5, Srabani, Sector-Ill, Salt Lake, Calcutta - 700 091
India (Phones 37-1550). Printed at Autocopiers, 9 Lalbazar Street, Calcutta-1
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