If Modi Really Wants Affordable Medicines, Why is His Niti Aayog Pushing in the Opposite Direction?

The government's premier policy-formulating agency recently recommended measures to deregulate the pharmaceutical sector and make essential medicines more expensive.

People walk past a chemist shop at a market in Mumbai, India, June 25, 2015. Credit: Reuters/Shailesh Andrade

People walk past a chemist shop at a market in Mumbai, India, June 25, 2015. Credit: Reuters/Shailesh Andrade

New Delhi: Even as the prime minister repeatedly expresses his commitment to providing affordable medicines in the country, it appears that the NITI Aayog and the Department of Pharmaceuticals (DoP) may be working in an opposing direction. Documents between October 2016 and April 2017 show the intention of various government arms to push for drug pricing to be deregulated in line with the demands of the pharmaceutical industry, making the prime minister’s recent statements seem like an aberration.

On May 1, Swadeshi Jagaran Manch – a ‘nationalist’ lobbying group backed by the Rashtriya Swayasevak Sangh – wrote a strongly-worded letter to the prime minister and called out various sections of the government for just this. The organisation named the NITI Aayog, which is the government’s premier policy-formulating institution, the Ministry of Health and Family Welfare, the DoP in the Ministry of Chemicals and Fertilisers and the Department of Industrial Policy and Promotion (DIPP) in the Ministry of Commerce and Industry, and said that these bodies were working to prevent medicines from being more affordable in the country.

“So powerful has the hold of the pharmaceutical companies been that the secretaries and joint secretaries of [these] three ministries … are now holding meetings along with the NITI Aayog to completely dismantle the system of price control. Of course, some kind of pretence, under the guise of pro-poor policies, will be made that they are going to introduce a better system,” their letter said.

Letter from Swadeshi Jagaran Manch to the prime minister, alleging that government bodies are trying to make drugs unaffordable.

The letter made the allegations without offering proof for them, but what the SJM is pointing too is a certain mood that has been observed by close watchers of the pharmaceutical sector as evidenced by communications within and between these government bodies over the past few months. The Wire reached out to three relevant officials at the NITI Ayog but they did not reply to calls, SMSs or emails. The relevant bureaucrat at the DoP said he is “not competent” to speak on the matter, although his office has been coordinating meetings on drug pricing recently.

Modi pushes for affordable medicines

On April 16, Prime Minister Narendra Modi told a gathering in Surat that his government planned to bring a law making it compulsory for doctors to prescribe generic medicines. He also tweeted that his office has pushed for price control, “even if that meant pharma companies are unhappy with us,” and all of this because, “The poor must have access to quality and affordable healthcare.”

In February, the National Pharmaceutical Pricing Authority (NPPA) brought life-saving cardiac stents under price control, slashing their prices by nearly 85%. The prices of bare metal stents were capped at Rs 7,260 and drug eluting stents at Rs 29,600. Modi praised the BJP for this move at rallies in Uttar Pradesh and in Himachal Pradesh, though it came after a Delhi high court ultimatum that left the government no alternative.

NITI Aayog pushes for drug price deregulation

The prime minister’s intentions notwithstanding, on April 23, NITI Aayog released its draft ‘Three Year Action Agenda’ (2017-2020). Health is in the second but last chapter, and in a small section titled ‘Access to Medicines’, the government’s think-tank writes briefly:

 “A balanced approach towards regulation is needed for achieving the twin objectives of access to effective medicines and a strong pharmaceutical industry. There is a trade-off between lower prices on the one hand and quality medicine and discovery of breakthrough drugs on the other. It is therefore recommended that the Drug Price Control Order may be delinked from the National List of Essential Medicines.”

For Swadeshi Jagaran Manch, their fears have been evidenced in this last line, which calls for delinking. In fact, they say the NITI Aayog is creating fear by taking the prime minister’s idea for more generic and affordable medicine in the country, and then insinuating in their draft report that affordable medicines will be of low quality.

In their letter to the prime minister, they say that these recommendations by the NITI Aayog are in continuation of their “attempt to deregulate the pharmaceutical market.” They “protest the ill-intentioned recommendations which will increase the prices of essential medicines to further unaffordable levels and is revealing of the NITI Aayog’s apathy towards the welfare of the poor people of the country.”

Implications of delinking NLEM and DPCO

Although it is a brief section, what the NITI Aayog’s draft agenda does is draw a connection between medicines that are affordable with medicines that are substandard or spurious. Their logic is that just because the medicines are cheap, they will automatically be dangerous. These insinuations aside, what will perhaps be most impactful is NITI Aayog’s last and technically-worded sentence: the government think-tank recommends the delinking of the National List of Essential Medicines (NLEM) from the Drug Price Control Order (DPCO).

The NLEM is currently a list of 376 drugs, listed in Schedule 1 of the DPCO. The DPCO is an order that draws its powers from the Essential Commodities Act, 1955. As far back as 2003, the Supreme Court had directed the Government to consider and formulate appropriate criteria “for ensuring essential and lifesaving drugs not to fall out price control.” Despite the noise made by the pharmaceutical industry about how price-control is repressive, it is in fact only as recently as 2013, when drugs listed in the NLEM began the slow process of having their prices fixed. It took ten years for the Government to bring the Court’s order to this limited state of fruition. 

The underlying philosophy for this is larger than just drugs. The Essential Commodities Act allows the government to also keep tabs on prices of several items considered important for life and livelihood, such as cattle fodder, cotton, edible oil seeds, sugar cane, coal and so on. It allows central and state governments to control the production, supply and distribution of these commodities and protect them from price fluctuations.

The NLEM makes medicines affordable to those who need it the most. The list is significant because it comes under the DPCO which allows for drug prices to be regulated. Without this linking of the two, the NLEM is just an inventory. Thus if they are delinked as the NITI Aayog recommends, there will be no incumbency on the centre or state to ensure that those listed drugs are made accessible, available or affordable. These listed medicines could then be priced at the fancy of the market. This would be a reversal to the pre-2013 time of exorbitant pricing for essential medicines.

Government tells different stories in the Supreme Court and parliament

It seems the NITI Aayog is also at odds with what the government told the Supreme Court in an affidavit this year. In January 2017, the government told the court that it was not planning to dismantle the NPPA or change the mode of price control in the country. It made this filing in an ongoing public interest litigation, ‘All India Drug Action Network and Others versus Union of India.’ The petitioners had asked the court for a rational drug-pricing policy devised on a cost based formula. The case began in 2003 and is now in its final arguments.

The main petitioners last year informed the court that they “fail to understand how the government can even think of dismantling DPCO 2013 when the matter is sub judice.” To this, the government replied in its affidavit, in clear terms: “regarding dismantling of the DPCO 2013, which at present is just an apprehension of the petitioner, as no such decision to dismantle DPCO 2013 has been taken by the Government.” The government also said that all news stories reporting it were “misconceived and misleading and they cannot be relied upon.”

Excerpt from the government’s affidavit in the Supreme Court in January 2017

Excerpt from the government’s affidavit in the Supreme Court in January 2017

Then there’s the matter of what the government has been saying in parliament. Hints on the NITI Aayog’s efforts had reached MPs as well and a few questions asked in parliament recently pertain to this. On December 9, 2016, Mansukh L. Mandaviya, minister of state in the Ministry Chemicals and Fertilisers, was asked in the Rajya Sabha whether the NITI Aayog has recommended that NLEM be delinked from DPCO and if the ministry is considering this proposal. Mandaviya denied this and also said that there wasn’t any proposal to bring a new DPCO soon.

Replies given by MoS Mansukh L. Mandaviya on price deregulation

Replies given by MoS Mansukh L. Mandaviya on price deregulation

Ongoing talks about pharmaceutical pricing in the PMO

On October 19, 2016, a meeting was chaired by the principal secretary in the prime minister’s office (PMO) to discuss issues relating to the pharmaceutical sector. Present in the meeting were the CEO of NITI Aayog and the secretaries of the health ministry, DoP and DIPP. According to the minutes of this meeting, the bureaucrats decided that the “Drug Price Control order may be delinked from the National List of Essential Medicines and, the National Pharmaceutical Pricing Authority, in its present form and current function may be wound up and deployed in the D/o Pharmaceuticals with a new mandate.” They also said that the secretary of the health ministry should consult with the CEO of NITI Aayog and the secretary of the DOP and the Department of Economic Affairs (DEA) before she takes any decision on which essential medicines can be listed in Schedule 1 of the DPCO.

The implication of this is that the access to essential drugs will be decided by government bodies who have an interest in promoting corporate interests, such as the DIPP and DEA. The health ministry will not be able to take decisions on its own, but will need to take guidance from the NITI Aayog and the DoP as well.

On March 28, 2017, another meeting was held in the PMO to discuss the concerns of the pharmaceutical industry. Orders seen by The Wire say that following this meeting, again chaired by the principal secretary, the members decided that files containing documents pertaining to the agreements and contracts between drug manufacturers and marketers would no longer go to the NPPA for analysis before price fixing. This was because “the Industry has represented that it compromises commercial information not directly relevant to decision on price fixation of a new drug.” Another decision taken in this meeting was also directed at the NPPA – the price regulator was told it cannot revise the price of a drug for five years (except for revisions based on a court order or the wholesale price index).
Minutes of the meeting in the PMO on October 19, 2016, regarding drug pricing and other issues

Minutes of the meeting in the PMO on October 19, 2016, regarding drug pricing and other issues

The DoP is also conducting its own meetings on drug pricing. On March 31, the DoP issued a notice setting up a ‘committee for ensuring enhanced accessibility of drugs to the poor’. It is expected to suggest in six weeks, the “measures to be taken for making pricing policy more in favour of poor patients affordable medicare and health security.” They have held two meetings so far. The most recent meeting, on April 21, was designed to be a stakeholder meeting. Twenty-four industry and trade bodies were invited as well as 12 civil society organisations, besides bureaucrats.

“Why should bureaucrats be pleading for the industry’s interests? They should be pleading for the people,” says Ashwani Mahajan, the co-convenor of the Swadeshi Jagaran Manch. In their letter to the prime minister, the organisation said that the real purpose of this committee chaired by the joint secretary of policy in the DOP “is to pander to the pharmaceutical companies and undermine the good work done by the NPPA, and ultimately to abort any attempt to do effective price control and make medicines affordable in India.”

What this means is that in three months, the government has either reversed its position from what it told the Supreme Court in January or that the NITI Aayog disregards that affidavit all together. For the NITI Aayog, nothing much has changed in it approach. From their meeting in the PMO in October last year through to April of this year, its stance has been consistent. The body is still recommending the deregulation of drug pricing and the dilution of the NLEM. The lines are surprisingly drawn, given that all of this happens even as the prime minister calls for affordable medicines and a case in the Supreme Court on drug pricing is going through final arguments.

(This story will be updated if and when the government bodies concerned get back with a response.)