The Department Related Parliamentary Standing Committee on Health and Family Welfare presented its 58th Report on the action taken by the Government on the recommendations / observations contained in the 45th report to both the Lower and the Upper houses of the Parliament on May 08, 2012.

In this report the Committee examined, besides other important subjects, the issues related to making high quality generic/branded generic medicines, patented and imported products available to the public at affordable prices to reduce ‘out-of-pocket expenses’ of the general population of India, significantly.

The Committee also suggested that the Department of Health and Family Welfare, in coordination with the Department of Pharmaceuticals and with the active involvement of Chief Secretaries of the State Governments should formulate an effective ‘Essential Drug Supply’ policy having the following components:

• Encouraging prescription of generic drugs
• Adoption of essential drugs list
• Adherence to Standard Treatment Guidelines
• Ensuring drug procurement through open tender system
• Distribution of low cost medicines through Government drugs stores like, ‘Jan Aushadhi’
• Demand generation for generic drugs through public awareness program

In addition, the report captured the great concern of the committee on rampant prescription of irrational and useless drugs by many doctors with ulterior motives and expressed the need of inclusion of the essential and lifesaving drugs under strict price regulation.

Parliamentary Report indicts the Department of Pharmaceuticals:

The committee, besides other issues, observed as follows with a strong indictment to the Department of Pharmaceuticals (DoP):

• The DoP seems be in the grip of policy inertia.
• ‘Lackadaisical approach’ and ‘lack of sense of urgency’ of the DoP to iron out hindrances in establishing required number of ‘Jan Aushadhi’ stores across the country have also resulted in their ‘soft-pedaling’ the issue of intensive promotion of generic drugs through a large number of ‘Jan Aushadhi’ outlets, as was planned by the government.
• DoP should shed its ‘indecisiveness’ and take all possible measures to speed up the revival and modernization of Public Sector Pharma Units, so that the all-important objective of access to affordable and quality medicines by all could be realized.
• Currently there is no mechanism to regulate the prices of new patented drugs which are imported into the country and sold at ‘super-normal profits’. Committee recommended that India as a sovereign country has every right to determine, for public health interest, prices of all drugs which are sold in the open market, by putting in place an effective price control mechanism.
• The issue of price regulation of all imported molecules including patented ones being sold in the country at high prices should be addressed by the DoP in the New Pharmaceutical Policy which is currently under finalization.
• The DoP should take decisive action, without further delay, in making the ‘Uniform Code of Pharmaceutical Marketing Practices (UCPMP)’ mandatory so that effective checks could be ensured on ‘huge promotional costs’ and the resultant add-on impact on medicine prices.
• The country holds a strong position in producing generic drugs. Besides, it has a robust distribution network not only in the domestic market but also in other developing and underdeveloped countries of the world. Thus, the Government should make all-out efforts to arrest the trend of acquisition of domestic pharma companies by the multinationals.
• The DoP to move the Cabinet for its approval with a sense of urgency for setting up the Central Procurement Agency as an autonomous society, as it can help control drug prices through effective procurement process.

Looking back:

In mid-2008, Government of India had set up a new department under the Ministry of Chemicals & Fertilizers (MC&F), named the ‘Department of Pharmaceuticals (DoP)’. The department was created primarily to have a greater focus on the pharmaceutical sector of India. Historically, issues and policies related to pharmaceutical industry mainly used to be handled by the Department of Chemicals and Petrochemicals. A separate Department of Fertilizers still handles all issues related to fertilizers in India. Both the departments were under the MC&F. The then Minister C&F felt that the pharmaceuticals sector has very many critical and complex issues, which are related mainly to pricing, access, availability, R&D, and other international commitments that necessitate integration of work with different ministries. A separate Department for Pharmaceuticals was, therefore, considered necessary to do justice to the pharmaceutical industry of India. The proposal, I reckon, was incubating with the government for quite some time though.

The expectations from DoP:

At that time in 2008,  it was widely expected that the DoP will be able to address the following key pharmaceutical industry related issues, with an integrated approach, to strike a right balance between the growth fundamentals of the industry and the Public Health Interest:

• A modern, both growth and access oriented, drug policy and pricing mechanism.
• Continuous improvement of access to high quality and affordable modern medicines for all.
• An efficient drug price regulatory system.
• An appropriate ecosystem to encourage R&D and foster pharmaceutical innovation.
• Addressing the issue of high ‘out of pocket expenses’ of the general population towards medicines in particular and healthcare in general.
• Facilitating fiscal and tax incentives required by the Micro-Small and Medium Enterprises (MSME) within the pharmaceutical industry of India to further drive its growth.

As stated above, all these will necessitate a close coordination and integration of work of various departments falling under different ministries of the government, DoP being the nodal department.

The Objectives of the Department of Pharmaceuticals (DoP):

Be that as it may, following are the stated objectives of the DoP, as mentioned in the Results-Framework Document (RFD 2011-12) of the DoP:

1. Ensure availability of drugs at reasonable prices as per the Pharma policy
2. Facilitate growth of Central pharma PSUs with required support
3. Develop Pharma Infrastructure and Catalyze Drug Discovery and Innovation
4. Launch and Position Pharma India Brand
5. Develop Pharma Human Resources through M.Pharma and Ph.D programs in NIPERS
6. Provide Infrastructure and staff for new NIPERs
7. Strengthening of NIPER Mohaili
8. ‘Jan Aushadhi Campaign’ and implementation of Business Plan for setting up of 3000 ‘Jan Aushadhi’ Stores (upto Subdivision level in the country)
9. Incentivizing Private Sector for development of new Drugs for diseases endemic to India

It appears, the current performance of the DoP even against their stated objectives as mentioned in RFD 2011-12, has prompted the Parliamentary Committee to make the above harsh comments.

A look at ‘Jan Aushadhi’ – a scheme conceived with a great purpose:

Before going into the reasons for lackluster performance of this scheme, let us look at the following objectives of scheme as set out by the DoP:

1. To promote awareness for cost effective quality generic medicines. (However, how exactly this will be done, is yet to be known.) 2. To make available unbranded affordable quality generic medicines through  Public Private Partnership (PPP) initiatives. (I would support this objective may be from procurement perspective. However, so far as the delivery of these medicines to the common man is concerned, I would still argue: why do we reinvent the wheel?) 3. To encourage doctors in the Government Hospitals to prescribe such cost effective quality generic medicines. (This is again just a statement of good intent without considering the critical issue of its implementation in the predominantly branded generic market of India.) 4. To help patients save significantly towards medicines costs with ‘Jan Aushadhi’ outlets. 5. A national help line to increase awareness level of this initiative. The statement of intent of the DoP also highlights that the State Governments, NGOs and Charitable bodies will be encouraged to set up such generic medicine shops across the country. It also states that the existing outlets of the Government and NGOs may also be used for this cause.

Arguing for the need of a course correction for ‘Jan Aushadhi’ scheme: It now appears that the ‘Jan Aushadhi’ scheme of the DoP may not ultimately be able to achieve its cherished goals and is perhaps destined to go into the history as yet another good intention of the Government, if a course correction is not made forthwith in the right direction. The main issue in improving access to affordable quality medicines for the common man with ‘Jan Aushadhi’ scheme does not lie in the conceptualization of this ‘Public Health’ project, where the Government is pretty good at, armed with the support of a good number of brilliant bureaucrats. The problem in translating this laudable idea into reality, I reckon, lies not only in the understanding of the critical barriers to the project, but also in making out the key drivers of the same.

Key barriers:

In my opinion, following two  are the key barriers to the success of ‘Jan Aushadhi’ scheme:

• Cost-effective procurement of quality medicines in adequate quantity
• An effective delivery mechanism involving state government, NGOs and various other related bodies.

Cost effective procurement:

As recommended by the Parliamentary Committee, the DoP should move the Cabinet for its urgent approval to set up a Central Procurement Agency for cost effective procurement of quality medicines and at the same time encourage the state governments to do the same at respective state level.

No need to ‘reinvent the wheel’ – An effective delivery system already exists:

The DoP should explore possibilities of using the existing Government Public Delivery Systems to ensure cost effective easy access and availability of such medicines to the common man after tightening the loose knots wherever exist. There does not seem to be any dire need to ‘reinvent the wheel’ in this particular case.

Two grossly underutilized Government controlled ‘Public Distribution Systems’: The Government of India has following two very unique product distribution and delivery systems within the country with deep penetration from metro cities to far-flung rural areas: 1. Public Distribution System (PDS) : Called Ration shops and is currently used for public distribution of food grains and other essential commodities.

2. Indian Post Offices (IPO): This establishment is currently adding many other products, besides postal services, for effective distribution to the public

Quite like food grains, medicines are also essential items. Why does DoP not collaborate with PDS/Ration Shops and IPOs through appropriate ministries to ensure easy availability and access to essential medicines by the common man?

This assumes even greater significance, when the Postal Department, as mentioned above, has already started collaborating with various other agencies to sell and distribute many types of products in rural areas through IPO network. In that case, what prevents the DoP to consider this alternative, as well?

In fact, I would strongly recommend the usage of both PDS and IPOs by the DoP for deeper penetration of ‘Jan Aushadhi’ across the country, especially for those who do not have adequate access to affordable modern essential medicines.

I am aware that the question of ‘in-efficiency’ of these systems may be raised by many in India. However, at the end of the day who is responsible to make these systems efficient? People responsible for managing a system are usually held accountable for its ‘efficiency’ or ‘inefficiency’. It is about time that the government fixes strict accountability in these areas too.

We have currently many excellent minds in the DoP, I hope, they may wish to explore the possibility of effectively utilizing these two already available state controlled mass distribution systems to ensure proper access and availability of “Jan Ausadhi” drugs to the common man”.

An intriguing observation in the Report:

It is indeed difficult to fathom the robustness of the reasoning of both the Parliamentary Committee and the DoP for the revival of the sick and loss making Public Sector Pharmaceutical Units in the country.

As stated above, the very second objective of the DoP also articulates as follows:

“Facilitate growth of Central pharma PSUs with required support”.

This is indeed quite baffling.

Everyone knows that all these PSUs created at the expense of tax payers’ money, miserably failed to perform time and again, despite receiving all such incentives from the government umpteen number of times, even when the Indian pharmaceutical industry has been growing at a scorching pace, decade after decade.

Thus I wonder what magic wand the Government will wield now to be able to turn around these loss making and heavily bleeding PSUs from continuous non-performance and utter failure in governance and that too in the prevailing environment of fierce competitive pressure within the industry.

Considering all these, will the decision of pouring in even more money from the national exchequer’s fund into the bottomless pits of these loss making PSUs currently under dangerous tail spins fetch any dividend at all for the common man?

I reckon, if these PSUs still attract interest of some good private buyers/investors with reasonable valuation, the government should unhesitatingly decide to unlock these values, sooner the better.

Conclusion:

Not so long ago, in July 25, 2011 a news item reported, “Department of Pharmaceuticals moots National Authority for Drugs & Therapeutics (NADT) with Central Drugs Standard Control Organization (CDSCO) under it”.

If I recall, some years ago, another taskforce appointed by the Government suggested integration of the offices of the DCGI, CDSCO and NPPA along with all their powers and functions to ensure adequate availability and access to high quality medicines at affordable prices for the population of the country.

Nothing has fructified, as yet, in this direction. However, it appears from all such recommendations of various task forces that a strong desire to create powerful silos has perhaps assumed higher priority of the relevant players engaged in this ball game. Failure to deliver the deliverables for public health interest almost on a continuous basis by spending national exchequers money has become more a routine than exceptions.

That said, there seems to be a silver lining catching some eyeballs in this whole process. Some brilliant minds that the government now has in the DoP, I hope, will be able to turn around the situation to everybody’s satisfaction, sooner than later.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.