Over the years, the advancement in technology has led to innovation in the field of pharmacy, with new life-saving drugs being formulated every day. India, regarded as the pharmacy of the world, is on the threshold of becoming a major global market for pharmaceuticals by 2020. Pharmaceutical manufacturing companies in India are one of the world’s largest sources of generic drugs, exporting medicines worth of Rs 50,000 crore across the globe. However minuscule in comparison to the global players, India’s gross expenditure on R&D has more than tripled from Rs. 24,117 crore to Rs. 85,326 crore in the last decade.
Emerging lifestyle diseases in the last few decades have resulted in an immense increase in the availability of medicines in the marketplace, though accessibility is still an issue that needs to be resolved. According to the Global Burden of Disease (GBD) data published in the Lancet this year, heart disease is the leading cause of death, killing over 1.2 million people annually. Life-threatening diseases are on the rise and so is the profit-making by the pharmaceutical industry. A huge amount of research and development goes into discovery, development and clinical trials, before the commencement of the production. Every newly launched drug is thus very expensive, to begin with. Our country with its one-third population living below the poverty line, contracting a disease comes with a huge cost.
India has adopted the concept of Essential Medicines as pronounced by the World Health Organisation (WHO) while formulating the national list of essential medicines. National Pharmaceutical Pricing Authority (NPPA) is a government regulatory agency that controls the prices of essential pharmaceutical drugs in India, keeping in mind the overgrowing demand and affordability concerns. NPPA has the power to invoke Paragraph 19 of Drug Prices Control Order (DPCO), 2013, which gives it the power to fix and monitor the ceiling price or retail price of any drug.
Bayer Corporation vs. Union of India
Compulsory Licensing, a legal counterweight to combat the adverse effects of patents as a mechanism is allowed by the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) – the international agreement which establishes intellectual property rights, including patent rights. In a one-of-its-kind case, the Intellectual Property Appellate Board (IPAB) in 2013, granted the first compulsory license (CL) to the Hyderabad-based Natco Pharma Limited, a generic drug maker, to produce and market Nexavar, an already patented cancer drug invented by Bayer Pharma, paving way for reduction in the prices of costly life saving drugs. Natco attained the license to manufacture and sell in India the patented drug under its brand name at a price of less than Rs.10,000/- per month as against the price of Rs.2,80,428/- per month charged by the Bayer Corporation. It was the first step towards fixing the price of life-saving drugs as Bayer failed to fulfil the reasonable requirement of the public with regard to the aforementioned drug.
Price Cap On Stents And Knee Implants
In July 2016, the government notified the inclusion of stents in the National List of Essential Medicines (NLEM), citing unethical profiteering and exploitative pricing. The National Pharmaceutical Pricing Authority (NPPA) brought down the prices of stents, a tiny wire mesh tube that is placed inside an artery in order to remove any blockages, from Rs 1.21 lakh to Rs 27,890. Paragraph 19 of the DPCO, 2013 inter-alia authorises the government, in extraordinary circumstances, to fix the ceiling price or retail price of any drug for such period, as it deems fit, keeping in view the essentiality of stents in a country where there are approximately 30 million heart patients.
A price cap on drugs or devices poses a major threat to the availability of the same in the marketplace, with pharmaceutical company arguing that although it is a responsible corporate citizen, it can’t provide vast quantities of the drug for less than its manufacturing cost. The drug in question — furosemide, sold under the brand name Lasix — is a medicine prescribed to babies with heart ailments. In 2017, National Pharmaceutical Pricing Authority cut its price from Rs 100 to Rs 10 per pack. Since then, the availability of this medicine in the market has come down drastically leaving parents of sick babies running from pillar to post. In the U.S, a new drug is launched in the market within two-three years of it getting approved, but in India, it takes around 6-8 years for the same drug to come out in the marketplace. Hence, as the price of the drug goes down, its availability in the market also gets massively affected.
The cost of bringing a drug to the market is higher than the actual cost of the drug itself. Inventing a drug takes years and years of research and is incredibly complex and extraordinarily expensive. Indian pharmaceutical companies or subsidiaries of multinational pharmaceutical companies in India often worry that lower drug prices, either through faster generic approvals or price control, would have a negative effect on the industry’s ability to bring innovations to patients in India. As a result of price control, Abbots Healthcare pulled the plug on two of its coronary stents, citing commercial unsustainability in India.
Is The High Cost Of Drugs To Offset R&D Costs Justified?
Research & development over life?
On an average, a pharmaceutical company invests millions of dollars into Research and Development and in order to recoup the amount, it raises the price of the drug and demands for ‘market exclusivity’ or patent, which is a right given to the inventor for a limited period of time over the product that it invented. The time period for which it gets a patent ranges from 15 to 20 years. During this time frame, no other company is allowed to manufacture the same drug, unless the license is granted either by the state or the company itself. Patent regime works well in the western countries where people are covered by health insurance. In an underdeveloped country like India, where only 18% of the population is covered under any kind of health insurance, and 276 million people are living below $1.25 per day, such strict patent system does not work.
According to healthdata.org – the major cause of disease burden over the last 26 years was diabetes (rate increased by 80%) and ischemic heart disease (up 34%). More than 60% of deaths, about 6.1 million, in 2016 were due to Non-communicable diseases (NCDs), up from about 38% in 1990. Hence, to address the issue of increasing drug prices affecting millions of people across the country, we should have a cost-based system, keeping in mind that the market-based system not only worsens the condition of poor people but also monopolises the market. Moreover, it is equally important that the drug companies reduce the profit margin to serve the need of the people in want of the life-saving medicine. The present predicament, of poor access to affordable healthcare amidst plenty of overpriced medicine, should not be allowed to continue to imperil the lives and health of Indians across the country.