April 1, 2023: In what could be a bitter pill to swallow for the average Indian who is struggling to negotiate inflation, joblessness, and inequality, the country’s healthcare authorities have paved the way for an unprecedented wealth transfer from the hands of the helpless masses to the coffers of Big Pharma giants.
Starting today, foreign and domestic drugmakers operating in India have the government’s nod to hike the prices of essential medicines by well more than 11%. The escalation in prices covers basic medicines, such as painkillers and antibiotics, and also those for treating life-long conditions, such as diabetes, chronic infections, high blood pressure, and cardiac problems.
On March 25, the Indian government announced that pharma companies had been allowed to sharply increase drug prices, arguing that it’s unavoidable as the rates are linked to a rise in India’s WPI (Wholesale Price Index).
This is the highest price rise of essential drugs since the new WPI-linked system was introduced, affecting a large number of patients, particularly those battling urban lifestyle diseases.
BIGGEST PRODUCER
OF GENERIC DRUGS
Incidentally, India makes 62% of all vaccines used globally, and is the largest producer of the world’s generic drugs – cheaper pharmaceutical products made to match brand-name drugs in quality and performance as well as safety.
A quick look at the prevalence of three maladies – cardiac issues, hypertension and diabetes – reveals the guaranteed higher profits set to flow into the coffers of pharma companies driving the Indian healthcare sector, which was worth $280 billion in 2020 and estimated to reach $372 billion by 2022.
India is known as the world’s diabetes capital, with the lifelong condition likely to affect seven crore people – more than Britain’s entire population – by 2025, and over eight crore people by 2030.
According to the WHO (World Health Organisation), around 35.4 lakh deaths occur in India annually due to cardiovascular disease. Indians also have the highest rate of coronary artery disease. When it comes to high blood pressure, an estimated 22 crore Indians – close to the population of Nigeria – have the problem.
DEEP IMPACT
The decision will have wide ramifications in the poverty-torn country, covering 384 drugs and over 1,000 formulations that fall under the category of essential medicines, as prescribed by the WHO. The world body says essential drugs or medicines are those “that satisfy the healthcare needs of a majority of the population; they should, therefore, be available at all times in adequate amounts and in appropriate dosage forms, at a price the community can afford”.
Launched in 1977, the Essential Medicine Concept constitutes one of the eight pillars of the WHO’s “primary health care” strategy. The WHO has adopted a flexible approach with regard to the specific medicines to come under the category in a particular country, and entrusted the national authorities to make the decisions.
Consequently, in India, the government has published what is called the NLEM, or the National List of Essential Medicines.
In the Indian scenario, the government’s announcement of the hike in the ruse of WPI increase goes against the spirit of the last part of the WHO’s definition of ‘essential drugs’ – “at a price the community can afford”.
Two points may be flagged here.
Firstly, last year, too, the government had declared a WPI-linked hike of 10.7%. But several drug manufacturers pegged the raise at less than 5%.
This was apparently done because of market forces; in other words, to ensure competitors did not run away with orders by offering medicines at lower prices.
In a free-market economy, no manufacturer would want to sell his goodies at a loss. The fact that some drug makers went for a smaller hike is a fair indication that the price was enough to make a decent profit. To buttress this argument, one can take a look at the profit margins of the leading pharmaceutical companies.
Cipla was the leading pharma company in India as of July 2022 with a net profit of about Rs 3,000 crore. Divis Labs and Glenmark came second and third with net profits of around Rs 2,900 crore and Rs 2,000 crore, respectively, during the same time period.
Also, a price war ensues only when the selling price is competitive, or when it is above the profit line. This shows that the price fixed by the government is clearly on the higher side. It also calls into question the policy of WPI-linked hikes. In other words, the pricing system appears rigged.
Secondly, as per norms, there is an automatic 10% rise in the rates of non-essential medicines every year. But both in 2022 and 2023, the hike in the rates of essential drugs, including life-saving medicines, was more than the rise in the price of non-essential medicines. So, the very purpose of linking WPI to the price rise – that is to maintain some sort of a limited administered price control – is defeated.
ALLEGATION OF
BRITISH MEDDLING
Meanwhile, making a startling allegation, UK-based advocacy group Global Justice Now, which is taking on Big Pharma as part of its efforts to promote a more equitable healthcare system, recently said the British government is pressuring India “to adopt rules that would drive up medicine prices”.
Basing its allegation on a “draft chapter” of the UK-India trade negotiations, which it claimed has been leaked, the watchdog claims the British government’s “apparent plan” is to push through “stricter intellectual property rules on India” that would “shore up Big Pharma’s medicine monopolies and drive up the price of cheap generic medicines produced in India”.
“This won’t just harm the global south – a quarter of all medicines used in the NHS (National Health Service of the UK) come from India’s successful generics industry… If agreed, the UK’s demands would threaten the NHS and have a devastating impact on public health across the world,” Global Justice Now posted on its website.
This is no flash-in-the-pan example of foreign intervention in India’s pharma market. During the past decade, multinational pharma giants, eyeing a slot in India’s huge healthcare sector, had reportedly pressured the US to act against the Asian country for stopping local companies from producing new varieties of cheap generic drugs still on-patent.
Among the western drugmakers, Pfizer, Novartis, Roche, and Sanofi had been looking for a share of India’s medicine market at that time.
The cost of essential healthcare spiralling upwards is the worst thing that can happen to a country characterised by grinding poverty, massive economic disparity, and continuous meddling by foreign forces.
The latest turn of events makes one ask a few uncomfortable questions: In an economically unstable country like India, is such a jump in drug prices ethical? Who is actually running the country’s healthcare industry? Is it a clique of pharma companies that has the final say?
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