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Pharma prices go through the roof

Pharma prices go through the roof

The international pharmaceutical industry has found its cash cow in India’s beleaguered consumers. With a basic wage worker afflicted with a chronic disease like multi-drug-resistant tuberculosis faces penury. His treatment, with drug combinations, which works out to roughly Rs.1.2-Rs.1.5 lakh, is the equivalent of nearly 4-6 years of savings. Even managing a disease like diabetes or hypertension can erode much of his monthly income. Medicines remain overpriced and unaffordable in India. In a country mired in poverty, medical debt is the second biggest factor. If a large number of people are opting out of proper treatment due to financial reasons, the cost of medicines is the most significant contributing factor. It is paradoxical that even as India has earned its global identity as “Pharmacy of the Global South”, 63 million people sink into poverty each year as a result of unaffordable health care costs. Over 40% of those hospitalized have to borrow money and/or sell assets. With innovative policymaking, the troika of quality, affordability and access can be achieved.


Several whistle blowers have highlighted scams and manipulation issues in the pharmaceutical industry in India from time to time. The country needs strict criminal prosecution against suppliers of substandard drugs on the one hand and over-pricing on the other. There is a need for comprehensive overhaul of rules governing the Indian pharma sector. Despite past recommendations from various committees and the drug policies to centralize the licensing powers under a national drug regulator, the current system still separates these powers due to some unknown reasons. There is a crisis in the area of prices of the drugs and the quality of drugs sold all over the country. While the blame of medicines becoming unaffordable are going on qualified doctors, one conveniently forgets the quacks, which corner a lion’s share of gifts, since they contribute to the unethical business of the companies in a big way. The cross-pathy quacks are the biggest targets of small time pharma companies. How much ethics can be expected from such doctors?


Exorbitant and unfair prices


The Supreme Court’s description of India’s drug pricing policy—irrational and unreasonable—is accurate. There have been two contradictory developments in the recent past: there is now a possibility that heart-stent will become a component of the National List of Essential Medicines (NLEM)- a good news. And  customs duty exemptions on a number of drugs were lifted- this will make them expensive.

Corporate hospitals are making a kill by selling expensive brands at marked up prices, when equally effective drugs from well known houses are available in the market at 10% cost. Patients, as a captive market, have little choice but to bear the inflated costs. Incidentally the hospitals being bulk buyers of medicines and medical devices can get huge discounts over the MRP.  Price of Daraprim, a drug for HIV patients, was raised from $20 to $750 — an increase considered “unjustifiable” even for the drug industry. Glenmark announced an equated monthly installment scheme for two anti-cancer drugs, Abirapro (250mg; 120 tablet pack is Rs.39,990) and Evermil (10 mg; 10 tablet pack is Rs.29,965). Glivec, another anti-cancer drug, saw its base price rise from Rs.8,500 to over Rs.1 lakh per month over the last decade. A new hepatitis C drug, Sovaldi, is $1,000 per pill. Cortisporin, for ear infections, developed by Glaxo Wellcome and approved in 1975, has had its price rise from $10 to $195. The prices have gone through the roof.  If generic drugs of standard quality and same bio-equivalence  are marketed under the supervision of the drug regulator the cost to the patient may be even lower say 1-5% of the expensive brand sold by the hospitals. This single step can make the medical care much affordable.
As per the report of a leading daily a patient diagnosed with multiple myeloma, was given an injection, Novartis’s Zometa, that costs Rs 15,200 per shot, every three to four weeks for over two years in a top private hospital in NCR. On a work trip to Bangalore, she got the injection at a hospital there for just Rs 4,000. When she confronted the NCR hospital about this huge cost difference, it readily offered her a cheaper option — Cipla’s Zoldria for Rs 2,800. She went to a different hospital and get the same injection, Zoldonat, manufactured by Natco, for just Rs 800,” says she. Zometa is sold to stockists for just Rs 13,000, according to an industry insider. At that rate, the hospital would make a profit of Rs 2,200. Clearly, the Rs 800 injection could not yield that huge a margin. Taking the example of an antibiotic meropenem, used in ICUs for patients with serious infections, Cipla’s Merocrit is sold for Rs 2,965 per gram by a top hospital. Merocrit is sold to hospitals for Rs 700per gram. The adult dose is about 2g every eight hours for about 10 days. That’s about Rs 1.8 lakh on just one antibiotic. So the hospital makes Rs 1.4 lakh on just one patient by pocketing the discount. It’s not just medicines; hospitals charge MRP on every consumable — from syringes and catheters to bandages and diapers — though they buy them at huge discounts. To protect this revenue stream, patients are not allowed to buy anything from outside the hospital, ostensibly to ensure quality. Why MRPs are much higher than actual cost prices? “Pharmaceuticals or devices and diagnostics are two major revenue earners for any private hospital. Besides, we also have to ensure healthy profits for the investors,” points out a hospital administrator.

Two major reforms suggested are: capping the profit to 20% of the cost and total ban on marketing of substandard medicines.


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