Killer cure
Written by Business Standard   
Wednesday, 08 February 2006


Killer cure

Harinder S Sikka

 Ever since India became TRIPS-compliant, there have been speculation about a drug price hike. Indeed, the prices did go up, but the hike was due to the finance ministry’s inventive policies on fringe benefit tax and untimely MRP-based excise duty. With over 97 per cent drugs off patent in India, there is not going to be any adverse impact on most drugs for at least the next one decade. The knowledge-economy sector, however, has some fears regarding the impending drug policy. 

Part A of the policy recommends that the industry should be asked to reduce trade margin on anti-cancer and AIDS drugs to the barest minimum. The R&D-based industry resents this. Any new drug researched in India will have to be paid for, either by the government or by the patient, for the simple reason that the pharma industry is running on shoe-string budgets and cannot afford to provide subsidies and meet the rising R&D costs, too. This is a role that ought to be played by the state machinery.

Second, the government wishes to empower itself to impose price control for any period of time. Past experiences have shown that such wide encompassing powers in the hands of the bureaucratic machinery are often misused. The industry would rather have a price fixation clearly specified so as to resolve all ambiguities in its interpretation. 

Third, the committee recommends powers to approve a brand name for any specific product as also prevent changes in the composition of a product. The industry, however, feels that with a huge number of brand names already in the market and in the pipeline, it would lead to a bureaucratic nightmare and could prove detrimental to launching of new products. 

Fourth, the draft policy suggests a health cess for funding schemes for the poor. It, however, does not appreciate that the knowledge economy sector can ill-afford any more cess burdens, especially at a time when the pharma sector is trying hard to keep its head afloat. 

Fifth, the government proposes to incentivise R&D through increased weighted deduction upto 200 per cent until 2015. It is indeed a step in the right direction, but falls short of expectations. Given the fact that facilities in India for conducting trials are still at a nascent stage, clinical trials should also be made an integral part of the said policy. More importantly, the Mashelkar Committee’s recommendation of freeing R&D-based companies from price control has been omitted. This one step alone would have helped the industry in focusing on researching drugs for diseases prevalent in the Indian subcontinent. 

R&D is the backbone of any industry. It is, therefore, of paramount importance that the government, which as of now spends a near pittance on healthcare, focuses on providing impetus for an efficient drug delivery system. While the whole world is looking at our country for cutting costs on research and manufacturing, the entire pharma sector is looking at the Centre, hoping it would hold its hand at a stage so crucial. SARS has shown that one healthcare disaster could bankrupt any nation, big or small. With the threat of pandemics looming large on the entire civilization, it is a wake-up call for India to put its act together. 

The writer is Co-Chairman, ASSOCHAM Pharma Committee

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