Tag Archives: Access

How have the ‘Drug Policies’ of India fared against the set objectives?

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Indian Pharmaceutical Industry has by now established itself as one of the most important knowledge based industry of the nation with significant sets of differential advantages. It has earned global recognition as a low cost producer and global supplier of generic drugs. The domestic industry today meets almost the entire demand for pharmaceutical products of the country. This happened, as many would consider, primarily due to the pragmatic decision of the government to abolish the product patent during the growth stage of the Indian pharmaceutical industry, in the early 70’s.
In global perspective India is still a small market in terms of value turnover:

Having achieved all these, one should keep in mind that despite being the second largest country in terms of population, domestic Indian pharmaceutical market recorded a turnover of just U.S$ 7.8 billion in 2008, which is significantly lower than any smaller country of the developed world.

This is primarily because India is a low priced generic pharmaceuticals market. McKinsey forecasts that by 2015 the industry will record a turnover of U.S$ 20 billion. The key drivers of growth are forecasted to be the following:

1. Overall rising income level, particularly of the middle class.

2. Increase in life-style related diseases.

3. Change in demographic pattern with increase in life expectancy.

4. Greater penetration in the rural markets.

5. Increasing penetration of health insurance.

6. Increase in government expenditure towards healthcare.

A quick snapshot of ‘Drug Policy’ changes:

With the initiation of globalization process in 1991, many significant steps have been taken by the government for the pharmaceutical industry of India.

Along with reduction in the span of price control of drugs, reservation of some drugs for the public sector was withdrawn and private sector was allowed to manufacture all types of drugs. Although industrial licensing for pharmaceuticals was abolished, for bulk drugs the system is still in force. Foreign investments through automatic route was first raised to 74 percent and then to 100 percent.

The product patent regime with the introduction of the Patents Act 2005 ushered in a paradigm shift in the pharmaceutical landscape of India. Almost simultaneously, on in-house research and development, the facility of weighted deduction of 150 percent (though inadequate) to cover expenditure towards R&D, patent filing, regulatory approvals and clinical trials was a welcome step. These steps, howsoever good, were considered to be not good enough by a large section within the pharmaceutical industry of India.

The need for some more key changes:

The reform initiatives as enunciated in the successive drug policies were considered by the pharmaceutical industry as far from satisfactory. In the era of globalization, where market forces play a dominant role to control prices including of essential commodities like, food grains, the rigors of stringent price control on pharmaceuticals need to have a relook urgently. This was re-inforced even in the ‘National Economic Survey Report of 2009′.

Moreover, considering the new product patent regime is well in place since January 2005, to foster and encourage innovation within the country, there is an immediate need to take robust fiscal measures and offer attractive financial incentives for indigenous pharmaceutical R&D initiatives.

Simultaneous reform measures are warranted in the health insurance sector:

It is worth mentioning, effective penetration of health insurance being one of the key growth drivers of the Indian pharmaceutical industry, adequate and immediate reform measures in this area is necessary to respond to the need of a robust healthcare financing model for all strata of the society. This should work in tandem with the new drug policy measures.

The health insurance sector is growing, but not to the extent that it should. Health insurance premiums had grown to around U.S$ 800 million as on 2007 and are expected to reach around U.S$ 4.5 billion by 2013. Entry of more private health insurance players along with a reformed health insurance regulatory policy, is expected to expedite the growth rate of this important sector further.

Achievements against each key objective areas of the drug policy, thus far:

In the Drug Policy 1986 the basic objectives of policies relating to drugs were clearly enunciated. But the question is: have the objectives of the successive drug policies yielded the desirable outcome? Let us have a reality check as follows:

1. Objective: To ensure abundant availability of medicines at reasonable price and quality for mass consumption.

Reality: 65 percent of the population of the country still do not have access to modern medicines

2. Objective: To strengthen the domestic capability for cost effective, quality production and exports of pharmaceuticals by reducing trade barriers in the pharmaceutical sector.

Reality: The country has been able to make good progress in this area.

3. Objective: To strengthen the system of quality control over drug and pharmaceutical production and distribution.

Reality: The quality of all medicines produced in the country against valid manufacturing license still raises a big concern. Even the government of India while purchasing medicines for its own ‘Jan Ausadhi’ outlets, restricts purchases of medicines only upto a certain category of pharmaceutical manufacturers, for product quality reasons.

4. Objective: To encourage R&D in the pharmaceutical industry in a manner compatible with the country’s need and with particular focus on diseases endemic or relevant to India by creating conducive environment.

Reality: Nothing worth mentioning has been done in this area.

5. Objective: To create an incentive framework for the pharmaceutical industry, which promotes new investment into the industry and encourage introduction of new technology and new drugs?

Reality: Again nothing significant has been done by the government in this area.

Conclusion:

The role and objectives of the drug policy should help accelerating the all-round inclusive growth of the Indian pharmaceutical industry and make it a force to reckon with in the global pharmaceutical industry. The drug policy is surely not formulated only to implement rigorous price control of drugs. The policy formulates other key objectives to contribute significantly towards achieving the healthcare objectives of the nation, working closely with other related ministries of the government.

Unfortunately, it has not been able to keep pace with the globalization process of the country as compared to the other industries, also dealing with the essential commodities. The amended Indian Patents Act came into force in India in 2005. The drug policy of India, for various reasons, has not been able to articulate, as yet, specific measures to encourage innovation, giving a new thrust to the pharmaceutical R&D space of the nation.

By Tapan 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.

Emerging markets and a robust oncology portfolio expected to be the future growth engine of the global pharmaceutical industry… but not without associated pricing pressures.

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When the growth rate of the developed markets of the global pharmaceutical industry started slowing down along with the declining R&D productivity, the emerging markets were identified as the new ‘El-Dorado’ by the global players. At the same time, new launch of anti-cancer drugs, more in number, started giving additional thrust to the growth engine of the industry, at least in the developed markets and for the ‘creamy layers’ of the emerging markets of the world. As cancer is being considered as one of the terminal illnesses, the cancer patients from all over the world, would like to have their anti-cancer medications, at any cost, even if it means just marginal prolongation of life with a huge debt burden.According to a recent study done by the Cancer Research, UK, despite significant decline in the overall global pharmaceutical R&D productivity over a period of time, in a relative yardstick, newer anti-cancer drugs have started coming up to the global market with a much greater frequency than ever before. ‘Pharmacy Europe’reports that 18 percent, against a previous estimate of 5 percent of 974 anti-cancer drugs will see the light of the day in the global market place, passing through stringent regulatory requirements. This is happening mainly because of sharper understanding of the basic biology of the disease by the research scientists.Another study reports that between 1995 and 2007 such knowledge has helped the scientists to molecularly target ‘kinase inhibitors’, which are much less toxic and offers much better side effect profile. Well known anti-cancer drug Herceptin of Roche is one of the many outcomes of molecularly targeted research.

Price of Anti-cancer drugs:

Although in the battle against the much dreaded disease cancer, the newer drugs which are now coming to the market, are quite expensive. Even in the developed markets the healthcare providers are feeling the heat of the cost pressure of such medications, which would in turn impact the treatment decisions. Probably because of this reason, to help the oncologists to appropriately discuss the treatment cost of anti-cancer drugs with the patients, the American Society of Clinical Oncology recently has formed a task force for the same.

The issue is now being fiercely debated even in the developed markets of the world:

In the developed markets of the world, for expensive cancer medications, the patients are required to bear the high cost of co-payment, which may run equivalent to thousands of U.S dollars. Many patients are finding it difficult to arrange for such high co-payments.

Thus, it has been reported that even the National Institute of Health and Clinical Excellence (NICE), UK considers some anti-cancer drugs not cost-effective enough for inclusion in the NHS formulary, sparking another set of raging debate.

‘The New England Journal of Medicine’ in one of its recent articles with detail analysis, expressed its concern over sharp increase in the price of anti-cancer medications, specifically.

Is the global pharmaceutical industry in a ‘gold rush’ to get into the oncology business?

Recently ‘The New York Times’ reported some interesting details. One such was on the global sales of anti-cancer drugs. The paper reports that in 1998 only 12 anti-cancer drugs featured within the top 200 drugs, ranked in terms of global value turnover of each. In that year Taxol was the only anti-cancer drug to achieve the blockbuster status with a value turnover of U.S$ 1 billion.

However, in 2008, within top 200 top selling drugs, 23 were for cancer with three in the top ten, clocking a global turnover of over U.S$ 1 billion each. 20 out of 126 drugs recording a sales turnover over U.S$ billion each, were for cancer, impressive commercial growth story of which is far from over now.

How to address this issue?

Experts are now deliberating upon to explore the possibility of creating a ‘comparative effectiveness center’ for anti-cancer drugs. This center will be entrusted with the responsibility to find out the most cost effective and best suited anti-cancer drugs that will be suitable for a particular patient, eliminating the possibility of wasteful expenses, if any, with the new drugs, just because of their newness and some additional features, which may not be relevant to a particular patient. If several drugs are found to be working equally well on a patient, most cost effective medication will be recommended to the particular individual.

Some new anti-cancer medications are of ‘me-too’ type:

‘The Journal of National Cancer Institute’ reports that some high price anti-cancer drugs are almost of ‘me too’ type, which can at best prolong the life of a patient by a few months or even weeks. To give an example the journal indicated, ‘Erbitux for instance, prolongs survival in lung cancer patients by 1.2 months… at a cost of U.S$ 80, 000 for an 18 – week course of treatment.’

However, the manufacturer of the drug later told ‘The Wall Street Journal’ (WSJ), ‘U.S.$ 80,000 is like a sticker price, but the street price is closer to U.S$ 10,000 per month” i.e around U.S$ 45,000 for 18 week course of treatment.

Conclusion:

Even in the developed countries, the heated debate on expensive new drugs, especially, in the oncology segment is brewing up and may assume a significant proportion in not too distant future. India being one of the promising emerging markets for the global pharmaceutical industry, willy nilly will get caught in this debate, possibly with a force multiplier effect, sooner than later.

By Tapan 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.

The Indian and Global Pharmaceutical Industry – A brief perspective to meet the challenge of change

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A. INDIAN PHARMACEUTICAL INDUSTRY PERSPECTIVE:
January 1, 2005 ushered in a paradigm shift in the Indian Pharmaceutical Industry with the new product patent regime. Future of the industry, thereafter, will never be the same again as what we have been witnessing since 1970.

Gradually India, which was synonymous to cheaper copycat generic versions of products patented in most of the developed and emerging pharmaceutical markets of the world, is expected to transit through a relatively ‘lull period’ for a shorter duration, before it starts helping to establish India as a force to reckon with, in the pharmaceutical research and development (R&D) space of the world. We have seen some glimpses of the era to come by through initial basic research initiatives of companies like, Ranbaxy, Dr. Reddy’s Laboratories (DRL), Piramal Life Science and Glenmark. All such companies are gradually transforming their R&D focus from reverse-engineering to developing new chemical/molecular entity (NCE/NME) or novel drug delivery systems (NDDS).

Opportunities during the paradigm shift:

The low cost base, large English speaking technical talent pool and development of world class R&D facilities of the country will play the role of catalysts in this fast changing process and throw open many new vistas of opportunities for the industry to cash on.

At the same time, generic companies will play even more important global role than ever before. Many of them will no longer remain a local branded generic or generic player, they will open their wings to fly down to the important global destinations. Some others will collaborate with multi-national pharmaceutical companies (MNCs) in their contract research and manufacturing services (CRAMS) initiatives. For others, the domestic pharmaceutical market will still remain big and lucrative enough to grow their business.

However, those companies, which will not be able to effectively combat the ‘challenge of rapid changes’ will either perish or be gobbled-up by the big fishes in the consolidation process of the local and global pharmaceutical industry.

Some perspectives:

Though the domestic Indian pharmaceutical industry caters to around 70% of the requirements of pharmaceuticals of the nation, is highly fragmented. The industry manufactures 8% of the global production being the fourth largest producer of pharmaceuticals in terms of volume and employs over half a million people, mostly by around 300 large to medium sized companies in their local and global operations. Although around 6000 companies are engaged in manufacturing, many of them are third party manufacturers. Small manufacturers, who do not conform to ‘Schedule M’ requirements of the Drugs & Cosmetics Act will face or have already started facing trying times.

In terms of value, at present, India with around U.S 7.8 billion turnover, shares just around 2% of the global market with 14th in ranking. McKinsey forecasts that by 2015 India will record a turnover of U.S$ 20 billion and will improve its rank in the global pharma league table to 10th.

Key markets of the domestic Indian companies:

Although India still remains one of the major markets of the domestic Indian pharmaceutical companies, many of them have already established their business in the US, Europe, Latin America, Russian Federation, Africa, Middle East, South East Asia and even in Japan and Australia.

Contribution of India business of different Indian pharmaceutical companies to their global business varies based on their respective business strategies, from 63% of Zydus Cadila to around 16% of DRL, in 2007-08.

US market followed by Europe, is the main revenue earner for most of the large Indian companies. For example Ranbaxy generated around 27% and 20% of their global turnover from the US and Europe, respectively in 2008.

However, for some other companies like Wockhardt, Europe is a more important market than USA. Wockhardt generated around 54% of their global turnover from Europe, in 2007.

Global market entry strategy:

Different Indian companies adopted different market entry and expansion strategies in their globalization process. However, these have been mostly driven mergers and acquisitions.

Is the Indian pharmaceutical industry facing a dire need for an image makeover?

Despite significant contribution of the Indian pharmaceutical industry to provide relatively cheaper generic medicines to address a wide array of ailments of a vast majority of the population, the image of the industry to its stakeholders or even to public at large, is far from satisfactory.

There are some key perceptual reasons for the same. Some of these are as follows:

1. Pharmaceutical industry is making exorbitant profits at the cost of the basic healthcare needs of the common man.

This perception gets further strengthened when, for example, the National Pharmaceutical Pricing Authority (NPPA) demands crores of rupees from many pharmaceutical companies for overcharging to the patients and notices are served even attaching their properties to recover these dues.

2. The quality of all medicines is not reliable.

This gets vindicated when, for example, the government for its ‘Jan Aushadhi’ program refuses to buy from certain groups of licensed pharmaceutical manufacturers, predominantly on product quality parameters.

3. Some questions, do the pharmaceutical manufacturers in India manufacture medicines following the highest quality norms?

To answer to this question some people argue; if so, why will Indian manufacturers need stringent manufacturing quality certification of the drug regulators of the developed markets to export medicines in the those countries? Why the manufacturing quality certification given to these exporters by the Indian drug regulator is not accepted in those countries?

Moreover, when medicines are imported into India, we accept the quality norms of the drug regulators of the developed countries.

4. Some sections of the media highlight the alleged malpractices by the Indian pharmaceutical companies to promote their mediciness to the medical profession. Such alleged high expenditure towards product promotion is considered by many as avoidable wasteful expenses, the benefit of which can easily be passed on to the patients.

Indian pharmaceutical industry is yet to develop a uniform code of marketing practices, which will be applicable to all the pharmaceutical companies across the board and implement the same effectively, to address such allegations.

Multinational Companies – friends or foes?

To partly salvage the situation, at the same time, one notices open attempts are being made to project the multinational drug companies as demons, the exploiters with a suspicious agenda of thwarting the growth of the domestic companies. In such a scenario, it is indeed perplexing, when one sees the names of the Indian companies at the top of the NPPA lists who allegedly overcharged maximum amount of money to the common man.

What the industry should do jointly:

Under such sad circumstances, the entire industry should come together, take a hard look on itself first and extend its helping hands in public private partnership (PPP) initiatives for the benefit of the civil society.

Such PPP may not necessarily be charitable. It could focus on developing a robust healthcare financing model with industry expertise, for implementation with the government involvement for all strata of society. Or, for example, the industry should come out with a plan, which the US Pharmaceutical trade association – PhRMA has recently proposed to the Obama administration voluntarily on their ‘Medicare’ program, for the senior citizens of America.

For image makeover the name of the game is actual ‘demonstration’ of the good intent and NOT ‘pontification’ of what others should do, highlighting the identified loopholes in the government machineries.

B. GLOBAL PHARMACEUTICAL INDUSTRY PERSPECTIVE:

In the midst of the global financial meltdown, beginning 2009, no one is still able to fathom what impact, if at all, will it leave on to the global pharmaceutical industry.

In the most populous country of the world – China, in April 2009, the government unfolded the blueprints of new healthcare reform measures, covering the entire nation.

Similarly, in the oldest democracy and the richest country of the world – United States of America, President Barak Obama administration expressed their resolve to address important healthcare related issues, as an integral part of the economic reform of the country.

In other developed markets of the world like Europe and Japan intense cost containment pressure is in turn creating significant pricing pressure on pharmaceuticals, triggering the demand of greater use of cheaper generic formulations.

Financial meltdown though eroded the market capitalization of most of the companies; the growth of the global pharmaceutical industry remained unabated till 2008, albeit at a slower pace though. Many markets of the world witnessed a faster generic switch, fuelling higher volume growth of the generic segment of the industry.

Some perspectives:

In 2008 the global pharmaceutical market size was of U.S$ 780 billion, which is expected to grow to U.S$ 937 billion in 2012 registering a 5 year CAGR of around 5.5%. Sales worth U.S$ 253 billion came from just 100 blockbuster drugs, contributing around one third of the global pharmaceutical market.

USA with a retail revenue turnover of U.S$ 206 is the largest market of the world, though currently showing a sharp decline in its growth rate. The growth rate of the US is expected to drop further along with the patent expiry of other blockbuster drugs.

Just three countries of Europe, U.K, France and Germany contributed to 50% of pharmaceutical sales of entire Europe.

Doctors’ are no longer the sole decision maker to prescribe a medicinal product:

Just like in the US, one witnesses a change in the role of the medical professionals as a key decision maker to prescribe medicines for the patients in Europe, as well. More and more, payors like health insurance companies, NHS are assuming that role.

A shift from small molecule pharmaceuticals to large molecule biotech products:

As small molecule pharmaceuticals are coming under intense pricing pressure, the focus of new drug launches is shifting towards more expensive large molecule biotech drugs with much higher margins of profit increasing the treatment cost further.

The brighter side:

Growing middle class population with higher disposable income together with increase spending of the government towards healthcare, in most of these countries, are making the pharmaceutical industry grow at a much faster pace in the emerging markets like, Brazil, Venezuela, Russia, China, India, Turkey, Mexico and Korea. However, the revenue and profit earned by the global companies from the developed markets are still far more than the emerging markets of the world.

Access to healthcare still remains a global issue:

Despite so much of progress of the global pharmaceutical industry, access to healthcare still remains an issue, besides others, even in some of the developed markets of the world. The waiting period of a patient just to get an appointment of the doctor is increasing fast. Even in the US about 47 million of US citizens still are not covered by insurance, besides many more of them who remain underinsured.

Global pharmaceutical industry is still considered a part of the problem:

Despite meeting the unmet needs of the patients through intensive research and development initiatives and various global access programs for the needy and the downtrodden, the civil society all over the world, including in the developed countries, still believes that the pharmaceutical industry is a part of the global healthcare problems, though relatively more in the developing and the least developed economies of the world. These perceptions are mainly due to high costs of patented drugs, high research expenditure for low value added drugs and seemingly unethical marketing practices of the industry across the board with varying degree.

Conclusion:

The pharmaceutical industry, the ultimate savior in the battle against disease, is now passing through a critical phase both locally and globally and both in terms of its image and capacity to deliver newer medicines ensuring their affordable access, the reason of which may vary from country to country.

Be that as it may, the industry has been making significant contribution to the humanity to meet the ever increasing unmet needs of the patients. However, expectations of the stakeholders are also growing and justifiably so. There is no time for the industry, in general, to ponder much now or rest on the past laurels. It is about time to walk the never ending extra mile, for the global patients’ sake.

By Tapan 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.

Healthcare reform process and policy measures to reduce socio-economic inequalities should be implemented in tandem for optimal economic progress of a nation.

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Important research studies indicate that health of an individual is as much an integral function of the related socio-economic factors as it is influenced by the person’s life style and genomic configurations.It has now been well established that socio-economic disparities including the educational status lead to huge disparity in the space of healthcare.Healthcare preventive measures with focus just on disease related factors like, hygiene, sanitation, alcohol abuse, un-protected sex, smoking will not be able to achieve the desired outcome, unless the underlying socio-economic issues like, poverty, hunger, education, justice, values, parental care are not properly addressed.

It has been observed that reduction of social inequalities ultimately helps to effectively resolve many important healthcare issues. Otherwise, the minority population with adequate access to knowledge, social and monetary power will always have necessary resources available to address their concern towards healthcare, appropriately.

Regular flow of newer and path breaking medicines to cure and effectively treat many diseases, have not been able to eliminate either trivial or dreaded diseases, alike. Otherwise, despite having effective curative therapy for malaria, typhoid, cholera, diarrhoea/dysentery and venereal diseases, why will people still suffer from such illnesses? Similarly, despite having adequate preventive therapy, like vaccines for diphtheria, tuberculosis, polio, hepatitis and measles, our children still suffer from such diseases. All these continue to happen mainly because of socio-economic considerations.

Following are some research studies, which I am using just as examples to vindicate the point:

• HIV/AIDs initially struck people across the socio-economic divide. However, people from higher socio-economic strata responded more positively to the disease awareness campaign and at the same time more effective and expensive drugs started becoming available to treat the disease, which everybody suffering from the ailment cannot afford. As a result, HIV/AIDS are now more prevalent within the lower socio-economic strata of the society.

• Not so long ago, people across the socio-economic status used to consume tobacco in many form. However, when tobacco smoking and chewing were medically established as causative factors for lung and oral cancers, those coming predominantly from higher/middle echelon of the society started giving up smoking and chewing of tobacco, as they accepted the medical rationale with their power of knowledge. Unfortunately the same has not happened with the people of relatively lower socio-economic status. As a consequence of which, ‘Bidi’ smoking, ‘Gutka’/tobacco chewing have not come down significantly within people belonging to such class, leading to more number of them falling victim of lung and oral cancer.

Thus, in future, to meet the unmet needs when more and more sophisticated and high cost disease treatment options will be available, it will be those people with higher socio-economic background who will be benefitted more with their education, knowledge, social and monetary power. This widening socio-economic inequality will consequently increase the disparity in the healthcare scenario of the country.

Phelan and Link in their research study on this issue has, therefore, remarked:

“Breakthroughs in medical science can do a lot to improve public health, but history has shown that, more often than not, information about and access to important new interventions are enjoyed primarily by people at the upper end of the socioeconomic ladder. As a result, the wealthy and powerful get healthier, and the gap widens between them and people who are poor and less powerful.”

Conclusion:

Though healthcare reform measures are essential for the progress of any nation, without time bound simultaneous efforts to reduce the socio-economic inequalities, it will not be easy for any nation to achieve the desirable outcome.

By Tapan 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.

The need for urgent healthcare reform in India: The way forward.

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If we look at the history of development of the developed countries of the world, we shall see that all of them had invested and even now are investing to improve the social framework of the country where education and health get the top priority. Continuous reform measures in these two key areas of any nation, have proved to be the key drivers of their economic growth.Very recently we have witnessed some major reform measures in the area of ‘primary education’ in India. The right to primary education has now been made a fundamental right of every citizen of the country, through a constitutional amendment.As focus on education is very important to realize the economic potential of any nation, so is the healthcare space of the country. India will not be able to realize its dream to be one of the economic superpowers of the world without sharp focus and significant resource allocation in these two areas.

Healthcare in India:

There are various hurdles though to address the healthcare issues of the country effectively, but these are not definitely insurmountable. National Rural health Mission is indeed an admirable scheme announced by the Government. However, many feel that poor governance will not be able make this scheme to become as effective as it should be. Implementation of such schemes warrants effective leadership at all levels of implementation. Similar apprehensions can be extended to many other healthcare initiatives including the health insurance program for below the poverty line (BPL) population of the country.

A quick snapshot on the overall healthcare system of India:

In terms of concept, India has a universal healthcare system where health is primarily a state subject.

Primary Health Centres (PHCs) located in the cities, districts or rural areas provide medical treatment free of cost to the citizens of the country. The focus areas of these PHCs, as articulated by the government, are the treatment of common illnesses, immunization, malnutrition, pregnancy and child birth. For secondary or tertiary care, patients are referred to the state or district level hospitals.

The public healthcare delivery system is grossly inadequate and does not function with a very high degree of efficiency, though some of the government hospitals like, All India Institute of Medical Science (AIIMS) are among the best hospitals in India.

Most essential drugs, if available, are dispensed free of charge from the public hospitals/clinics.
Outpatient treatment facilities available in the government hospitals are either free or available at a nominal cost. In AIIMS an outpatient card is available at a nominal onetime fee and thereafter outpatient medical advice is free to the patient.

However, the cost of inpatient treatment in the public hospitals though significantly less than the private hospitals, depends on the economic condition of the patient and the type of facilities that the individual will require. The patients who are from below the poverty line (BPL) families are usually not required to pay the cost of treatment. Such costs are subsidized by the government.

However, in India only 35 percent of the population have access to affordable modern medicines. The healthcare facilities in the public sector are not only grossly inadequate, but also understaffed and underfinanced. As a result, whatever services are available in most of the public healthcare facilities, are of substandard quality to say the least, which compel patients to go for expensive private healthcare providers. Majority of the population of India cannot afford such high cost of private healthcare providers though of much better quality.

A recent report on healthcare in India:

A recent report published by McKinsey Quarterly , titled ‘A Healthier Future for India’, recommends, subsidising health care and insurance for the country’s poor people would be necessary to improve the healthcare system. To make the healthcare system of India work satisfactorily, the report also recommends, public-private partnership for better insurance coverage, widespread health education and better disease prevention.

The way forward:

In my view, the country should adopt a ten pronged approach towards a new healthcare reform process:

1. The government should assume the role of provider of preventive and primary healthcare across the nation.

2. At the same time, the government should play the role of enabler to create public-private partnership (PPP) projects for secondary and tertiary healthcare services at the state and district levels.

3. Through PPP a robust health insurance infrastructure needs to be put in place, very urgently.

4. These insurance companies will be empowered to negotiate all fees payable by the patients for getting their ailments treated including doctors/hospital fees and the cost of medicines, with the concerned persons/companies, with a key objective to ensure access to affordable high quality healthcare to all.

5. Create an independent regulatory body for healthcare services to regulate and monitor the operations of both public and private healthcare providers/institutions, including the health insurance sector.

6. Levy a ‘healthcare cess’ to all, for effective implementation of this new healthcare reform process.

7. Effectively manage the corpus thus generated to achieve the healthcare objectives of the nation through the healthcare services regulatory authority.

8. Make this regulatory authority accountable for ensuring access to affordable high quality healthcare services to the entire population of the country.

9. Make operations of such public healthcare services transparent to the civil society and cost-neutral to the government, through innovative pricing model based on economic status of an individual.

10. Allow independent private healthcare providers to make reasonable profit out of the investments made by them

By Tapan 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.

Healthcare reform for the needy and poor in the richest and the most populous countries of the world. What about the largest democracy of our planet?

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Healthcare reform to ensure access to affordable high quality healthcare services for all, is considered as an integral part of the economic progress of any country. During recent global financial meltdown, this need became visible all over the world, even more.In my last article, I wrote how the most populous country of the earth – China, unfolded the blueprints of a new healthcare reform process in April, 2009, taking an important step towards this direction.Around the same time, in the richest country of the world, after taking over as the new President of the United States of America, President Barak Obama also reiterated his election campaign pledge for a comprehensive healthcare reform process in the USA.

These measures, in both the countries, intend to ensure access to affordable, high quality health care coverage and services to every citizen of the respective nations. In America, the reform process also intends to bridge the healthcare coverage gap in their Medicare prescription drugs program for the senior citizens.

The pharmaceutical industry response to healthcare reform in the USA:

Responding to this major policy initiative of the government, very responsibly David Brennan, Chief Executive Officer of AstraZeneca and the Chairman of Pharmaceuticals Research and Manufacturers of America (PhRMA) announced recently:

“PhRMA is committed to working with the Administration and Congress to help enact comprehensive health care reform this year. We share a common goal: every American should have access to affordable, high-quality health care coverage and services. As part of that reform, one thing that we have agreed to do is support legislation that will help seniors affected by the coverage gap in the Medicare prescription drug benefit.”

For this purpose Brennan publicly announced the following:

1. America’s pharmaceutical research and biotechnology companies have agreed to provide a 50 percent discount to most beneficiaries on brand-name medicines covered by a patient’s Part D plan of Medicare, when purchased in the coverage gap.

2. The entire negotiated price of the Part D covered medicine purchased in the coverage gap would count toward the beneficiary’s out-of-pocket costs, thus lowering their total out-of-pocket spending.

American Pharmaceutical Industry pledges U.S$ 80 billion towards healthcare reform of the nation:

With the above announced commitment, it has been reported that the US Pharmaceutical and Biotech companies have offered to spend U.S$ 80 billion to help the senior citizens of America to be able to afford medicines through a proposed overhaul of the healthcare system of the country.

This is a voluntary pledge by the American pharmaceutical industry to reduce what it charges the federal government over the next 10 years.

What is the Medicare plan of America?

According to the explanation of the program given by Medicare, it is a prescription drug benefit program. Under this program, senior citizens purchase medicines from the pharmacies. The first U.S$ 295 will have to be paid by them. Thereafter, the plan covers 75 percent of the purchases of medicines till the total reaches U.S$ 2,700. Then after paying all costs towards medicines ‘out of pocket’ till it reaches U.S $ 4,350, patients make a small co-payment for each drug until the end of the year.

American citizens’ support on the new healthcare reform of President Barak Obama:

A leading American daily reports that American citizens overwhelmingly support substantial changes to the country’s healthcare system and are strongly behind a government run insurance plan to compete with private insurers.

According to the latest New York Times/CBS News poll most Americans would be willing to pay higher taxes, so that every individual could have health insurance. Unlike in India, Americans feel that the government could do a better job of holding down healthcare costs than the private sector.

Current American healthcare: High quality – high cost

85 percent of respondents in this survey said the country’s healthcare system should be completely overhauled and rebuilt. The survey also highlighted that American citizens are far more unsatisfied with the cost of healthcare rather than its quality.

President Obama has been repeatedly emphasizing the need to reduce costs of healthcare and believes that the health care legislation is absolutely vital to American economic recovery. 86 percent of those polled in the survey opined that the rising costs of healthcare pose a serious economic threat.

An interesting recent study from the George Washington University School of Public Health and Health Services:

A recent study conducted by the George Washington University School of Public Health and Health Services reports that as a part of the new healthcare reform initiative in the US, if the health centers are expanded from the current 19 million to 20 million patients, the country can save U.S$ 212 billion from 2010 to 2019 against a cost of U.S$ 38.8 billion that the government would have incurred to build the centers. This is happening because of lower overall medical expenses for these patients.

Last year the health centers already generated health system savings of U.S$ 24 billion.

What then is happening in the largest democracy of the planet – our own India, towards such healthcare reform?

India in its 1983 National Healthcare Policy committed ‘healthcare to all by the year 2000′. However, the fact is, in 2009, only 35 percent of Indian population is having access to affordable modern medicines. So many commendable policy announcements have been made by the government thereafter. Due to poor governance, nothing seems to work effectively in our country.

Conclusion:

People with access to the corridors of power appear to believe that when the country will clock the magic number of GDP growth of 9 percent, India will have adequate resources to invest in healthcare. Till then frugal healthcare initiatives will continue at the abysmal level of speed of execution, denying access to affordable modern medicines to 65 percent of population of the country.

If and when the healthcare reform plans will be unfolded in India, hopefully like in the USA, all stakeholders will come forward with their own slice of contribution to ensure access to affordable high quality healthcare to all the citizens of our nation.

When the world believes that healthcare reform measures to cover the entire population of the country to provide access to affordable, high quality healthcare services is fundamental to economic progress of a country, the government of India seems to nurture a diametrically opposite view in this regard. The policy makers appear to sincerely believe that 9 percent economic growth is essentiall to provide access to affordable high quality healthcare to all.

Are we engaged in the well known “Catch 22” debate at the cost of health to all?

By Tapan 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.

China has recently unfolded the blueprints of its new healthcare reform measures, when will India do so?

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Early April, 2009, China, a country with 1.3 billion people, unfolded a plan for a new healthcare reform process for the next decade to provide safe, effective, convenient and affordable healthcare services to all its citizens. A budgetary allocation of U.S $124 billion has been made for the next three years towards this purpose.
China’s last healthcare reform was in 1997:

China in 1997 took its first reform measure to correct the earlier practice, when the medical services used to be considered just like any other commercial product, as it were. Very steep healthcare expenses made the medical services unaffordable and difficult to access to a vast majority of the Chinese population.

Out of pocket expenditure towards healthcare services also increased in China…but…:

The data from the Ministry of Health of China indicate that out of pocketl spending on healthcare services had doubled from 21.2 percent in 1980 to 45.2 percent in 2007. At the same time the government funding towards healthcare services came down from 36.2 percent in 1980 to 20.3 percent in the same period.

A series of healthcare reforms was effectively implemented since then like, new cooperative medical scheme for the farmers and medical insurance for urban employees, to address this situation.

The core principle of the new phase of healthcare reform in China:

The core principle of the new phase of reform is to provide basic health care as a “public service” to all its citizens. This is the pivotal core principle of the new wave healthcare reform process in China where more government funding and supervision will now play a critical role.

The new healthcare reform process in China will, therefore, ensure basic systems of public health, medical services, medical insurance and medicine supply to the entire population of China. Priority will be given for the development of grass-root level hospitals in smaller cities and rural China and the general population will be encouraged to use these facilities for better access to affordable healthcare services. However, public, non-profit hospitals will continue to be one of the important providers of medical services in the country.

Medical Insurance and access to affordable medicines:

Chinese government plans to set up diversified medical insurance systems. The coverage of the basic medical insurance is expected to exceed 90 percent of the population by 2011. At the same time the new healthcare reform measures will ensure better health care delivery systems of affordable essential medicines at all public hospitals.

Careful monitoring of the healthcare system by the Chinese Government:

Chinese government will monitor the effective management and supervision of the healthcare operations of not only the medical institutions, but also the planning of health services development, and the basic medical insurance system, with greater care.

It has been reported that though the public hospitals will receive more government funding and be allowed to charge higher fees for quality treatment, however, they will not be allowed to make profits through expensive medicines and treatment, which is a common practice in China at present.

Drug price regulation and supervision:

The new healthcare reform measures will include regulation of prices of medicines and medical services, together with strengthening of supervision of health insurance providers, pharmaceutical companies and retailers.

As the saying goes, ‘proof of the pudding is in its eating’, the success of the new healthcare reform measures in China will depend on how effectively these are implemented across the country.

Healthcare scenario in India:

Per capita public expenditure towards healthcare in India is much lower than China and well below other emerging countries like, Brazil, Russia, China, Korea, Turkey and Mexico.

Although spending on healthcare by the government gradually increased in the 80’s, overall spending as a percentage of GDP has remained quite the same or marginally decreased over last several years. However, during this period private sector healthcare spend was about 1.5 times of that of the government.

It appears, the government of India is gradually changing its role from the ‘healthcare provider’ to the ‘healthcare enabler’.

High ‘out of pocket’ expenditure towards healthcare in India:

According to a study conducted by the World Bank, per capita healthcare spending in India is around Rs. 32,000 per year and as follows:

- 75 per cent by private household (out of pocket) expenditure
- 15.2 per cent by the state governments
- 5.2 per cent by the central government
- 3.3 percent medical insurance
- 1.3 percent local government and foreign donation

Out of this expenditure, besides small proportion of non-service costs, 58.7 percent is spent towards primary healthcare and 38.8% on secondary and tertiary inpatient care.

Role of the government:

Unlike, recent focus on the specific key areas of healthcare in China, in India the national health policy falls short of specific and well defined measures.

Health being a state subject in India, poor coordination between the centre and the state governments and failure to align healthcare services with broader socio-economic developmental measures, throw a great challenge in bringing adequate reform measures in this critical area of the country.

Healthcare reform measures in India are governed by the five-year plans of the country. Although the National Health Policy, 1983 promised healthcare services to all by the year 2000, it fell far short of its promise.

Underutilization of funds:

It is indeed unfortunate that at the end of most of the financial years, almost as a routine, the government authorities surrender their unutilized or underutilized budgetary allocation towards healthcare. This stems mainly from inequitable budgetary allocation to the states and lack of good governance at the public sector healthcare delivery systems.

Health insurance in India:

As I indicated above, due to unusually high (75 per cent) ‘out of pocket expenses’ towards healthcare services in India, a large majority of its population do not have access to such quality, high cost private healthcare services, when public healthcare machineries fail to deliver.

In this situation an appropriate healthcare financing model, if carefully worked out under ‘public – private partnership initiatives’, is expected to address these pressing healthcare access and affordability issues effectively, especially when it comes to the private high cost and high quality healthcare providers.

Although the opportunity is very significant, due to absence of any robust model of health insurance, just above 3 percent of the Indian population is covered by the organised health insurance in India. Effective penetration of innovative health insurance scheme, looking at the needs of all strata of Indian society will be able to address the critical healthcare financing issue of the country. However, such schemes should be able to address both domestic and hospitalization costs of ailments, broadly in line with the health insurance model working in the USA.

The Government of India at the same time will require bringing in some financial reform measures for the health insurance sector to enable the health insurance companies to increase penetration of affordable health insurance schemes across the length and the breadth of the country.

Conclusion:

It is an irony that on one side of the spectrum we see a healthcare revolution affecting over 33 percent population of the world. However, just on the other side of it where around 2.4 billion people (about 37 percent of the world population) reside in two most populous countries of the world – India and china, get incredibly lesser public healthcare support and are per forced to go for, more frequently, ‘pay from pocket’ pocket type expensive private healthcare options, which many cannot afford or just have no access to.

In both the countries, expensive ‘pay from pocket’ healthcare service facilities are increasing at a greater pace, whereas public healthcare services are not only inadequately funded, but are not properly managed either. Implementation level of various excellent though much hyped government sponsored healthcare schemes is indeed very poor.

Moreover, despite various similarities, there is a sharp difference between India and China at least in one area of the healthcare delivery system. The Chinese Government at least guarantees a basic level of publicly funded and managed healthcare services to all its citizens. Unfortunately, the situation is not the same in India, because of various reasons.

Over a period of time, along with significant growth in the respective economies of both the countries, with China being slightly ahead of India for many reasons, life expectancy in both India and China has also increased significantly, which consequently has lead to increase in the elderly population of these countries. The disease pattern also has undergone a shift in both the countries, mainly because of this reason, from infectious to non-infectious chronic illnesses like, hypertension, diabetes, arthritis etc. further increasing the overall burden of disease.

High economic growth in both the countries has also lead to inequitable distribution of wealth, making many poor even poorer and the rich richer, further complicating the basic healthcare issues involving a vast majority of poor population of India.

A recently published report indicates that increasing healthcare expenditure burden is hitting the poor population of both the countries very hard. The report further says that considering ‘below the poverty line’ (BPL) at U.S$ 1.08 per day, out of pocket healthcare expenditure has increased the poverty rate from 31.1 percent to 34.8 percent in India and from 13.7 percent to 16.7 percent in China.

To effectively address this serious situation, the Chinese Government has announced its blueprint for a new healthcare reform measures for the coming decade. How will the Government of India respond to this situation? It will indeed be interesting to watch.

By Tapan 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.

Telemedicine – one of the unsung advances towards improving access to healthcare services in India.

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Telemedicineis gradually becoming popular in India, like in many other countries of the world. This emerging technology based healthcare service, will surely meet the unmet needs of the patients located in the far flung areas, by providing them access to specialists to treat their even tertiary level of ailments, without requiring to travel outside their villages or small towns where they reside. Telemedicine is therefore emerging as a convenient and cost-effective way of treating even complicated diseases of the rural folks.The definition:The World Health Organisation (WHO) has defined telemedicine as follows:

“The delivery of healthcare services, where distance is a critical factor, by all healthcare professionals using information and communication technologies for the exchange of valid information for diagnosis, treatment and prevention of disease and injuries, research and evaluation, and for continuing education of healthcare providers, all in the interests of advancing the health of individuals and their communities”

The applications of Telemedicine:

1. To extend affordable quality healthcare services to those places where these are not available due to basic healthcare infrastructure and delivery issues.

2. Electronic transmission of clinical information of both synchronous and asynchronous types, involving voice and data transfer of patients to distantly located experts and get their treatment advice, online.

3. To effectively train the medics and the paramedics located in distant places and proper management of healthcare delivery/service systems.

4. Disaster management.

The Process:

The process can be:

- ‘Real time’ or synchronous when through a telecommunication link real time interaction between the patients and doctors/experts can take place. This technology can be used even for tele-robotic surgery.

- ‘Non-real time’ or asynchronous type, which involves transmission of stored diagnostics/medical data and other details of the patients to the specialists for assessing off-line and advice them at a time of convenience of the specialists.

These processes facilitate access to specialists’ healthcare services by the rural patients and the rural medical practitioners reducing avoidable travel time and related expenses. At the same time such interaction helps upgrading the knowledge of the rural medical practitioners and paramedics.

Relevance of Telemedicine in India:

Telemedicine is very relevant to India as it faces a scarcity of both hospitals and medical specialists. In India for every 10,000 of the population just 0.6 doctor is available. According to the Planning Commission, India is short of 600,000 doctors, 10 lakh nurses and 200,000 dental surgeons. Over 72 percent of Indians live in rural areas where facilities of healthcare are still grossly inadequate. Most of the specialists are reluctant to go to the rural areas. In addition, 80 percent of doctors, 75 percent of dispensaries and 60 percent of hospitals, are situated in urban India.

Telemedicine can bridge the healthcare divide:

Equitable access to healthcare is the overriding goal of the National Health Policy 2002. Telemedicine has a great potential to ensure that the inequities in the access to healthcare services are adequately addressed by the country.

The market of Telemedicine in India:

Frost & Sullivan has estimated the telemedicine market of India at US$3.4 million, which is expected to record a CAGR of over 21 percent between 2007 and 2014.

Practice of Telemedicine in India:

Not only the central government of India, many state governments and private players are also entering into telemedicine in a big way with the Indian Space Research Organization (ISRO) playing a pivotal role.

Telemedicine now shows an immense potential, within the frugal healthcare infrastructure of India, to catapult rural healthcare services, especially secondary and tertiary, to a different level altogether. Current data indicate that over 278 hospitals in India have already been provided with telemedicine facilities. 235 small hospitals including those in rural areas are now connected to 43 specialty hospitals. ISRO provides the hospitals with telemedicine systems including software, hardware, communication equipment and even satellite bandwidth.

In 1999, India based one of the largest healthcare providers in Asia, The Apollo Hospitals Group also entered into telemedicine space. Today, the group has quite successfully established over 115 telemedicine locations in India, It has been reported that a tele-consultation between the experts and the rural centre ranges from 15 to 30 minutes in these facilities.

The state governments and private hospitals are now required to allocate funds to further develop and improve penetration of Telemedicine facilities in India.

Issues with Telemedicine in India:

Telemedicine is not free from various complicated legal, social, technical and consumer related issues, which need to be addressed urgently.

- Many a time, doctors feel that for Telemedicine they need to work extra hours without commensurate monetary compensation, as per their expectations.

- The myth created that setting up and running a Telemedicine facility is expensive needs to be broken, as all these costs can be easily recovered by any hospital through nominal charges to the patients.

- Inadequate and uninterrupted availability of power supply could limit proper functioning of a telemedicine centre.

- High quality of Telemedicine related voice and data transfer is of utmost importance. Any compromise in this area may have significant impact on the treatment outcome of a patient.

- Lack of trained manpower for Telemedicine can be addressed by making it a part of regular medical college curriculum.

- Legal implications, if arise, out of any Telemedicine treatment need to be clearly articulated.

- A system needs to be worked out to prevent any possible misuse or abuse of the confidential Telemedicine treatment data of a patient.

- Reimbursement procedure of Telemedicine treatment costs by the medical insurance companies needs to be effectively addressed.

Conclusion:

Some significant and path breaking advances have indeed been made in the field of Telemedicine in India. It is unfortunate that not enough awareness has been created, as yet, on this novel technology based healthcare service for the common man. The pioneering role of ISRO in this field is also not known to many. It appears that advances of Telemedicine in India to extend quality healthcare services, especially, to our rural folks will continue to remain unsung for some more time. Until of course our all powerful ‘Fourth Estate’ steps in to initiate a healthy discussion on this subject within the civil society.

By Tapan 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.