Law

As SC Tries Case on Drug Price Ceiling, Government Mulls Dismantling Price Control Body

Representational image. Credit:PTI

Representational image. Credit:PTI

New Delhi: Four days before the Supreme Court backed the National Pharmaceuticals Pricing Authority (NPPA)’s decision to create a ceiling for drug prices to keep them reasonably priced, the government held a closed-door meeting to discuss dismantling the central price control authority, representatives from civil society organisations told media persons.

The NPPA fixes and revises the prices of essential drugs and monitors the prices of decontrolled drugs to keep them at reasonable levels.

The organisations, which work to ensure the affordability of life-saving drugs, alleged at a press meet held in New Delhi this past Tuesday that “the government has done it at the behest of the pharmaceutical industry under the pretext of removing ‘unnecessary hurdles’ and ‘ease of doing business’ in India with little or no public consultation, even though it would have far [a] reaching effect on public health and [people’s] right to life.”

The October 19 meeting, held by Niti Aayog, also suggested removing or significantly diluting Drug Prices Control Orders (DPCO) which are issued by the government– under the Essential Commodity Act, 1955 – to ensure the affordability of essential drugs for the general public by instituting price ceilings.

Srinivasan of Low Cost Standard Therapeutics(LOCOST), said, “The health sector in the country is already highly privatised which makes healthcare for many unaffordable. The pharmaceutical industry has been lobbying hard with the government to decontrol drug pricing on generic drugs so that it can further its profits. However, in the last three weeks’ time, two judgements – one by the Bombay high court (on September 26 in the case Union of India and Others versus Indian Pharmaceuticals Alliance (IPA) and the other by the SC (on October 22 in the case Union of India and Others versus Cipla Ltd. and ANR) – came to the industry players as a huge setback. Together, the courts have held the industry liable for overcharging recovery to the tune of Rs. 6,000 crores by the NPPA. Though the IPA appealed [to] the Bombay court order in the SC, its petition was dismissed.”

He added, “Facing the prospect of paying such high fines for overcharging consumers, it is not a surprise that the industry is pushing hard to have the entire legal framework on drug pricing overturned. However, what is astonishing is the manner in which the government is simply capitulating to industry demands without a thought for patients.” Prior to that, the SC, in 2003, asked the government to put all essential and life-saving drugs under price control.

Together with Mira Shiva of the All India Drug Action Network (AIDAN), Narendra Gupta from Jan Swasthya Abhiyan and lawyer Gopa Kumar, Srinivasan pointed out to the press meet attendees that Niti Aayog’s suggestions “go against the 2012 Supreme Court order which held that the government has a constitutional obligation to ensure the affordability of essential medicines.”

“It is also a sub judice matter as the SC is still hearing the case on drug pricing policy. The news about such a suggestion came at a time when there is a critical hearing of the case this Wednesday. Our lawyer will place this development at the court,” Srinivasan added.

Filed by AIDAN, LOCOST and Jan Swasthya Sahyog along with some other NGOs in 2003, the public interest litigation filed with the SC sought judicial intervention to ensure that the prices of essential medicines remained within the reach of the common man. The petitioners complained that only around 78 drugs were counted under the Drugs (Prices Control) Order, 1995 (DPCO) making the rest of the medicines unaffordable for the average Indian. The DPCO 2013 expanded the list to 370 drugs. While hearing the ongoing case in 2012, the apex court asked the government not to alter the existing pricing system as it might lead to a hike in the prices of essential drugs.

“The existing system of price control has already been watered down and greatly compromised through years of industry lobbying. If it is further weakened, a large section of people will fail to get medical care. We have to ask if the system is for public health or for the industry,” said Gupta.

He added that he and members from other groups were invited to meet a group of secretaries at Nirman Vihar to discuss the issue on November 7.

“The invitation for the meeting didn’t state any specific subject of discussion. When we began by giving a background of the issue, we were told, don’t analyse, just give point-wise suggestions. Though they told us not to give any submission, we did give one, pointing out important details,” he said.

“Though the industry has been saying that price control has been affecting its growth, only 12% of the domestic market is under price control. We pointed it out in our submission that it debunks the theory of the industry and the government that dilution of price control is required to bring ‘ease of business’,” said Srinivasan.

He pointed at figures to drive home the point that the 88% of the non-price controlled drug market “is growing by leaps and bounds.”

“In spite of the DPCO 2013, the industry has grown from Rs. 70,000 crore to more than Rs. One lakh crore (as per [Big] Pharma figures) and an equivalent amount for exports.”

Mira Shiva pointed out, “Nearly 80% of medical care costs have to be borne by patients out of pocket of which 70% is on medicines. Denial of essential life saving medicines due to lack of affordability and indebtedness is a harsh reality. A distorted market cannot and should not be the basis of drug pricing and policy, especially when the sale price has no bearing on the cost of production and purchasing power of our people.”

Speaking to The Wire, Srinivasan said, “It is a foolish step by the government. It is politically unwise and ethically unjust. Is this sabka saath and sabka vikas?”

Other developing countries have also been following India’s example of keeping generic drugs’ prices low and affordable – a practice that has made India a pharmaceutical drug supplier to a large part of the world.  However, this has become a point of contention with US pharmaceutical multinationals, ever since the 2012 and the 2013 SC judgments were announced, pharmaceutical companies have been lobbying their governments to pressurise India into strengthening patent protection for drugs.

As per several news reports, US president Barack Obama raised the issue with Prime Minister Narendra Modi when the latter visited the US in 2014. And in June this year, the Indian government decided to allow foreign investors to buy as much as 100% of the stake in Indian drug companies without prior government approval. Civil society organisations see this move as concerning because it enables the gradual takeover of the domestic pharmaceutical industry, which in turn may alter India’s role as a world supplier of low-cost generic drugs.

In May this year, the government also issued a new patent policy to bolster public perception of international intellectual property “as a marketable financial asset and economic tool” and create a “holistic” system that provides economic growth while protecting the public’s interests.