Prize control on Drugs is a lazy thinking

Prize control on Drugs is a lazy thinking

Context:

The government is increasingly relying on imposition of price controls on medicines and devices to check rising health-care costs.

Introduction:

• Last month, the National Pharmaceutical Pricing Authority capped the prices of 37 more medicines raising their number to 821.
• It has already capped the prices of coronary stents and orthopaedic implants.
• Presently around 20% of medicines by volume are subject to price controls. More medicines and devices are likely to come under it.
• The policy also seeks to raise import duties on active pharmaceutical ingredients (API) to encourage the indigenous industry.

Impacts:

• This will increase the input cost for manufacturers.
• Restrictions on loan licensing will further raise manufacturing costs and bring down the margins of pharma companies.
• It will impact companies’ ability and willingness to fund research and development of innovative medicines.
• Research and Development spends by Indian pharma companies are already low, at 8-10% of their sales revenue as compared to a figure of 20% of multinationals.
• Subjecting 74 notified bulk drugs to price control via the Drugs (Price Control) Order 1995 led many pharma companies to opt out of their production.
• This forced manufacturers of formulations to import bulk drugs and APIs from China which now supplies two-thirds of India’s requirements.
• The frequent imposition of price ceilings creates uncertainties, caps expected profit and deters investors.
• Trade-off between price and quality.

Reasons for rising health care costs:

• Profiteering by private hospitals.
• Low per capital availability of medical practitioners.
• Doctor’s consultation fees, cost of operation procedures, diagnostic tests and hospital bed rentals are the factors responsible for rising health care costs.
• Increasing supply of cheaper medical seats in government medical colleges will make doctors less vulnerable to unethical profiteering by private hospitals.

Problems government hospitals facing:

• The lack of competition from under-staffed.
• Over crowded government hospitals
• Lack of funds
• Lack of infrastructures

Solutions:

• The key to bring down medicine (or device) prices lies in increasing competition among pharma (or device) companies.
• Unlike oligopolistic airline or telecom industries which may require price regulation, there are 15,000 pharma companies in India competing with each other for market share. That makes collusion and price rigging difficult.
• Improving facilities at government hospitals.
• Increasing government spending on health care which is low at 1.4% of India’s GDP when compared to 3% in China and 4.3% in Brazil.
• The government should also instruct all health-care providers to display all charges and fees on their websites so that buyers of their services can compare and decide where to go and which facilities to use.
• This will improve transparency and will be more patient friendly.
• The government can directly procure medicines from manufacturers and distribute them through Jan Aushadi outlets to reduce medicine prices.

New National Health Policy 2017:

• The government has approved the National Health Policy, 2017 (NHP, 2017).
• The Policy seeks to reach everyone in a comprehensive integrated way to move towards wellness.

Key objectives of  New National Health Policy:

• It aims at achieving universal health coverage and delivering quality health care services to all at affordable cost.
• It focus on Preventive and Promotive Health Care and Universal access to good quality health care services
• This Policy looks at problems and solutions holistically with private sector as strategic partners.
• It seeks to promote quality of care; focus is on emerging diseases and investment in promotive and preventive healthcare. The policy is patient centric and quality driven. It addresses health security and make in India for drugs and devices.
• The main objective is to achieve the highest possible level of good health and well-being, through a preventive and promotive health care orientation in all developmental policies, and to achieve universal access to good quality health care services without anyone having to face financial hardship as a consequence.
• The policy advocates extensive deployment of digital tools for improving the efficiency and outcome of the healthcare system and proposes establishment of National Digital Health Authority (NDHA) to regulate, develop and deploy digital health across the continuum of care.