Modi govt's failure to regulate pharmaceutical sector indicates vested interests at play

Recent news reports that the manufacturers of a Paracetamol pill sold under the brand name ‘Dolo’ gave ‘freebies’ worth 1000 crore to medical practitioners to promote its usage clearly demonstrate the Union government’s abject failure to regulate unethical marketing practices adopted by cash-rich pharmaceutical companies.

It is hardly a secret that these companies spend a huge amount of money to promote their products, even to the extent of organizing lavish medical conferences in the name of ‘continued medical education programmes’ for doctors, besides funding foreign vacations and doling out expensive gifts to them.

Such quid pro quo practices ultimately end up adding to the cost of drugs and to the patients’ out-of-pocket expenditure.

The Centre had come up with a policy termed as Uniform Code of Pharmaceutical Marketing Practices (UCPMP) ostensibly to curb such tendencies.

A letter dated 12 December 2014 issued by the Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers mentioned that this will be voluntary for a period of six months with effect from January 1, 2015 and will be reviewed thereafter. Quite obviously, the voluntary clause did not yield noticeable results.

Admitting the same, H.N. Ananth Kumar, the then Union Minister for Chemicals and Fertilizers, said in the Rajya Sabha in June 2016 that the voluntary code introduced in 2015 had not yielded desired results, and that the government would make it mandatory because the pharmaceutical companies had failed to take any tangible steps to implement the Code.

Clauses 6 and 7 of the Code prohibit pharmaceutical companies from offering ‘freebies’ to medical professionals. But despite innumerable representations from public health activists and civil society groups, the practice continues to go unchecked.

The Indian Medical Council (Professional Conduct, Etiquette and Ethics) regulation also warns doctors against practices such as receiving financial benefits in any form, including for attending ‘education programmes’.

Taking cognizance of the matter, even the Central Board of Direct Taxes (CBDT) in its Circular No. 5/2012 [F. NO. 225/142/2012-ITA.II], dated 1-8-2012 had said that any such expenditure by a pharmaceutical company will not be considered for tax deductions.

This order was upheld by the Supreme Court. Expressing concern over pharmaceutical companies giving ‘freebies’ to doctors, which push up the cost of medicines, the court on February 22, 2022 held that they are not entitled to claim tax exemptions on the expenditure incurred in giving ‘incentives’ to medical practitioners to promote their medical products and it would be considered as part of their income.

As per the guidelines in the UCPMP, pharmaceutical companies must adopt stipulated procedures laid down by the competent authority for involving doctors in ‘research projects’. They are prohibited from using a doctor’s reference, including his/her photograph in their promotional literature. But the ground reality is, of course, very different.

A statement made by Minister of Chemicals and Fertilizers DV Sadananda Gowda in the Lok Sabha in September 2020 that the Centre had no plans to make the UCPMP mandatory is, then, extremely disappointing.

When a delegation of ‘Alliance of Doctor for Ethical Healthcare’ submitted a report on the Big Pharma’s unethical conduct to the National Pharmaceutical Pricing Authority (NPPA), the drugs price regulating body, in February 2020, they were told that the body had no jurisdiction to check the companies.

The Centre’s complete turnaround on making UCPMP mandatory indicates lack of will to keep its own commitment. One wonders if some sort of a deal has been struck between it and the pharmaceutical companies.

The high cost of drugs seriously affects the healthcare of our population as nearly 67% of out-of-pocket health expenditure in our country is on drugs. This pushes 6.3 crore population below poverty line every year, a fact admitted in the National Health Policy document 2017. But the Centre has still not taken any tangible steps to control the excess trade margins in the sale of drugs and medical devices.

A committee formed to look into high trade margins in the sale of drugs on September 16, 2015 took serious note of the practice. It pointed out that in some cases, the trade margin was as high as 5000 per cent. The committee submitted its report on December 9, 2015, but seven years later, the Centre has failed to stir out of its slumber and do anything about the issue.

The pricing of the drugs should be calculated on the basis of the cost involved in their production. The market-based pricing, calculating the average of the highest selling drugs, is a totally flawed approach.

It is clearly high time that the Centre makes UCPMP mandatory and comes out with an effective way to control drug prices.

Having sensed that the private sector’s role in the pharmaceutical sector would be exploitative, India’s first Prime Minister Jawahar Lal Nehru took initiative to ensure that drugs were largely produced in the public sector to ensure affordability. While inaugurating Indian Drugs and Pharmaceuticals Ltd. (IDPL) in 1961 he said, “The drug industry must be in the public sector…. I think an industry of the nature of the drug industry should not be in the private sector anyhow. There is far too much exploitation of the public in this industry”.

The objectives of the IDPL, incorporated in April 1961, were to create self-sufficiency with respect to essential lifesaving medicines, free the country from dependence on imports, and to provide medicines to millions of people at affordable prices rather than make millions from their sale to them.

IDPL played a pioneering infrastructural role in the growth of the Indian drug production industry. It produced quality medicines to ensure the success of strategic national health programmes like family welfare programme and population control (Mala-D & Mala-N), efforts to control malaria (Chloroquine) and prevention of dehydration (ORS).

When plague broke out in India in 1994, IDPL played the role of a sheet anchor, supplying Tetracycline to the entire nation. It also made an uninterrupted supply of Chloroquine to combat the malaria epidemic in different parts of the country. In 2005, to combat an emergency situation when leptospirosis broke out due to floods in Maharashtra, IDPL supplied requisite doses of Doxycycline capsules within no time.

The PSU has always supplied quality medicines and its presence has played a price balancing role in a highly competitive and business environment. This is what World Health Organisation had said of IDPL: “IDPL had achieved in 10 years what others have in 50. IDPL products have been examined for quality very carefully by the developed countries and many of them want to buy from here”.

Nehru had also laid the foundation stone of Hindustan Antibiotics Ltd (HAL), another important PSU in the field. Another PSU, Kasauli-based Central Research Institute (CRI), is a pioneer in the field of vaccines not only in India but in the world. Founded on May 3, 1905, the institute was mandated to carry out research in the field of medical and public health, manufacture vaccines and antiserum, human resource development and to act as a national referral centre for public health problems.

The scenario began changing following a shift in the economic policies and changes in the patent rights laws under the WTO after it was founded on January 1, 1995. Indian companies, especially, PSUs had to bear the brunt. IDPL, HAL and CRI, Kasauli became financially constrained. Cheap vaccines produced by these companies became expensive and got out of reach of the common man.

The Union Cabinet’s recommendation in its meeting held on December 28, 2016 to close down and sell pharmaceutical PSUs came as a big blow to the concept of the State ensuring affordable, and possibly free-of-cost, medicines to millions across the nation.

As per an NPPA order dated March 25, 2020, there are 856 drugs whose ceiling price has been fixed by it. Since medicines and medical device are essential commodities and not a luxury, there should be a ceiling on the price of all the drugs and devices without exception. It is equally imperative to rejuvenate and strengthen PSU units to ensure affordable drug prices.

(IPA Service)

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