FOR A RATIONAL SCIENTIFIC HEALTH-ORIENTTED NATIONAL POLICY.pdf

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DRUG ACTION FORUM, TCR
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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
Phone: 22-0410, 23-201S.

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