Ill-fitting caps

Industry should be coaxed in the direction of better public health, through incentives rather than controls

The notification of the long-expected Drug Prices Control Order has set in motion a process that will see a fall in the prices of hundreds of new drugs on the National List of Essential Medicines. This would lower the cost of several categories of medication, from common skin creams to HIV and cancer drugs. Earlier, price controls had been sidestepped by ceasing the production of capped drugs and withdrawing their promotion. The present order plugs such loopholes but opens up new ones. It discourages pharma companies from ceasing production of essential drugs with a moratorium, and it requires reporting of inventories so that shifts in production and sales patterns can be detected early. However, it offers a five-year relief from capping for drugs developed in India. While this would encourage investment in indigenous R&D, it could also allow caps to be sidestepped, since an existing drug synthesised or delivered by new mechanisms would be regarded as

a new drug.

While it is important to monitor production and sales, how drugs are prescribed and sold should also be tracked to ensure the delivery of affordable healthcare to the poor. Earlier, it had been noticed that the prescription of capped drugs fell as medical representatives stopped pushing them. Besides, this order does not address the problem of big brand dominance. When prices are capped and the differential between competing brands is reduced, buyers prefer brands with better recognition. Brands that are priced higher because of bigger promotional spends win out, defeating the objective of cheaper drug availability.

As India heads for a much-advertised public health crisis, the government obviously has to take an interest in medication. However, it should look at the whole cycle by which drugs are innovated, produced, acquired by the public health system, prescribed, promoted and consumed. While the present order is more evolved than its predecessor, the reality that price capping skews markets appears to be insufficiently appreciated. Besides, the capping of so many drugs looks uncomfortably coercive. It would be preferable to coax the industry in the direction of better public health, valuing incentives over controls. This order could be regarded as a half-step in that direction.

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