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Why Is the Draft Pharmaceutical Policy Shaking up India’s Drug Price Regulator?

The policy proposes changes in the role and function of the National Pharmaceutical Pricing Authority, as well as to its overall structure, which will weaken the autonomy of the body.

The changes to the NPPA suggest that the price regulator has been underperforming, when, in fact, it has been sticking close to its government-given mandate. Credit: Reuters

The changes to the NPPA suggest that the price regulator has been underperforming, when, in fact, it has been sticking close to its government-given mandate. Credit: Reuters

The draft pharmaceutical policy has been recently circulated by the Department of Pharmaceuticals (DOP) to a select group of organisations. Its concerns are spread across at least three ministries – DOP, health and commerce, the last for issues related to patents. The Wire earlier reported on the range of issues it aims to cover including the quality of Indian drugs, time taken for drug approval and reducing dependence on China for raw materials.

The draft policy spends a lot of bytes on India’s drug price regulator, the National Pharmaceutical Pricing Authority (NPPA). So let us focus on that first. The draft policy has written in features that will alter the roles and functions of the NPPA as well as its overall structure. The changes suggest that the price regulator has been underperforming, when, in fact, it has been sticking close to its government-given mandate.

It is indeed strange for a government body such as the DOP to not claim credit when it is due. Surprisingly, one does not see any mention in the policy draft of the useful capping of prices of stents and knee implants done by the NPPA and some ideas on the further road map on price capping of medical devices by NPPA.

The DOP is also planning a meeting in FICCI on medical device policy with representatives of the medical industry – none representing the public interest point of view. Does it mean that the DOP does not reinforce the initiatives proudly claimed by the PM in his several speeches?

Drug price regulation

Firstly, the new draft policy says DOP will take control over the National List of Essential Medicines (NLEM), which is used as the basis for determining which drugs the government can control the prices of. This has been rather infelicitously phrased as, “Government in the Department of Pharmaceuticals will prepare the list of medicines for price regulation and transmit them to the NPPA for fixing the price ceilings.” So is the NPPA not in or a part of the government?

The previous policy was that all NLEM drugs will automatically be under the Drug Price Control Order 2013 (DPCO). The NLEM is incidentally prepared under the aegis of the Ministry of Health. And the DPCO is under the Ministry of Chemicals and Fertilisers, along with the Department of Pharmaceuticals.

So what the draft policy appears to say is that henceforth, the health ministry will merely suggest the NLEM, and it is the DOP that will apply its mind as to what NLEM drugs to put under price control. Essentially, this means that the DOP can cut the list of drugs to even less than the current 376, say to a 100, because it thinks fit or because a set of drugs are not promoting ‘ease of business.’ Is DOP suggesting that it has the locus standi and competence to decide which drug is more essential, more than the dozens of medical experts who spend several meetings to finalise the NLEM? What should get primacy here? Is the essentiality of a drug for health of the people more important or the convenience of the pharma industry? The policy does not even explain if price control has inconvenienced the industry and how.

Curbing NPPA’s autonomy

It continues in the same peremptory style: “The regulator and the government would be two distinct agencies. The government shall not be the regulator and the regulator shall not be the government.” As with the previous section attempting to take hold of the NLEM, here too the suggestion is that the NPPA, which is the regulator, is somehow “out” of the government?

But reading between the lines of this somewhat confusing phraseology indicates that the DOP secretary and joint secretary will take the call and overturn the decisions of the NPPA as has been happening frequently in the recent past. The Wire had recently reported that Swadeshi Jagran Manch even wrote a letter to Ananth Kumar, the minister of chemicals and fertilisers, citing examples of this.

This policy’s suggestions will then save the tedium of issuing memorandums, that the DOP have been shooting off recently to the NPPA, spelling out dos and don’ts. This will legitimise the curbing of NPPA’s autonomy – no straying off hereafter into curtailing prices of stents and knee implants by NPPA on their own initiative or no using of para 19 powers suo moto – despite the Bombay high court saying para 19 is within the scheme of the purpose of price control and that the previous exercise of para 19 powers in the year 2014 was legitimate beyond doubt.

Structural changes in NPPA

The third matter of concern regarding the NPPA is that the DOP wants to change its constitution and structure entirely, not just its role and functions. The draft policy pursues a determined line of infantilising the NPPA. It says: “NPPA will be strengthened. It will be assisted by an advisory body for pricing, nominated by the government in the NPPA. The body will consist of doctors, pharmacists, other experts, civil society representatives, industry representatives and government representatives. The advice of this body will be recommendatory and the NPPA may accept or modify the advice rendered. While modifying/rejecting its advice, the NPPA will assign reasons in writing for doing so.”

What is the need for an advisory body that has conflicts of interests? Who is being hurt by a government body delivering on its mandate? In all its history, the period 2013 to date was the most proactive and pro-consumer phase for the NPPA. One can understand perhaps, if NPPA were malfunctioning or not delivering on its stated purpose, but the case has been anything but this – the NPPA has been doing exactly what it has been set up for. Instead of leaving the NPPA alone and strengthening its autonomy, this advisory body is another blow to the smooth functioning of the NPPA. The phrase “NPPA will be strengthened” is therefore clever because it is inappropriate. These strengthening measures will actually shackle the autonomy of the body and weaken it.

The policy also suggests certain measures presumably intended at transparency. It says the “strengthened NPPA” should be a multi-member body with decisions only to be taken by consensus and members should have a three-year tenure. What happens if consensus-decisions cannot get taken and bad, compromised decisions are made? Fixing three-year periods means everybody who comes in will take substantial time to learn the new job and this will mean pricing decisions will be even slower than they already are. There have been no signals till now that the NPPA is a corrupt body, so why is a specialist job being made transferable with short tenures?

The basic question is, why is the boat of the NPPA being rocked? Has it failed in doing its government-mandated duties? Can the DOP substantiate if the NPPA has been engaging in corrupt practices, and that is why the DOP is altering the regulator? It is neither of these. In fact, the NPPA has been navigating various choppy waters very well. This and other sustained efforts to knock the NPPA down over the last year, bring up shades of the T.N. Seshan affair – when he became too powerful and displayed an independent mind as the sole election commissioner, the Election Commission was made a three-member body. These bureaucratic games are not new.

Somewhere in the end, the draft policy betrays itself: “DPCO will be reoriented to move from price-control to monitoring of drug prices, their availability and accessibility.” That seems a step back to laissez faire in medicine pricing. Bad news for patients and consumers, good news for ease of business.

The draft policy concludes with genuflection to two current mantras – ease of business and ‘Make in India’.

Make in India does not at all mean that drugs will be made for the Indian consumer – the poor patient. This is a more desirable outcome, but is not guaranteed by this policy. The policy does not seem to address the stated goals of the prime minister to make drug prices more affordable – for that the market under price control needs to increase from the current, which is approximately a measly 11% to at least 50%. It will need to cover all essential, lifesaving and rational drugs and rational FDCs and eliminate the rest from the market.

S. Srinivasan is associated with LOCOST, Vadodara and has been involved with public health aspects of pharmaceutical policy.

  • https://babupaedia.blogspot.in Sudhansu Mohanty

    Kudos to Mr. Srinivasan for an immensely insightful piece where he has with facts and with the benefit of his pharma industry knowledge shown how intellectual dishonesty is being sown yet again in the present Indian governance system. The move is blasphemous and highly condemnable. How on earth is the Department of Pharmaceuticals to decide on the national list of essential medicines (NLEM) which rightly should be drawn up by medical experts of various disciplines under the supervision of the Ministry of Health and Family Welfare? Why infantilise the NPPA when the Authority has done rather well, and there obviously are no complaints (unless of course you’re talking about and holding a brief for the big pharma industry) against it? Is para 19 of the DPCO so disturbing for the government’s comfort and militates so much against the pharma lobby that the former has to resort to such mean subterfuge and shenanigan? What’s the meaning of the move to reorient the DPCO’s focus from “price-control to monitoring of drug prices, their availability and accessibility”? The author has summed it aptly and I can do no better than to quote his words: “The draft policy concludes with genuflection to two current mantras – ease of business and ‘Make in India’.

    It’s time the civil society understands the import of this subtle government move and raises its voice of complete disapproval.