National List of Essential Medicines and Price Caps

Posted by on May 4, 2017 in Blog | 0 comments

It has been widely reported that an RSS Affiliate (Swadeshi Jagran Manch) has taken issue with the recommendation of the Niti Ayog to delink the Drug Price Control Order (DPCO) from the National List of Essential Medicines (NLEM).

In order to understand if this recommendation makes sense, we need to first understand why a NLEM and a DPCO exist in the first place.

The reason for a NLEM is simple. The World Health Organization (WHO) defines an Essential Medical List as “Essential medicines are intended to be available within the context of functioning health systems at all times in adequate amounts, in the appropriate dosage forms, with assured quality, and at a price the individual and the community can afford.” It further says “National lists of essential medicines usually relate closely to national guidelines for clinical health care practice which are used for the training and supervision of health workers.”

Therefore, clearly, a functioning healthcare system in a country like ours needs to ensure some medicines, which our medical community considers as essential should be available at all times. It is important to note that this is not a static list; depending upon the need of the hour, this list changes. For example, when the avian-flu epidemic hit, Oseltamivir (Tamiflu) was added to this list because of its public-health impact, until we got a handle on that disease.

Now let us understand why we need price controls. In functioning markets, where the consumer demand drives price, controls are redundant. However, as I have argued in the past, healthcare is not a perfect market. The consumer (patient) is often ill-informed about the choices she is prescribed and therefore, regulation is needed to protect the consumer. The question here is whether we apply control across the board or use it as a selective tool to ensure there is no price gouging.

We have used the DPCO as a broad corrective measure to counter inefficiencies in our healthcare system. In an ideal situation, all things being equal (especially the quality of our drug supply), and external influence is minimized (over-the-top promotional practices), natural market forces should drive the price to the point of affordability. Price of medicine will reach some sort of an equilibrium assuming there are more than a few manufacturers who supply the product to the market. Historically, this doesn’t happen because the system is opaque and often skewed. Therefore, the knee-jerk reaction is to impose external controls, which are often counter-productive to achieve the goal of affordability.

Our country needs a viable and thriving pharmaceutical industry; and external controls typically do not foster its health. We need our industry to manufacture good quality product, which works as specified and provides therapeutic benefit. The industry has to make a profit and create value for its shareholders. An across-the-board implementation of price controls is counter-productive to this goal.

The problems that challenge affordability are somewhere else. They are in our regulatory framework, our ability to enforce the law as it is written today and our dysfunctional institutions which are responsible for the implementation of our healthcare policy.

Price controls are necessary when there is no competition. If a particular manufacturer has monopoly on a life saving product, price-caps are justified. But using this method when there are a myriad of manufacturers who are expected to make the same product and compete on price is not good for our healthcare system. Clearly, not all things are equal when it comes to medicines in India. There are grades of quality, and I have adequately written about this earlier. We need to fix that and allow the market to determine who survives and who doesn’t.

In markets for essential medicines, competition will ensure low prices; but we have to accept that prices may be higher than the capped price, because caps, set too low compromise the ability of legitimate manufacturers to make a good quality product. Going back to the WHO definition of EML, a key criteria, good quality, is compromised if the price cap is set too low. For example, in 2011, prior to the introduction of the National Pharmaceutical Pricing Policy, 27 of the 74 drugs under price control were discontinued by the industry because it was unprofitable for them to make. As recently as 2013, wholesalers and retailers temporarily stopped buying stocks of essential medicines with unviable margins leading to a shortage of medicines in the market. How does this help us protect public health?

The larger issue that needs addressing is strengthening our institutions and making governance transparent and accountable. It has been reported that the administration is considering consolidating bureaucracy across multiple ministries to simplify implementation of policy objectives. There is absolutely no reason why Ministry of Commerce and Industry, Ministry of Health & Family Welfare and Ministry of Chemicals & Fertilizers all have to have a say. Improving standards of governance and accountability requires qualified administrators; especially people who have background and experience in public health be hired, empowered and made accountable to the citizens of this country. And finally, bringing our outdated healthcare law on par with globally accepted standards for quality should be a key objective.

DPCO is a tool that we need to use sparingly, not broadly. There are good reasons where price caps make sense, but using is across the board is not helpful. We need to enable market forces to function, and use the regulatory and the legal justice system to hold people who distort the market dynamics publicly accountable. Using it to cover up dysfunction and inefficiencies in our systems is not a sound solution. Price caps are not appropriate for medicines on the EML; we should enable the market to drive affordability. Specialty medicines with monopoly producers is where price caps are most effective, or at least a threat of a negotiated price so that gouging does not occur.

The recommendations of the Niti Ayog seem to be in the right direction for the country. Delinking the EML from DPCO makes sense; price caps may be warranted in certain cases and an EML is required, but competition will ensure low enough prices and hopefully of good quality if we get fix our systems and get our institutions working properly. Let us not make the same mistake we made before; take knee-jerk actions to address a short-term problem and compromise what we need for the country in the long term.

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Affordable Generic Drugs: The end-game

Posted by on May 1, 2017 in Blog | 1 comment

This is my last blog in the series discussing affordability of medicine in India. In my past blogs, we have tried to understand the problem,  the nomenclature that confounds this issue, and elements of a solution space that will give us a roadmap to our goal of affordable generic medicines.  I have tried to focus the discussion on data, rather than on emotive issues and opinions. But honestly, I have never actually addressed the core issue; is it possible for us to have affordable medicines in this country? I will try and address this issue now and I believe this is the most important topic in this entire discussion.

What we have heard on the television debates and in newspaper reports is a lot misdirection. We have several stakeholders whose opinion often contradicts one-another. We heard that any attempt to regulate the industry more than it is now is a death-knell for this emerging sector of our economy, so much so that the industry lobby linked their ability to command a price to their desire to set up new manufacturing facilities overseas (presumably to supply the domestic market). We heard from the regulator, CDSCO in the past that global quality standards cannot be applied to Indian industry serving the domestic market because it is too expensive for the industry to comply. It will put the domestic pharma industry out of business. The rationale of our regulator therefore is that our countrymen should learn to accept second-rate systems and live with it. Tough!

I have two data points for you to consider.

The Indian Pharmaceutical Industry is second only to the IT industry in terms of its ability to earn foreign exchange by selling its product in overseas regulated markets. Here are some reports that present how much our industry earns from foreign markets. Report 1, Report 2, Report 3 & Report 4. Not just revenue, the industry’s profits from these markets are very healthy. Here are a few reports on the industry’s financials: Report 6, Report 7 & Report 8. All of these reports confirm that our industry does extremely well selling into these regulated markets. These markets are profitable and profits from the regulated markets makeup for a significant part of their bottom line.

Now lets see the pricing data that allows our industry to generate these healthy profits from the overseas regulated markets. Dr David Belk has compiled a list of what an average pharmacy in the US pays for generic medicines. His research is available here: The True Cost of Healthcare. For ease of reading, he has categorized generic drug names alphabetically and for each formulation; his tables tell us what an average pharmacy paid for each drug/formulation in 2016. Let us look at a few examples of medicines commonly prescribed in our country for chronic treatments (cardiovascular and metabolic diseases):

Cost Per Tablet in the US
Atorvastatin 10 mg $0.11 7.15 ₹
Atorvastatin 20 mg $0.13 8.45 ₹
Atorvastatin 50 mg $0.15 9.75 ₹
Atorvastatin 80 mg $0.17 11.05 ₹
Simvastatin 10 mg $0.03 1.95 ₹
Simvastatin 20 mg $0.03 1.95 ₹
Simvastatin 50 mg $0.04 2.60 ₹
Simvastatin 5 mg $0.04 2.60 ₹
Carvedilol 12.5 mg $0.03 1.95 ₹
Carvedilol 25 mg $0.03 1.95 ₹
Carvedilol 3.125 mg $0.03 1.95 ₹
Carvedilol 6.25 mg $0.03 1.95 ₹
Glimepiride 1 mg $0.07 4.55 ₹
Glimepiride 2 mg $0.10 6.50 ₹
Metformin HCL 1000 mg $0.03 1.95 ₹
Metformin HCL 500 mg $0.02 1.30 ₹
Metformin HCL 850 mg $0.03 1.95 ₹
Metformin HCL ER 500 mg $0.04 2.60 ₹
Metformin HCL ER 750 mg $0.09 5.85 ₹
1 USD = 65 INR

These are just a few examples, the entire list is available on the link above.

Clearly, these prices (converted into Indian Rupees) look affordable to me. Mind you, the industry is still able to generate healthy profits from selling their products at these negotiated prices in the world’s most regulated market (the USA). To comply with the US Standards for cGMP, manufacturing facilities used by our own industry put what they use to make drugs for domestic consumption to shame. They conduct bioequivalence studies to demonstrate therapeutic efficacy, conduct long term stability studies to support expiry dates (which is still not mandatory in India, we just assume the drug is good until the date printed) and submit annual reports both for safety and batch release to the US FDA on schedule. And this is not the whole list. All of these things do take time, effort and money. Despite complying with these standards, our own industry, which accounts for more than 50% of the US drug supply  makes a healthy profit selling their product at these negotiated prices.

My question is simple. If our industry can do this for the US market, what is stopping it for replicating this model at home? Why are we told that we have to live with a lower standard, consume substandard medicines and  if we dare question the industry’s practices, then all hell breaks loose? What I find absolutely amazing is that the regulator, whose job is to protect public health becomes a vocal proponent of the industry’s arguments.

Our pharmaceutical industry made investments to comply with US standards and is generating healthy profits for their shareholders by selling into that market. Do they do half of that for a license to sell domestically in India? I think we all know the answer to this question. Why is that?

Keep in mind that these negotiated costs include costs to ship the product made in India to the US. Furthermore, it doesn’t address the fact that our patient pool in India is three times as large as the US. Doesn’t that scale warrant additional efficiencies?

Why then, are we told both by the industry and the regulator to suck it up and stop complaining? That if we ask for compliance with global standards, we will kill this industry? What are we missing here?

If there is one lesson from the discussion over the last two weeks about the issue of affordability, it is that we need to remove the issue of “quality” as a variable from the equation. Look at the same issue being debated in the US, do they even bring the issue of “quality” up? It is a testament to their regulator and their administration that the discussion is focussed on price, and just price.

This was the reason I approached the Supreme Court of India in March 2016 with a set of Public Interest Litigations based on two years of grueling RTI work. I was disappointed that the Chief Justice then questioned my standing, because I am a US Citizen of Indian origin to bring such a case in an Indian court. The judge said my arguments were academic, and that the court had more important issues to adjudicate. Now that this issue has been brought into the public awareness by none less than the Prime Minister of India, perhaps there will be a more successful effort in us achieving his vision of providing affordable medicines to the citizens of this country.

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Affordability: What does procurement have to do with it?

Posted by on Apr 30, 2017 in Blog | 0 comments

In the last blog, we looked at how we can enable pharmaceutical manufacturers to use quality as a differentiator and empower the citizens of our country to make more informed decisions about the medicines that they purchase. We briefly touched upon access, and I said we will come back to revisit this topic later. Let us now look closely at a few interesting facts about how our public procurement systems work, which is a key determinant of access.

Other than policy related documents on how procurement of medicine “should” work in our country, there has been very little research on its implementation and on-the-ground reality of how it actually does. The best reference I came across is this 2013 study published in the British Medical Journal where the authors from Indian School of Business and Indian Institute of Public Health compared drug procurement among five Indian states. Using information collected through the RTI process among other things, they looked at how Tamil Nadu, Kerala, Odisha, Punjab and Maharashtra implemented their drug procurement policies. The article makes for very interesting reading, and their conclusions are nicely summarized in this poster,

For the purposes of our discussion here, I would like to draw your attention to the following conclusions drawn by the authors followed by my comments inline:

  • Lack of any sophistication in demand estimation and forecasting models. States use previous year’s consumption as the basis, no feedback in the modeling exercise.
    • In today’s complex and dynamic disease burden conditions, clearly we can do better than this. Forecasting is sophisticated science, there is absolutely no reason we shouldnt utilize it in our demand planning.
  • Quality control: Empaneled private labs and/or government labs.  Tamil Nadu has empaneled laboratories to which every sample from each batch is sent for quality testing before distributing to user institutions.  Odisha and Maharashtra do not have any quality testing protocols in place, apart from the supplier s internal quality certificate. Pre-qualification criteria, GMP/WHO-GMP/US-FDA is a requirement for all
    • I have trouble reconciling this fact with what the DCGI and the CDSCO has publicly said, that a large majority of our manufacturing facilities do not conform even to Schedule M, forget WHO-GMP. How then are these states fulfilling this requirement?
  • More than half of the suppliers to Tamil Nadu are from within the state. The same statistic for Kerala is 14%, for Maharashtra 34% and for  Odisha, a surprising 0%! 
    • While it could be a good practice to help develop the local drug manufacturing industry, this also points to political patronage. Although difficult to substantiate, patronage manifests itself in many ways, including shortages, availability and overpayments.
  • There was no observed correlation between price vs. volume but there is a negative correlation between level of quality control and pre-qualification criteria vs. price
    • This is very surprising, particularly the second observation. Clearly, quality is not a differentiator when it comes to public procurement it appears. As far as the first observation goes, doesn’t it defeat the whole purpose of having a consolidated procurement system?
  • Tracking dispatched/delivered drugs: value based to none
    • Again, we can do a whole lot better here. Leakages within the system benefit no one, especially, those toward whom this is targeted. Political patronage plays a key role here.
  • A clear difference in the efficiency of the processes can be seen between the autonomous organizations and the state-run organizations in terms of lead times for payments, quality control and in the usage of IT systems and so on. Autonomy refers to the extent of government involvement in the decisions of the procurement organization; fully autonomous’ implies minimal involvement while government owned indicates a high degree of involvement. The idea of having an autonomous organization in the public sector is to enable it to function more transparently by avoiding the plausible procedural delays and also to enable it to make decisions of contracting and outsourcing that are best suited for the prosperity of the organization.  

The procurement process followed by the central and the state governments is vividly described, with interesting anecdotes in this 2007 Working Paper from the University of Edinburgh, which also makes for very interesting reading.

While this study is limited to just a few states, the observations and conclusions drawn are applicable to all. If access to medicines is a priority for us, several of these obvious gaps in our supply chain need to be better managed.

There are no silver bullets, this is a complex web. Most of the changes needed here are systemic. However, there are a number of things we can do in short order to help. Here are some low hanging fruit that we can adopt to simplify our supply chain:

  • With the advent of GST, one of the key reasons for the existence of the many Clearing & Forwarding (C&F) Agents that dot our drug supply should vanish. These entities existed primarily to address the disparate tax collection systems between the various states and the centre and contributed to the price of the drug at the pharmacy counter.
  • While selecting the provider and negotiating contracts:
    • We should change our approach away from selecting the lowest bidder in government contracts. When it comes to medicines, the lowest cost bidder is not always the best. We want the industry to function, and deliver good quality medicine.
    • Only those formulations which have proven therapeutic efficacy should make the cut. The manufacturer ought to have secured regulatory approval for safety and efficacy prior to qualifying for the bidding process
    • The bidding process should be transparent and automated to make it free of political influence. In all my research, this seems to be a big factor. Because Health is a State subject, individuals in power within the State administration essentially have a carte-blanche when it comes to procurement of medicine. There is virtually no accountability or transparency.

Then there are lessons we can draw from how the US is handling drug shortages. Driven primarily by the regulatory observations and actions against pharmaceutical manufacturers based in India, the US public health system has also been at the receiving end of shortages of some life saving drugs. The way in which the system responded to these challenges and the remedies that they have put in place is instructive to us as a country. For more information on how they did it, you can read it here.

As you can see, affordable medicines is a noble objective which can be achieved. But it needs us to understand why we are where we are and chart out a roadmap to our goal in a thoughtful and deliberate manner.

Guidelines from the MCI for example, which were reiterated last week, show how poorly these institutions understand the ground reality of how our drug supply chain works. We should refrain from offering such simplistic platitudes and focus our effort toward developing a better understanding how how the system works today, where systemic issues such as the ones highlighted here prevent efficiencies and therefore result in lack of access.


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A step toward affordability

Posted by on Apr 29, 2017 in Blog | 0 comments

In this series of blog posts, I have described the challenges with the proposed simplistic approach to make drugs affordable, including the nomenclature we use, the factors confounding the problem and the difficulties we face with the proposed solution in the long term. Since this is a problem we created with decades of neglect of our healthcare systems, it is going to take at least half of that time to undo the damage we have caused.

In this post, we propose a small step which empowers the patient to make the right choices for herself. Prashant Reddy, who helped me with my PIL and I wrote an opinion about this in a recent op-ed. The conversation on affordability has been hijacked (and rightfully so) by two specific issues. Access and Quality. A cursory scan of the reporting on this topic for the last week will show anecdotes of lack of access in many cases. While that is an important aspect of this solution, for now, lets focus on quality and we will come back to access another time.

One approach to allaying the fears about quality of drug supply is to enable the patient to verify that the medicine he is dispensed has been checked for therapeutic efficacy.  We already have such a tool in the Clinical Trial Registry of India (CTRI).  The idea behind establishing this database was similar to what the US does to promote transparency, make manufacturers register their planned clinical studies. This accomplishes two objectives. If the study fails, the pharma company cannot hide the data forever.  Pharmaceutical companies were notorious for publishing positive studies and not disclosing studies that failed. This addresses that issue. Someone can look up the study registration and ask the company to publish what it found at a future date. Second, it provides an effective platform for patients seeking experimental therapy to enroll into clinical studies. Now, let us see how we can use this tool in the current context.

The Indian Pharmaceutical Alliance (IPA) has argued that their products have been tested for efficacy and safety against their innovator counterparts. Their argument is that the rest of the (unbranded) drug supply has never been; therefore, it may not be effective therapeutically. Let us ask them to provide these BE studies and their respective study reports to CDSCO. Let the CDSCO verify that they have in fact conducted proper BE studies on their product and if so, allow these member IPA companies to register these studies retrospectively with the CTRI. For every study that the CDSCO verifies as properly done, let it issue some kind of logo or an image to the manufacturer, which can be printed on the packaging that both the pharmacist at the dispensing counter and the patient can easily read. Presence of such a logo will confirm that this specific formulation has been verified for therapeutic efficacy. For those manufacturers who fall into what the IPA says supply the remainder of the drug supply, the presumption is that they have never conducted clinical studies. If they have, let them follow the same process; if they have not, let them register new studies in the CTRI and conduct these studies and secure such a logo.

This is a simple and cost effective approach to addressing the issue of quality. It inspires confidence in us, the citizens that someone has checked and verified the formulation we are being dispensed. It addresses a key issue among the medical fraternity. And most importantly, this can be implemented quickly. The IPA says their products are equivalent, lets start there. We will at least know that 15% of our drug supply has been verified as therapeutically effective to begin with. This approach provides a powerful differentiator to those companies that actually invest in building quality systems. It empowers the patient to make informed choices.

Now, the only drawback to this approach is the integrity of the regulator, CDSCO. History shows that it has not always acted in public interest. There needs to be some independent oversight of this process to ensure that when it evaluates retrospective studies from any manufacturer, whether a member of the IPA or an unbranded one, it does it based only on Science and not other influencing factors.

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Generic prescriptions: Do we want a nanny state?

Posted by on Apr 26, 2017 in Blog | 0 comments

In my last two blogs, I have tried to outline the complexity of the problem when it comes to affordability of medicines in India. In this post, lets take a look at a few factors that confound the solution space if our goal is to create an affordable healthcare system for the country.

The genesis of this entire discussion stems from the prevailing perception that doctors somehow, under the influence of pharmaceutical companies, nudge poor patients toward more expensive branded medicines when cheaper, unbranded alternatives, which work as well as the branded drugs do exist.

In a 2017 Social Science & Medicine article, authors Chirantan Chatterjee & Ajay Bhaskarabhatla  show that in cardiovascular medicines, 129 million scripts (8.1% of the total) in the 2008-2011 period were irrational, meaning there was no good scientific reason for these 129 million prescriptions. Another study published in 2013 says that most physicians were unaware of the active pharmacological ingredients (APIs) of 20% these irrational drugs.  CDSCO’s own expert committee report from last year showed that a large majority of the 1000 odd irrational medicines it evaluated had no scientific basis. Clearly, these irrational drugs do exist and are being prescribed by our medical fraternity. The question is why? To what extent do we hold the practitioners accountable when they prescribe these drugs (most of which are promoted extensively, and therefore more expensive) or the regulator who allowed these drugs to get to the market in the first place? Whose interests was the regulator protecting when it allowed these companies to market them? Certainly, not the citizens of this country.

In 2007, I co-founded and ran a company named Sciformix  where we hired recent medical graduates to conduct analysis of Adverse Events and prepare reports for regulators in US, EU and Canada. My observation from those days was that these recent medical graduates had very little knowledge of pharmacology, phramcokinetics and pharmacodynamics, which is a required part of the medical education curriculum. Concepts such as dose-response, average retention time, maximum concentration of the drug in the body etc were alien to them. On average, we had to invest about a year in retraining them in basic medicine before they became productive. This speaks to the quality of education we impart to our doctors. Therefore, I am not surprised that the study referred to above found that about a fifth of our medical fraternity doesnt know what the active ingredients are in the medicines that they are prescribing. I am sure that with clinical experience, these folks do develop a better understanding of drugs are metabolized in our bodies.

The role of the industry in influencing the medical fraternity into prescribing their “latest and greatest” products was something we already discussed.

The flip side of the argument is that we all do not metabolize drugs in the same manner. Our physiology, our life-style choices and our metabolism all play a key role in how effective a particular drug is to treat an ailment. For this discussion, let us take the extreme case of narrow therapeutic index drugs. Two years ago, I was the co-author on a peer-reviewed paper that discussed how Levothyroxine,  Budeprion, and Methylphenidate behave very differently depending upon the formulation. Despite being approved as bioequivalent, we found subtle and significant differences in therapeutic response to these drugs primarily based on the way they were formulated. Experienced clinicians know what to look for in our vitals and properly titrate the dosage or  switch it to a different formulation based on their observations in the best interest of the patient.

So this begs the question whether we want to take away the freedom of our physicians to determine which formulation is best suited to our unique physiology based on their clinical experience? Do we want to throw the baby out with the bath-water?

Clearly, there are some (well, around 20%) bad apples, that the data shows. However, to prevent these bad apples from prescribing these expensive, irrational drugs, do we want to mandate the whole medical fraternity to write prescriptions for “generic” knowing well these variations exist among formulations and are thoroughly documented? And I am not even bringing substandard drugs into the discussion yet, which we know are a large percentage of our drug supply, thanks to the US FDA and even the CDSCO, which acknowledged last year that approximately 10% of the supply procured by government funded facilities were substandard. That is a whole another ball of wax. Is this what we want our policy makers to do? Let us pause and consider this for a moment.

Let us stop deluding ourselves that the solution to our problem is as simple as mandating doctors to write “generic” prescriptions. We created this problem with decades of complacency and inaction and cannot expect it to disappear overnight. This needs thoughtful, data-based analysis, a long term vision and a lot of perseverance to look at the facts and then make a realistic and implementable policy.

Speaking of the medical fraternity, I was amused by their response to this issue. Conversations on Twitter center around the word “should” in the way they advise their members to write prescriptions. I do have a basic question for the MCI though. Knowing that 85% of the drug supply has never been tested for therapeutic efficacy in our country, how do you justify issuing the guideline you did with the hippocratic oath that you took when you obtained a licensed to practice medicine? I guess no one asked them that!


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Transaction Price Vs Long Term Outcome: What does the data say about affordability?

Posted by on Apr 26, 2017 in Blog | 1 comment

Now that we understand what “generic” means in the Indian context, lets look at whether we have any historical evidence of these “generic” medicines actually saving us money. The only studies that I know of are from public sector entities, the Central Government Health Scheme, the Indian Army and the Indian Railways. I have written extensively about these reports in my past blogs.

Anecdotally, yes, the price we pay at the pharmacist for a generic prescription is often lower than its comparable promoted brand. The reason is simple. There are costs to promote a product. You need people who go to clinics to extoll the virtues of your product, television and paper advertisements, goodies to the practitioners to induce them to write a prescription and so on. And those costs get added to the product price which we end up paying at the counter. So in principle, yes, for that transaction, as a consumer, I pay less than what I would if I chose a “promoted” branded drug.

Now lets look at what these public sector organizations, which supposedly were tasked to procure “generic” drugs for the benefit of their membership found.

For samples which were tested from the Armed Forces Medical Stores Depot (AMFS), the CAG report notes that the rate of rejection for locally procured medicine, due to samples failing quality tests, increased from 15% to 31% during 2006-07 to 2010-11. The average rate of rejection during the three year period of 2008-09 to 2010-11 was therefore 24% approximately. This means that one in every four drugs dispensed by these organizations is not of standard quality.

In its report no. 28 of 2014 on the Railways Hospitals, the CAG noted that substandard drugs worth Rs. 21.45 lakh were supplied to 20 hospitals over 8 different zones of the railways. As noted by PAC Committee in its report between 2009-2012, CGHS, Bombay had reported Rs. 28.45 lakhs worth of drugs as sub-standard. Of these medicines, stock worth Rs. 15.66 lakhs had already been issued to patients.

And then there is the experiment we call Jan Aushadi stores (JAS). Factly reports that one half of these stores have no stock to sell. Other than Rajasthan, this has been an abject failure as the graphic on the Factly website shows. A recent study by the Center for Health Policy at the Tata Institutes of Social Sciences said “From the policy perspective, it raises serious questions regarding the pricing of medicines in JAS and the goal to be achieved. With information asymmetry and supplier induced demand feature in the healthcare market, the OOP expenditure due to medicines is unlikely to decline in India with the existing JAS.”

I will not go into the reasons why Non-Standard Quality medicines are harmful. My past blogs explain this in great detail. Suffice to say that focussing just on the price that we pay at the counter is not very productive. There are larger, systemic issues that need to be fixed first.

When was the last time you went to a doctor and asked him to write a prescription for the cheapest drug? I have asked this question of many who I know and I got no positive answers. Instead, I got weird looks! Although my unscientific survey did not include someone who makes 500 rupees a day, I venture to guess that even he would ask the doctor to give him the “best” medicine, not the cheapest.

The best anecdote I read was from a critical-care physician in Mumbai. The most expensive drug she said, and I whole heartedly agree is the one that does not work. And NSQ drugs certainly do not work.

What does this tell us?

It doesnt matter how inexpensive a particular transaction is, without a view on the long term outcome, discussing affordability is moot. We just simply do not have the data to make well-reasoned conclusions that mandating “generic” prescriptions actually helps lower the cost of care.  In such a scenario, why do we spend so much time debating an issue which clearly is not properly defined ? This is a pointless discussion. Yes, it will rile up people on the television and create drama, but will it help us achieve the objective we have set for ourselves?

The only source of scientific evidence of what cheap, poor quality medicines do to public health is in the treatment of malaria, a disease that is endemic to our country as well. For a long time, scholars have studied the effect of substandard, counterfeit drugs that are so prevalent in the supply chain that treats this disease. The evidence unequivocal. Poor quality drugs cause (a) economic sabotage; (b) therapeutic failure; (c) increased risk of the emergence and spread of resistant strains of Plasmodium falciparum and Plasmodium vivax; (d) an undermining of trust/confidence in healthcare stakeholders/systems; and, (e) serious side effects or death. I am sure you agree that the cumulative cost of handling these outcomes is much larger to us as a country than the cost of the transaction at the pharmacy counter.

Good governance means not making policy based on anecdotes and emotive issues; rather, using actual data to formulate policy and define criteria to measure its effectiveness once implemented. I hope our Niti Ayog is listening.

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The real answer to affordability

Posted by on Apr 25, 2017 in Blog | 0 comments

Over the last two weeks, there has been a spirited debate about how to make medicines affordable to the citizens of India. Driven by the Prime Minister’s call to make less expensive medicines available to the people of the country, there have been several news-reports and well meaning discussions on this topic in the print media and on television. While these discussions seem to present every stakeholder’s point of view, no one seems to be interested in understanding how to best go about achieving this well-intentioned objective.

I wanted to take a step back and ask a few questions to all who profess to have an opinion on this issue.

  1. What data do we have to inform us that switching to a generic version of the drug saves us money?
  2. Do we want to discount the clinical experience of your doctor and impose restrictions on what to prescribe on her?
  3. How confident are we that this mandated “generic version” only prescription actually works as intended?

Lets get the nomenclature right first. The term “generic” as it is used in the Indian context is not the same as we seem to appropriate from the US context. In the US, “generic drugs” are those which are no-longer protected by patents. In our country, “generic” refers to “unbranded” medicines; because our companies produce and market drugs that are no longer under patent as “branded-generics”. Unless we understand this difference, the rest of the conversation doesn’t make much sense.

The next thing for us to understand is why would a manufacturer “promote” something that is no longer protected by a patent. The assumption we make in this case is that if a product is protected by a patent, the patent holder can charge a higher price  because there isnt anyone to compete against that product. Therefore, pharmaceutical manufacturers bred armies of what we call “medical representatives” who eulogized the benefits of such products to healthcare practitioners. In the Indian context, two different manufacturers could in-principle manufacture the same drug (whether it was protected by a patent until we adopted the TRIPPS agreement was immaterial). Therefore, how does one differentiate (meaning push its product to more consumers) if there is no differentiation in the product itself? Here came the magic of marketing. We devised flashy advertisement campaigns, promoted the virtues of “my” product under the guise of “medical-education” and came up with more innovative strategies which perhaps be left alone. This is how “brands” were born. Pharmaceutical companies used novel and very interesting strategies to ensure that their “brand” sold more than the “other brand” despite the fact that the underlying product was supposed to be identical.

There were other strategies like “Fixed Dose Combinations” that were invented to combine two or more drugs into a “cocktail” under the guise of better patient compliance with the dosing regimen. But that is a topic for another time. Lets just stick to the simple stuff for now.

Inspired by our penchant for jugaad, and the fact that the regulatory framework that was supposed to keep an eye on the industry was fast-asleep in the best case and was colluding the industry at worst, enterprising pharmacists (who made money on the margins that they retained buying from the wholesaler stockist and selling it to gullible patients) developed their own models for how to be profitable. They “pushed” the product that gave them the highest margin on sale. Knowing that two or more of the chemical salts were “supposed” to be similar, what was the harm in “substituting” the more expensive version to the patient? After all, they were running a business, not a charity. They negotiated hard with each brand on their margins and whoever offered them the most was the product of choice. Once they got used to this idea, the next concept of “frugal innovation” was to “make-our-own”. The regulatory framework never asked for any proof of therapeutic efficacy for any drug that was over four years old; so they could set up a tablet-punching machine in a garage and stamp out as many of these pills as they wanted. Because they cut corners at every step, meaning, no process checks, no quality control, their profit margins were the highest. This is how our “unbranded” medicine industry was born.

The pharmacists then “pushed” these unbranded drugs, many of them made in garages and had no efficacy and we ended up with an industry with 30,000 pharmaceutical manufacturers. And because the regulator was so incompetent, it seldom checked for quality or therapeutic efficacy of these products. In those rare cases it did, and its inspectors found problems, our legal-justice system essentially killed their efforts by letting these wrongdoers go with a slap on the wrist.

Now that we understand what “generic” drugs are in the Indian context, I would love to hear from you on what your views are on the questions I have posed above. I was so hoping to hear this on the many shows I have watched and written pieces I have read, unfortunately, they seem to regurgitate the same talking points. I am hoping that we can have a more meaningful discussion here.

More in the next blog.

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