Some good news for those fighting high healthcare expenses: the drug controller general of India’s (DCGI) office under the health ministry has asked all state drug departments to grant licences to drug companies only on generic drug names and not on brand names.

This move, if implemented in letter and spirit, will drastically slash retail prices of drugs, making healthcare affordable for many. But the central drug control office has a tough task ahead. To ensure that the drugs are sold cheap, it will have to fix a deep-rooted problem in its own backyard first.

The state branches of the DCGI have been granting licences to drug companies allowing them to sell cheap drugs expensive, in a way legitimising a malpractice.

Generic and branded
Cheap generic drugs are available in abundance in India. These are unpatented drugs which any company can produce under the drugs’ ‘salt name’ after obtaining marketing licence on the generic name of the drug. Since these drugs are produced by several companies, the competition keeps the price of the drugs low.

Then, on the other hand, are branded drugs. A company can apply for marketing licence of a drug under a brand name only when it invents the drug. That is, if the company discovers a new molecule and tests the efficacy and safety of the drug formed from that molecule through clinical trials. This procedure may take several years and innovation is expensive. But if it succeeds in discovering a new drug, then it can apply for an exclusive patent of that drug and also for a licence under a brand name, provided it has data to prove that the drug is its own and that it is effective on the Indian population.

But in India, a lot of drug companies are simply selling old wine in new bottle. They are applying for marketing licences for generic drugs calling them their own and giving them brand names. For example, paracetamol is a generic name of an unpatented drug. This drug is sold by GlaxoSmithKline Pharma under the name Crocin, by Remedy Healthcare under the name Reemol and by Citadil Fine Pharma as Fepanil. The common salt in all these drugs is the same and all drugs have the same curative effect. Yet, they are priced differently depending on companies’ marketing muscle.

Thus, a ten-strip paracetamol pack of ten 500 mg tablets each is available for Rs 24.50 at government generic drug stores but a 10-strp pack of 15 tablets each of Crocin is sold for Rs 300. The per-tablet price is thus inflated from 24 paisa to Rs 2 (see box for more comparisons).

This exclusivity of a brand name can only benefit the drug companies and, in some cases, doctors. Companies market these drugs and down the chain doctors end up writing these brand names on patients’ prescriptions for which they allegedly get commission from the companies. Patients buy these expensive so-called ‘branded drugs’, which are actually generic drugs and rather cheap.

Racket well-known
The issue of drug licensing, however, is not new. On May 8, the parliamentary standing committee on health and family welfare submitted its report on the functioning of the central drug department, central drugs standard control organisation (CDSCO). The report exposed the nexus between drug companies and doctors and corruption in the drug control offices.

It notes that the state drug authorities have been approving drugs to be sold in the country “without any scientific evidence establishing their safety and efficacy”.

These authorities are also approving fixed dose combinations (FDCs) that are not approved in several other countries. FDCs are combinations of two or more drugs which are taken as a single dose to treat an ailment. Drugs under FDCs may be individually approved but to get licence to market them as FDCs, a company must undertake clinical trials and follow other procedures for approving a new drug.

The planning commission’s working group, headed by K Chandramouli, then secretary, health ministry, in its report on drugs and food regulation under the 12th five-year plan also highlights this problem of drug licensing. It notes, “Many FDCs approved in the country harm public health and patients by increasing adverse effects, imposing higher financial burden on patients and facilitating emergence of drug resistance.”

The recent outflow of letters by the central drug control office is a result of these developments.

Late awakening
It is a well documented fact that one of the biggest hurdles in reducing India’s healthcare cost is the cost of drugs which is anything between 50 to 80 percent of the total cost of treatment, according to planning commission figures. Spending on healthcare is also the second most frequent reason for rural indebtedness.

According to the World Health Survey, 2011, India is 42nd in the list of countries in terms of high out-of-pocket expenditure on healthcare. It found that 74.4 percent of private expenditure on health was paid out-of-pocket. As per the public health foundation of India’s health economist Sakthivel Selvaraj, if a family spends more than 10 percent of household expenditure on healthcare, then it is termed catastrophic expenditure. In India, 13.68 percent of household expenditure is spent on healthcare.

The government’s past efforts to reduce this burden of drug costs have fallen flat on the ground. It opened 44 generic drug stores, called Jan Aushadhi stores, in 2008; doctors in government hospitals in eight states were directed to prescribe only generic drugs and schemes like providing free medicines to patients in government hospitals were announced. But all these failed miserably.

This dismal picture of India’s healthcare expenditure exists even though it is called the pharmacy of the world. It supplies cheap drugs to more than 200 countries. India’s pharmaceutical industry is worth Rs 1,00, 000 crore and has been growing at the rate of 11 to 12 percent, as per planning commission figures. It is the third largest in the world by volume and 13th in value.

After the partial success of the national rural health mission, the health ministry now aims to make healthcare accessible and affordable to all through universal health care. But to achieve this, reducing drug prices is one of the central concerns, says Narendra Gupta of the non-profit organisation Prayas in Rajasthan who is also a member of the working group on drug licensing. He adds that almost 98 percent of the drugs sold in India today are generic, non-patented drugs passed off as branded drugs.

If the health ministry manages to correct the drug marketing licensing system this time, it may get some brownie points as along with reducing drug prices, it may be able to break the vicious networks between drug companies, doctors and corrupt drug control officers.

Such an industry-unfriendly move, however, may result in companies withdrawing from producing certain drugs as their profit margins dip, says Shailly Gupta from Medecins Sans Frontieres, an international non-profit fighting for promotion of generic drugs in India. “In the past when the government increased the number of drugs in the list of essential medicines, a lot of companies stopped producing those drugs leading to a scarcity in the market. They may resort to such measures again,” she fears.

On the other hand, DG Shah, general secretary of India Pharmaceutical Alliance, an association of Indian pharmaceutical companies, says that the directive from the drug control department is in fact in favour of the drug companies. He explains that different companies get marketing licences on names similar to each other's products, thus creating conflicts. The latest move will stop this trend. Will manufacturers stop production of some drugs due to reduced profit margin? He replies, “The matter (of reducing drug prices) is being debated. There is a separate policy that looks into it. Companies will decide what to do when the matter comes up."

The ministry will have to do a balancing act to ensure that the ultimate losers are not patients again.

Generic vs branded drugs

The difference is in price, not in effectiveness:

Paracetamol, 500mg tab (for fever)
(A pack of 10X10 means 10 strips of 10 tablets each, totally 100 tablets )

Jan aushadhi rate: Rs 24.50 (10X10)
Crocin (GlaxoSmithKline Consumer healthcare): Rs 300 (10X15)
Calpol (Glaxo SmithKline Pharmaceuticals): Rs 165 (15X10)

Ciprofloxacin 500mg (antibiotic)
Jan aushadhi rate: Rs 215 (10X10)
Ciplox (Cipla): Rs 890 (10X10)
Cifran (Ranbaxy): Rs 1,000 (10X10)

Levofloxacin, 500mg (antibiotic for severe bacterial infections)
Jan aushadhi rate: Rs 444.50 (10X10)
Levoflox (Cipla): Rs 780 (10X10)
L-Cin (Lupin): Rs 700 (10X10)

Glimperide, 2mg tab (anti-diabetic)
Jan aushadhi rate: Rs 118.10 (10X10)
Amaryl (Aventis): Rs 1,180 (10X10)
Diapride (Micro Labs): Rs 900 (10X10)

Pantoprazole, 40mg tabs (gastro-resistant)
Jan aushadhi rate: Rs 103 (10X10)
Pantosec (Cipla): Rs 200 (10X10)
Pantocid (Sun Pharmaceutical): Rs 730 (10X10)
Pan 40 (Alkem): Rs 765 (10X10)

“Collusive nexus between drug manufacturers, CDSCO functionaries…”

From a report of the parliamentary standing committee on health:

1. The committee is of the firm opinion that most of the ills besetting the system of drugs regulation in India are mainly due to skewed priorities and perceptions of CDSCO. For decades together it has been according primacy to the propagation and facilitation of the drug industry, due to which, unfortunately, the interest of the biggest stakeholder, i.e., the consumer has never been ensured.

2. Work relating to an application for market approval of a new drug that will be used by millions and thus have an impact on the well-being of public at large in India for years to come, is far more important and urgent than giving permission to a foreign company to conduct clinical trials on an untested new patented, monopoly drug.

3. There is sufficient evidence on record to conclude that there is collusive nexus between drug manufacturers, some functionaries of CDSCO and some medical experts.

4. The issue regarding grant of manufacturing licences for unapproved FDCs by some state drug authorities was first deliberated in 49th Drug Testing Advisory Board meeting held on 17 February, 2000, i.e., 11 years ago. It is a matter of great concern that even after a lapse of a decade, no serious action has been taken.  

“Law is required to mandate prescription audits”

From the planning commission working group’s recommendations:

1. All drug pricing related matters should be under one ministry and not be divided between the health ministry and chemicals and fertilizers ministry. The health ministry should be the nodal ministry for National Pharmaceutical Pricing Authority (NPPA, the body to regulate drug prices and to ensure availabilility in the market).

2. Prescriptions must be made in international non-proprietary name (INN) which could play a crucial role in removing incentives for doctors to prescribe the most expensive brands of generic drugs.

3. Patent matters must continue to be firmly delinked from the drug licensing process for clinical research, manufacture and marketing approval.

4. The health ministry shall identify and issue compulsory licences for patented expensive drugs required for public health programmes and take steps to make them affordable.

5. The health ministry in collaboration with Medical Council of India should incorporate into the medical, pharmacy and nursing syllabus rational use antibiotic policies, and promotion of generic medicines.

6. A comprehensive law is required to mandate prescription audits, a measure necessary to curb drug resistance.

7. Use of generic names or the INN should be encouraged at all stages of procurement, distribution, prescription and use as it contributes to a sound system of procurement and distribution, drug information and rational use at every level of the health care system.