Who does the drug policy benefit?

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Swine Flu has claimed over 800 lives in India so far this year. The first outbreak of H1N1 virus was reported in the country in 2009. But surprisingly, during the revision of the essential medicines list in 2011, the government did not include the formula for Oseltamivir or Tamiflu (a medicine for swine flu) in the National Essential List of Medicines, 2011. It is important to mention that Tamiflu is on the World Health Organisation’s (WHO) list of ‘essential medicines’ and the Centre for Disease Control and Prevention of the US, recommends it as one of the medications for treating the disease. The prices of medicines in India are governed by the National Essential List of Medicines (NELM) and the DPCO (Drug Price Control Order). The NELM is prepared by the Union Ministry of Health and Family Welfare and is revised every three years. However, the latest revised NELM, which should have been ready in 2014, is expected to come out later this year. Only the prices of the medicines falling under the NELM can be controlled by the National Pharmaceutical Pricing Authority (NPPA).

Meanwhile, the government has already accepted that the profit margins of pharmaceutical companies are upto a whopping 1023 percent. Also, alarmingly, a National Sample Survey Organisation (NSSO) report says that 3 crore Indian citizens slip below the poverty line each year, because they are unable to bear the financial burden incurred through pharmaceutical expenses.

Drug Policy favour Pharma Companies

India’s drug pricing policy has always been questioned for having benefited the pharmaceutical companies. In a DPCO order in 1995, the government only included 75 drugs in the NELM, which proved futile in controlling the price of medicines. Essential drugs of aids, tuberculosis, elephantiasis, hypertension, malaria, leprosy and many others were not included in the list. In the order, the retail prices of medicines under NELM were based on the manufacturing cost. For example, if the company spent Rs 5 on producing a medicine, including packaging cost, it could sell it for a maximum price of Rs 10.

Under the chairmanship of Sharad Pawar, the committee responsible for formulating the new drug policy replaced the cost-based pricing formula with a market-based one. As per the latest order in 2013, the average price of the drug sold by pharmaceuticals companies with at least one percent share in the particular market will be the retail price. Eventually, this made the drug even more costly, as prices are based on flawed Maximum Retail Price (MRP), with mammoth margins for the companies. (See table)

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