Compulsory Licenses Needed in India to Ensure Affordable Medicines

NSS data reveals that a majority of rural and urban populations did not get proper medical treatment because of the expense.

The latest decennial National Sample Survey (NSS) report on morbidity and health, released recently by the Ministry of Statistics and Programme Implementation, provides important leads for why India should more proactively make medicines more affordable. This includes resorting to measures including compulsory licenses to reduce the cost of medicines. It shows that medicines account for much of people’s spending on health care. In outpatient care (non-hospitalisation) where more than four-fifth of reported cases of ailments got treated in urban and rural areas, expenditure on medicines (only allopathic medicines) account for 68% in rural areas and 64% in urban areas of total medical expenditure. This shows how critical medicines are to our healthcare system as compared to advanced countries, where cost of medicines in healthcare expenditure is much less significant.

What would people do when they are ill, if they do not have the capacity to pay for medicines? They will not get proper treatment and resort to alternatives such as home remedies whenever possible. Four percent of the sick in rural areas and 2.5% in urban areas took no care at all, analysis in Sundararaman and Muraleedharan’s  article on NSS data shows. Of those who resorted to alternatives such as self-medication, this NSS report shows that 57% in rural areas and 68% in urban areas did not turn to professional medical treatment due to financial constrains. This is very different from other factors such as ailment not considered serious or lack of healthcare facilities in the neighbourhood. If a large number of people are opting out of proper treatment due to financial reasons, the cost of medicines is the most significant contributing factor.

Cancer provides the best example of cost of medicines preventing people from getting treatment. There are a number of new patented cancer drugs whose prices are very high. Out of an estimated 1.1 million cancer patients in India, only 36% are receiving treatment, statistics presented by V. Shanta of the Adyar Cancer Institute show. The NSS report also shows that cancer involves the highest expenditure for treatment among all diseases. The medical expenditure for cancer was more than six times the average medical expenditure (for all diseases) in urban areas and more than double in rural areas.

Compulsory licenses

These observations assume greater significance in the light of the discussions in India on issuing compulsory licenses. The patent law in India allows granting of compulsory license to produce and sell cheaper versions of drugs under certain circumstances, including if drugs are priced so high that they are not affordable to patients. India has so far granted only one compulsory license. Applications by BDR Pharma on a cancer drug and Lee Pharma on a type II diabetes drug were rejected for various reasons.

The Pharmaceutical Research and Manufacturers of America and US-India Business Council, in their inputs to United States Trade Representative for the Special 301 Report 2016, submitted that India had privately assured US business that Indian patent office would adopt a stringent approach in granting compulsory licenses. The government of India refuted this allegation through a press release. The National Human Rights Commission of India, however, issued a press release in April this year expressing concerns on the media reports over the private assurance given by the government and the denial of the two applications for compulsory licenses, emphasising the responsibility of the government to provide affordable healthcare to its citizens.

Lee Pharma’s application was rejected in January this year as it was not able to satisfy the Patent Office of India that the reasonable requirements of the public were not met by the patented medicine. The Patent Office wanted Lee Pharma to provide data, among other things, on the number of people affected by Type II Diabetes, alternate drugs available and their market share to see if the requirement of the public was actually met with. But the fact is that this data is not available in the public domain. The market share data which the National Pharmaceutical Pricing Authority relies on for regulating drug prices is not shared with the public. It is not fair of the Patent Office to insist on data which is not publicly available, thereby denying more patients the opportunity to access healthcare services. Rather, evidence coming out of this NSS report should be used by the stakeholders to understand the significance of cost of medicines in India’s healthcare system.

Reji K. Joseph is Associate Professor at Institute for Studies in Industrial Development (ISID), New Delhi.