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Drug Price Control And National Health Security

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‘Without Providing Affordable Medicines, There Can’t be Health Security’, said the Union Minister of Chemicals and Fertilizers of India, as reported on September 22, 2017. Although, the Minister made this remark while discussing Government price control on cardiac stents in India, let me dwell on the subject based on the above news headline by asking: Is drug price control improving access to medicines for greater ‘Health Security’ of the country?

It’s no rocket science to understand that making affordable drugs ‘available’ in requisite quantity for all, is essential, basically, for improving ‘access’ to medicines. Nevertheless, the mere availability of drugs is no guarantee for their improving access to all.

If we take a closer look at the well-articulated key objectives of the Ministry of Chemicals and Fertilizers, under which both the Department of Pharmaceutical (DoP) and the National Pharmaceutical Pricing Authority (NPPA) belong, this dichotomy will be easier to fathom.

The key objective of the ‘National Pharmaceutical Pricing Policy: 2012’, which is operational today, reads as: “To put in place a regulatory framework for pricing of drugs so as to ensure availability of required medicines – “essential medicines” – at reasonable prices even while providing sufficient opportunity for innovation and competition to support the growth of the industry, thereby meeting the goals of employment and shared economic well-being for all. The reasons are further elaborated later in the Policy Document.”

Similarly, according to the NPPA, one of the key objectives of drug price control in India is to ensure abundant availability, at reasonable prices of essential and life-saving and prophylactic medicines of good quality. Hence, the current key focus of the DoP and NPPA, on paper, does not go beyond making ‘affordable drugs available for all.”

Thus, the crucial point to ponder: Is ongoing drug price control, improving even availability of medicines for all to attain greater ‘health security’ of the country, as the Union Minister underscores?

A course correction without flagging the new course:

The Draft Pharma Policy 2017 makes an important course correction to address this critical issue. It expresses its objective in this important area slightly differently, by adding the word ‘accessible’, as: “Making essential drugs ‘accessible’ at ‘affordable prices’ to the common masses.”

Intriguingly, the draft remains mute, when it boils down to answering the fundamental question, how would this new policy improve access to affordable drugs for the common masses, without having any jurisdiction to improving access to overall health care? That turf, unquestionably, belongs to the Ministry of Health. Thus, I reckon, achieving this modified goal, in its totality, is no more than a rhetoric.

Would better availability guarantee greater patient access to drugs?

As things stand today, it is quite unlikely to happen. The broad process of improving access to health care in a holistic way, is enshrined in the  National Health Policy 2017, which is already in place. It assures the nation of progressively achieving ‘Universal Health Coverage (UHC)’. It outlines measures to improve the availability, access and affordability for quality secondary and tertiary care services, with significant reduction in ‘out of pocket expenditure’ on health care. The policy also emphasizes that this process would considerably reduce the proportion of households experiencing catastrophic health expenditures, and consequent impoverishment.

The silo mentality won’t work:

Although, the Ministry of Health is primarily responsible for meeting universal access to health care, which includes drugs, the Ministry of Chemicals and Fertilizers too, shoulders a crucial responsibility in this area. Thus, attaining the Health and Pharma policy goals – individually, collectively and meaningfully, both these Ministries need to work closely together, along with the State Governments, in the true spirit of cooperative federalism. The silo mentality has not worked and won’t work, ever, to meet health aspirations of the people.

Access to health care – a prerequisite to improving access to affordable drugs:

As I see it, access to health care for all is a prerequisite to improving access to affordable drugs for country’s ‘health security’. Without providing access to requisite health care, making affordable drugs available for all, does not make much sense, if at all. This is because, patients will buy or get medicines only when a medical or paramedical professional will advise and prescribe them what to buy while treating any particular ailment.

Is the key pharma policy goal anywhere near its target?

Be that as it may, let me now try to gauge whether even the current key goal of the pharma policy to make an increasing quantity of affordable drugs available to more number of the population is anywhere near its target or not.

Capturing the impact of the present pharma policy on the ‘health’ of Indian pharma industry, the Annual Report 2016-17 of the Department of Pharmaceuticals (DoP) acknowledges that owing to the Government’s efforts to make medicines affordable, the domestic Pharma market witnessed a slowdown in the ongoing financial year. The industry registered a decline in growth of 7.4 percent over the corresponding figure for 2014 -15, with a similar aftermath in its financial performance.

Interestingly, a Press Release of Ministry of Chemicals and Fertilizers of September 27, 2016 claims that ‘ceiling prices’ of 464 formulations fixed after announcement of NLEM, 2015 and Revised Schedule-I, resulted in savings of Rs 2288 crore for consumers. Let me also add that a September 22, 2017 tweet of the same Union Minister gives a much higher number in this regard, which includes cardiac stents, though.

Fair enough, in that increasing patient access to affordable drugs ought to get reflected in the reasonable incremental volume growth of the Indian Pharmaceutical Market (IPM), at least, of those products, which feature in the National List of Essential Medicines (NLEM)? Contrary to this expectation, according to an article published by ‘Pharmabiz’ website on the CPhI India Special supplement in December 2016, ‘over the past 3 years (FY 2013 – FY 2016), the IPM has grown at a CAGR of ~ 11%, much lower than its historical average growth rate of 15%.’

Thus, both the private retail audit data, and also the submission of the DoP clearly indicate that this has not happened, as a desired outcome of drug price control.

Drug price regulations aren’t irrelevant either:

My above argument doesn’t also mean that drug price control, or stringent price monitoring, or tough price negotiation – in whatever way one may call it, is of no use; even where Universal Health Care (UHC) is up and running. This is regardless of whether this universal care is insurance driven, as in the United States, or state funded, as in the United Kingdom. As I said before, access to health care for all is a prerequisite to improving access to affordable drugs. I stressed this point briefly in one of my recent articles published in this blog, while focusing on another important development.

Drug price regulation in the UHC countries:

In case of insurance driven UHC, insurance companies or related payers, or even the regulators, mostly enforce stringent control on drug prices, as is currently happening in the United States. This fact is vindicated by a May 29, 2017 report that indicates: “The pharma industry, under the constant glare of the US drug regulator, has to contend now with pricing pressures in the American market.” The report further highlighted: “From Sun Pharma and Lupin to Glenmark, Dr. Reddy’s and the others, price erosion in generic drugs has been a common anguish as they declared their results for the fourth quarter ended March 31. For some of these companies, more than 40 per cent of their revenues come from the US market. The developments came at a time new launches in the US – at least for some of them – have taken a hit because of regulatory action. Pricing pressure in generics is not new, but this has exacerbated in recent times, with experts warning of further deterioration.”

Similarly, where the UHC is funded by the State, such as in the United Kingdom, prices of branded pharmaceuticals supplied to the National Health Service (NHS), are controlled either by the ‘Pharmaceutical Price Regulation Scheme (PPRS)’ or by the ‘Health Service Branded Medicines Regulations 2008’. The situation is no different virtually in the entire Europe.

Moreover, in Japan, where UHC functions so immaculately, the regulatory officials of the country announced in December, as reported on 7th March 2017, the Government plans to review drug prices more frequently –  annually for all therapies and quarterly for the newest, and most expensive ones that are used widely. Over recent months, the price of Opdivo, a blockbuster cancer drug from Bristol-Myers Squibb Co. and Japan’s Ono Pharmaceutical Co., was halved in Japan following a 32 percent cut in April for Gilead Sciences Inc.’s hepatitis cure Sovaldi, the report said.

In addition, an OECD report dated January 16, 2017 observes: “The proliferation of high-cost medicines and rising drug prices are increasing pressures on public health spending and calling into question the pharmaceutical industry’s pricing strategies. Governments need to work with the industry and regulators to define a new approach to the development and use of new health technologies that encourages innovation while also delivering more affordable and value for money treatments.”

Hence, drug price regulations aren’t irrelevant, either in India or even in countries with a robust UHC system in place, not just yet.

The rationale behind drug price control in UHC countries and India:

The major difference in the rationale of drug price control between the countries with UHC and others, such as India is as follows:

  • UHC countries extend health coverage between 80 to 100 percent of the population, on an average, with a very low percentage of ‘out of pocket expenses’ on drugs. Hence, the Government and other payers want to keep their own cost of drugs within a reasonable limit with drug price control, though its methodology varies from country to country.
  • On the other hand, in countries, such as India, where UHC is not available, over 70 percent of the population incur ‘out of pocket’ expenses on health care – and over 60 percent of which is spent on drugs. Hence, the Government intends to ensure a significant reduction in ‘out of pocket expenditure’ towards medicines, by trying to make more affordable drugs available to many through drug price control.

Conclusion:

All health care related policy measures of the Government are important for the nation. As I know, the related discussion papers are circulated by the Government only after several informal and ongoing discussions on the subject with the stakeholders, and considering other feedbacks received in that process.

Despite this general mechanism, several points of draft proposals, or even the final policy, are often not liked by all, triggering a raging debate and inviting stringent criticisms, including disagreement from other ministries. For example, according to reports: “Even as Prime Minister Narendra Modi announced the government’s intention to ensure access to affordable medicines, the government policy think tank NITI Aayog seems to be pushing for greater deregulation of drug prices and to disempower India’s drug price regulator.” Just as many others, I also often participate in such debates.

That said, improving not just availability, but in tandem with greater access to affordable drugs, would play a key role to foster overall ‘Health Security’ of the country. Drug price control or its equivalent measures, alone, does not improve access to affordable drugs, except shaving off significant revenue and profit of the pharma companies. Whether the appropriate terminology in this case would be ‘profit’ or ‘profiteering’, is part of a separate debate, altogether.

Neither, impeccable sets of pharma and health policies, implemented in-silo by the two different ministries, will help achieve this goal. As is well researched, an excellent policy with shoddy or improper implementation, fetches far worse outcome than an average policy when implemented well, and in close coordination with other policies having common goals. This holds good even while striving for a robust ‘Health Security’ for the country.

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.

 

State funded ‘Universal Healthcare’ in India: A laudable initiative of the Government

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January 11, 2011 edition of ‘The Lancet’, in the article authored by Prof. K. Srinath Reddy et al titled, “Towards achievement of universal health care in India by 2020: a call to action”, proposed creation of an Integrated National Health System in India through provision of universal health insurance, establishment of autonomous organizations to enable accountable and evidence-based good-quality health-care practices and at the same time reduce the high out-of-pocket expenditure on health care through a well regulated integration of the private sector within the national health-care system of India, by 2020.

About six months later, in its August 16, 2011 issue ‘The Times of India’ reported that the Planning Commission of India is currently framing up the blue print for a universal health insurance scheme which would provide a minimum cover to everyone in the country. It is expected that a surcharge will be levied for this Universal Health Care (UHC) initiative.

Though UHC is indeed a very commendably initiative for India as a nation,  some dubious and self-styled ‘healthcare crusaders’ have already started raising the bogey of ‘the inadequacy’ of the scheme as a diversionary measure to misguide the easily vulnerable common man of the country.

Efforts being made to sensationalize the current status of the Indian healthcare system:

Even in the backdrop of UHC initiative, the following sensational headlines could be fallacious at times, which more often than not are being misused by the vested interests:

  • “About 1.8 million children under age of 5 die in India every year; 68,000 mothers die due to maternal causes, and 52 million children in the country are stunted”.
  • “With 70% people living in more than 600,000 villages across rural India, not more than an estimated 30% have access to modern medicine”.

It is unfortunate that many key stakeholders, interested in improved healthcare system, are continuously engaged in an eternal blame game of ‘it is not my monkey’. At the same time, taking advantage of this confused situation, some other groups plan to facilitate their vested interests by projecting a ‘weaker India’ with contentious planted reports both overtly and covertly.

In this prevailing scenario, which has been continuing since the last several decades, there is no dearth of people who would attempt to hijack the health interest of the nation to harvest mega commercial benefits.

While all concerned should keep a vigil on such sinister design, let me now try to place some hard facts before you on the current healthcare scenario in India in the context of UHC.

The facts on access to ‘round the year’ healthcare facilities in India:

As reported by the Government of India in 2004, access to healthcare infrastructure and services for the rural villages in terms of percentages were as follows (Source: India Health Report 2010) :

  1. Primary Health Centers:  68.3
  2. Sub-Centers:   43.2
  3. Government Dispensaries:  67.9
  4. Government hospitals in urban areas:  79
  5. Private Clinics:  62.7
  6. Private Hospitals:  76.7

I reckon, after implementation of National Rural Health Mission (NRHM) and National Urban Health Mission (NRUM), this situation prevailing in 2004 has improved. However, the scope for further improvement in all these areas still remains very high. UHC could be a key facilitator.

In any case, the shrill voice highlighting around 65% of population of India does not have access to healthcare or medicines seem to be highly misplaced.

‘Access to Modern Medicines’ is improving in India, slowly but surely:

Contrary to the above propaganda, in the real life situation the access to modern medicines by the common man in the country even in the rural India is steadily increasing.

This is evidenced by the facts, CAGR (volume) of the pharmaceutical industry since the last ten years has been around 13%, leaving aside another robust growth factor being contributed through the introduction of newer brands, every year. Encouraging growth of the Indian Pharmaceutical Market (IPM), since the last decade, both from the urban and the rural areas, certainly signals towards significant increase in the domestic consumption of medicines in India.

IPM maintained a scorching pace of 16.5% growth in 2010. A recent forecast of IMS highlights near similar growth trend in 2011, as well.

In addition, extension of focus of the Indian pharmaceutical Industry, in general, to the fast growing rural markets, which are currently growing at a much faster pace than ever before, clearly supports the argument of increasing ‘Access to Modern Medicines’ even in rural India. The improvement in access may not exactly be commensurate to the volume growth of the industry during this period, but a major part of the industry growth could certainly be attributed towards increase in access to modern medicines in India.

For arguments sake, out of this rapid growth of the IPM, year after year consistently, if I attribute just 5% growth per year, for even the last nine years over the base year of 1998 (as reported in 2004 by WHO) to improved access to medicines, it will indicate, at least, 57% of the population of India currently has access to modern medicines and NOT just 35%, as I wrote in my blog earlier, quoting the numbers from the above WHO report of 2004.

Unfortunately, even the Government of India does not seem to be aware of this gradually improving trend. Official communications of the government still quote the outdated statistics, which states that 65% of the population of India does not have ‘Access to Modern Medicines’ even today. No wonder, why many of us still prefer to live on to our past.

Be that as it may, around 43% of the population will perhaps still not have ‘Access to Modern Medicines’ in India. This issue needs immediate attention of the policy makers and can be resolved with a holistic approach. UHC initiative together with improvement of healthcare infrastructure and delivery systems are the needs of the hour.

So called ‘Diseases of the Poor’ are no longer the ‘Leading Causes of Death’ in India:

As stated above, the disproportionate diversionary focus on the diseases of the poor by the vested interests, being the leading causes of death in India, should be re-validated with the data available with the office of the Registrar General of India (2009). This report highlights a totally different scenario, where the top five leading causes of death in terms of percentage, have been reported as follows:

  1. Cardiovascular diseases:  24.8
  2. Chronic Obstructive Pulmonary Disease (COPD): 10.2
  3. Tuberculosis: 10.1
  4. Cancer: 9.4
  5. Ill-defined conditions: 5.3

Thus the diseases of the developed world, like cardiovascular diseases, COPD and Cancer cause over 45% of the total deaths in India, whereas Tuberculosis, Malaria, Diarrhea and digestive diseases cause around 23% deaths in the country. I reckon, UHC will take care of this emerging disease pattern in India.

The key reasons for not seeking medical treatment are not always poor ‘Access to Healthcare’:

While promoting the UHC, the government should take note of the key reasons for not seeking medical treatment, across socioeconomic milieu in the country. These reasons are not predominantly due to ‘Poor Access to Healthcare ‘. The following data will vindicate this point:

Reason

Rural Poorest 20%

Rural Richest 20%

Urban Poorest 20%

Urban Richest 20%
Financial Reasons

39.7

21.2

37.2

2.3
Ailments not considered serious

27.2

45.6

44.3

84.4
No Medical facilities

12.8

10.0

1.6

_
Others

20.3

23.2

16.9

13.3

Total

100

100

100

100

(Source: India Health Report 2010)

All these are happening probably because we do not have, as yet, any ‘well-structured healthcare financing system’ for all section of the society. The UHC initiative could well be a very significant part to the solution of this long standing problem together with other specific important measures, some of which I have already deliberated above.

While addressing the healthcare financing issue of India, January 11, 2011 edition of ‘The Lancet’ in its article titled, “Financing health care for all: challenges and opportunities” commented:

“India’s health financing system is a cause of and an exacerbating factor in the challenges of health inequity, inadequate availability and reach, unequal access, and poor-quality and costly health-care services. The Government of India has made a commitment to increase public spending on health from less than 1% to 3% of the gross domestic product during the next few years…. Enhanced public spending can be used to introduce universal medical insurance that can help to substantially reduce the burden of private out-of-pocket expenditures on health.”

I reiterate in this context, UHC initiative brings a breadth of fresh air to the prevailing rather gloomy healthcare financing scenario in India.

A comparison of private (out of pocket) health expenditure:

Look at it from, any angle, the general population of India is most burdened with high’ out of pocket healthcare expenses’ compared to even all of our neighboring countries:

1. Pakistan: 82.5% 2. India: 78% 3. China: 61% 4. Sri Lanka: 53% 5. Thailand: 31% 6. Bhutan: 29% 7. Maldives: 14%

(Source: The Lancet)

This factor itself, in case of just one or couple of serious illnesses, could make a middle class household of India poor and a poor could be pushed even Below the Poverty Line (BPL). UHC initiative of the Government is expected to change this scenario significantly in the years ahead.

The key unresolved issue of ‘affordability’ will get partially unresolved with UHC:

The above edition of ‘The Lancet’ highlighted that outpatient (non-hospitalization) expenses in India is around 74% of the total health expenses and the drugs account for 72% of this total outpatient expenditure. The study has also pointed out that 47% and 31% hospitalization in rural and urban areas respectively, are financed by loans and sell off assets.

This critical issue of ‘affordability’ of modern medicines is expected to get, at least partially resolved with the UHC scheme of the Government.

Around 32% of Indian BPL population can’t afford to spend on medicines:

While framing the UHC scheme, the government should keep in mind that a population of around 32% in India, still lives below the poverty line (BPL) and will not be able to afford any expenditure, however minor it may be, towards medicines. Proper implementation of the RSBY scheme with military precision, will be the right approach to this marginalized section of the society.

National Health Entitlement Card:

According to the Planning Commission, to enable the citizens availing the facilities provided by the ‘Universal Healthcare,’ the government will issue a ‘National Health Entitlement Card’, which will guarantee free access to  relevant healthcare packages designed for the primary, secondary and tertiary healthcare for all. This scheme will be fully funded by the Central Government and cover both inpatient and outpatient services.

Conclusion:

Thus in the current scenario, the initiative of ‘Universal healthcare’ to provide access to healthcare to all citizens of India by addressing the critical issue of high incidence of ‘out of pocket’ expenses towards health care, is indeed a laudable initiative and ushers in a breadth of fresh air, despite all motivated comments against it.

We need also to keep in mind, although the ‘Universal healthcare’ is a fascinating mega initiative by the Planning Commission of India, this may not resolve all health related maladies of the country in one stroke.

Even in the changed scenario, a large section of the population both rich and poor and from both urban as well as rural India, may continue to not seek medical treatment assuming initially many of their ailments are not serious enough. Such a situation will definitely not materially improve the healthcare scenario of India, quite adversely affecting the economic progress of the country.

Such a situation, if continues, will necessitate continuous disease awareness campaigns with active participation of all stakeholders, including the civil society across the country, sooner than later, in tandem with all other measures as may deem necessary from time to time.

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.