Drugs being essential items should be made available at affordable rates. There are a large number of branded and generic versions of drugs in the market which vary widely in price. The patient is often forced to pay for an expensive brand which the doctor prescribes. The Drug Price Control Order is a strategy to control prices of all drugs. Unfortunately the DPCO of 2013, links drug price to the market forces, which is not a good strategy when essential items like drugs are concerned. It is therefore not clear whether the new DPCO will really help the patients and the society, the government should be ready to tweak the order if it doesn’t.
Every individual needs a number of products and services, which broadly fall into two categories, essential and non-essential. The list of essential items goes on expanding and it is possible that at some time in future many of today’s non-essential items will be considered as essential. For example, electricity and water supply at home that may not have been considered as essential, even two hundred years ago are today a priority of every government. Essential items are those that are necessary for the survival, while non-essential items add value to life. This is also true in case of drugs.
Drugs and medical services will always be considered an essential need of humans and hence their availability at an affordable price should be assured. Medical practitioners or administrators may divide drugs into essential and non-essential ones, but the layman thinks that everything a doctor prescribes is essential and many are upset if a prescription is substituted with another brand of the same drug or an equivalent drug.
The choice of medicine is not in the hands of the end user, but in the hands of a medical practitioner, who decides for the patient. In the absence of adequate information about generic names and available brands, the patient cannot choose for himself, and should not be encouraged to do so.
This is not to deny that some patients choose their own medicine. After analysing the drug sales to 2,400 patients, it was found that a large number of patients had prescribed their own medication . In India self-medication is more common in urban areas  and associated with more educated patients . However it is guided by past prescription of doctors and not due to an inherent knowledge about medicines, their brands or prices .
By using aggressive marketing practices, the pharmaceutical industry can and does influence the prescription of the doctors, persuading them to prescribe the more expensive products for the patients. Since all medicines are ‘essential’ at least in the patient’s mind, they cannot choose to delay or refuse to purchase them.
In some developed countries, notably United States, no prices are controlled, and the market drives pricing strategies. Even there, common people find prices of medicines exorbitant, and the Reimportation Bill of 2001 was intended to give them some benefit . However the legislation, industry and trade representatives ensured that the strategy failed .
There is a fundamental difference between the pharmaceutical and medical business in developed and in developing countries like India. Despite the lower cost of living, earning of the citizens is so low that medical care has impact on individual budgets. The spread of insurance in India is still restricted and most medical expenses are borne out of pocket . While it must be accepted that increase in drug prices is much lower than those of food, control of drug prices is very much needed. Unfortunately, schemes that regulate drug prices have been found wanting since they have contrary aims for the patients and the industry .
Drug Price Control Order
Recognising this need of a majority of citizens, the Indian government has introduced the Drug Price Control Order. It was first issued in the wake of Chinese aggression in 1962, under the Defence of India Act, and has undergone numerous revisions to date. In 1979 the government fixed the ceiling price of 347 drugs (all manufactured in India), whose number was brought down to 142 in 1987 and 76 (later 74) in 1995. In a dramatic turn around the DPCO 2013 was extended to 348 drugs. The change in the number of controlled drugs reflects their ‘essential’ nature, and includes all drugs that are listed as Essential in the National List of Essential Medicines .
As in the past, the Pharmaceutical Industry is again at loggerheads with the government on the issue of drug price control. The wholesale and retail trade is against the Order, since it caps the stockists’ and retailers’ margins for a large number of drugs. In the past the industry spoiled the government’s party by moving away from production of essential drugs and often assigning their brands to the small scale industry which had been kept out of the scope of the DPCO . The noises made by the trade suggest that a similar strategy is being worked out.
The new DPCO was announced in mid-May, and will be effective from mid-July, this year. Let us examine a few examples of bulk drugs which come under control in 2013, by studying the brands and generic forms in which the drug is available in the market.
A common and very widely prescribed oral antidiabetic drug is Metformin, which is available as tablets in strengths of 250 mg, 500 mg, 850 mg and 1 G. It is also available as controlled release though the more common one is the non-modified release form. Medline India (www.medlineindia.com) lists 35 formulators, which is certainly a case of serious under reporting .
The prices of these products are shown in Table 1:
|Table 1. Prices of brands of Metformin (strip of 10 tablets).|
|Strength||Highest Price||Lowest Price||Highest/lowest ratio|
|Metformin 250 mg||7.90||4.34||1.82|
|Metformin 500 mg||23.50||6.00||3.92|
|Metformin 500 mg SR||25||8.25||3.03|
The above is for branded formulations; generics could be cheaper. A manufacturer of generic drugs offers Metformin 500 mg tablets at a price of Rs. 15.6 for 10 tablets . A website dedicated to generic drugs (www.medindia.com) lists 171 companies manufacturing this product, with prices as low as Rs.4.00 per 10 tablets 
The next example is that of Amlodipine, a commonly used antihypertensive drug. The branded formulations of this drug are manufactured by 68 companies, while 152 companies manufacture the generic product, the lowest price being Rs. 7 for 10 tablets.
|Table 2. Prices of Amlodipine tablets (strip of 10 tablets).|
|Strength||Highest Price||Lowest Price||Highest/lowest ratio|
|Amlodipine 5 mg||82||8.50||9.65|
|Amlodipine 10 mg||122||16||7.63|
So is the case of Cefixime, which is available as tablets and syrup with strengths ranging from 50 to 400.
|Table 3. Prices of Cefixime (strip of 10 tablets)|
|Strength||Highest Price||Lowest Price||Highest/lowest ratio|
|Cefixime 100 mg||335||49.95||6.71|
|Cefixime 200 mg||215||74.9||2.87|
Medindia lists 61 companies that manufacture Cefixime either as a single ingredient or a combination. The lowest priced single ingredient generic product containing 100 mg of Cefixime costs Rs. 40 .
Thus the market has low priced alternatives for almost every product in the Indian market. At times the lowest priced brand costs at par with a generic product. One would assume that the consumer could choose the product to suit his or her purse. Some observers feel that the availability of low cost products will protect patients from high priced products . But as explained earlier, the patient neither has the freedom to choose the product, nor the knowledge to do so.
Impact on patients
Very few patients are aware of the availability of multiple formulations of a single drug, even if they are; should they substitute the prescribed brand with another? So also they have been led to believe that some brands are more effective than others. To a large extent doctors and the pharmaceutical industry are responsible for spreading this message. This perception is reinforced by their faith in their doctor, who they believe has prescribed the most effective formulation in the market.
Sometimes the pharmacist influences the patients to choose a particular product . However very few retail shops have a pharmacist in attendance (though it is required by law), and even if they have one, what guidance will the consumer receive is not known. There is an ethical issue too; is the pharmacist right in guiding a patient to purchase a product different from what is prescribed?
While it is certainly true that some brands may not be bioequivalent to the market leader (or innovator), the drug law does not permit it. When random samples of antimalarial, antibiotic, and antimycobacterial drugs were tested, 5 % in Chennai and 12% in Delhi have been found to be substandard. Any product sold in India must conform to the standards laid down in the pharmacopoeia. The pharmacopoeia lays down the minimum and maximum content of the active pharmaceutical agents, their dissolution patterns and bioequivalence; hence the possibility of one brand being superior to another does not arise. It is the main function of Drug Control to ensure that this does not happen. It is the Drug Control that needs to be strengthened if non bioequivalent products are found in the market.
While it is a prerogative of the doctor to choose the medication for the patient, is the choice based on bioequivalence or any such comparative study? Every company claims that their product is the best, but comparative data are very rarely presented, if at all. Neither do most doctors ever maintain adequate records which would tell them which formulation of a particular drug gives a better cure rate than others. At best it must be concluded that doctors go by the “reputation” of the manufacturer, rather than any comparative data on efficacy or safety.
The patients face yet another problem. Since the retailer’s income depends upon the MRP, the retailers would prefer to sell the high priced formulation rather than the low priced one. By simple choice of the formulation, a retailer could increase his profit margin 3 to 4 fold. This is one reason why low priced formulation though listed in websites and MIMS or CIMS are not easily available in the market.
There certainly are doctors who would want to prescribe low priced products for their patients, but if the patients report that the prescribed product is not available, the doctor is forced to change the prescription. The industry and trade have used numerous such tactics to keep low priced formulations from the market . In this market scenario, an attempt to control prices of drugs makes a lot of sense.
To speak about price fixation is one thing and to do it, is another. Like distributive justice, it is a very difficult issue. Should the price of a drug be based on what it is worth or on what the market will bear? A case for price based on worth rather than market force has already been made. A group of oncologists specialising in Chronic Myeloid Leukaemia have analysed the prices of drugs used for the condition. In their paper they contend that drug prices should be based on what they are actually worth, and not on the basis of what the market will withstand . This philosophy applies to all drugs deemed essential by the government.
RP = [RM+PM+CC+PC] X [1+MAPE/100] + ED
Where RP is Retail Price, RM is Raw material price, PM is packaging material price, CC is conversion cost, PC is packaging cost and MAPE is Maximum Allowable Post Manufacturing Expenses. In other words the price of the formulation was based on the worth of the product. In the DPCO 2013, the Authority will calculate the price of formulations using the formula P(c) = P(s) X (1+M/100), where
P(s) = Average Price to Retailer for the same strength and dosage of the medicine. This will be on the basis of prices of all formulations containing the same amount of API, that hold more than 1% of the market share on MAT basis. MAT is the Moving Annual Total, which means the price prevailing in the last 12 months prior to the calculation. This is the price of the formulation to the retailer and the retailer may sell it after adding his 16% margin.
M = Margin to retailer and it is fixed at 16 % for formulations containing drugs covered by the DPCO.
The present DPCO links price to what the market is presently bearing. If high selling products dominate the market then a proportionately higher price will be permitted. If however the market is flooded with low cost formulations, then the permitted price will be low.
In practice, if the market is dominated by low priced formulations of a particular drug, then it really does not matter if one or two brands continue to be sold at high prices. The earlier DPCO allowed companies to have a higher price if they could justify the input and conversion costs. But as per the current DPCO, we will either have high prices products or low priced ones, This is an ironical situation since the patient did not ask for a high priced product under the garb of price control.
The DPCO has been formulated in the fond hope that low priced brands dominate the market. However, low priced brands are not in the interest of either the manufacturers or retailers. The market generally pushes down prices in a free market, but then pharmaceutical market is not a free market.
Most Indians pin their hope on free availability of generic medicines, which though freely available for bulk purchasers, are not sold to individuals . Under the drug law there is no restriction on the sale or purchase of generics. In fact there are shops selling generics in every city, they cater to hospitals and dispensing doctors, but do not entertain patients. The government and international bodies like the WHO have often recommended the use of generics in place of branded products . The industry has hit back claiming that branded products have higher purity, efficacy and safety, citing a few suitable examples. It is found that generics of most therapeutic classes can be safely used in patients, at least in US . Analysis of the quality of generic products in comparison with that of branded products, in India (by the same manufacturer) did not reveal any differences . Despite all efforts by the government, 99% of prescriptions in a teaching hospital were found to be in brand names .
The need for a stronger legislative action to bring down prices of medicines cannot be overemphasized. There is need for the Government to work with medical professionals, the industry and trade towards this end. But if the industry and trade decide not to co-operate, then the government will have to do it alone. If the medical profession joins the government, they would be held in higher esteem by a grateful patient population.
|Dr. Ravindra Ghooi, August 2013|