Workshop on IP & Access to Medicines at Cochin University of Science & Technology

Sakthivel SelvarajPublic Health Foundation of India

New Delhi (shakti@phfi.org)

Access to Medicines in India

Key Barriers to Access to Medicines

Unfair health financing mechanisms; Unreliable supply systems; Unaffordable pricing; Irrational use of medicines; Inadequate funding for research in

neglected diseases; Stringent product patent regime.

Source of Health Spending

Source: National Health Accounts, 2004-05, GoI, 2009

Share of Households’ OOP Expenditure by Quintile Groups, 2009-10

Sector Poorest 2nd Poorest Middle 2nd Richest Richest All

OOP Exp. (As Percentage of Household Expenditure)

3.74 4.57 5.11 5.84 7.23 5.73Inpatient

Exp.

(As Percentage of OOP Expenditure)

26.41 30.69 32.25 34.35 33.81 32.74Outpatient

Exp.

(As Percentage of OOP Expenditure)

73.59 69.31 67.75 65.65 66.19 67.26Drug Exp. (As Percentage of OOP Expenditure)

75.42 72.34 70.11 66.81 65.90 68.28

Source: Unit Level Records of NSSO.

Percentage of Households Facing Catastrophic Expenditure on Health, 2009-10

(>10% of HH Spend)Quintile Groups

OOP Expenditure

Inpatient Expenditure

Outpatient Expenditure

Drug Expenditure

Poorest 7.656 1.082 6.329 4.523

2nd Poorest9.875 1.980 7.394 6.012

Middle 12.237 2.770 8.848 7.392

2nd Richest16.197 4.496 10.979 9.591

Richest22.456 7.954 16.207 14.852

All 13.684 3.656 9.951 8.474Source: Unit Level Records of NSSO.

Impoverishment Due to OOP Payments in India (In Millions)

Source: Selvaraj and Karan (2009)

Government Expenditure on Drugs (%)States 2008-09 (Actuals) 2009-10 (RE) 2010-11 (BE)

Assam 5.7 5.6 5.0Bihar 6.3 5.9 7.0

Gujarat 6.5 4.9 7.6Haryana 8.6 6.8 5.5Kerala 10.6 10.4 12.5

Maharashtra 9.6 5.2 5.2Madhya Pradesh 9.1 10.1 9.3

Punjab 1.1 1.0 1.0Rajasthan 3.0 1.9 1.5

Uttar Pradesh 6.9 4.8 5.3Jharkhand 2.9 2.3 3.4

West Bengal 9.2 6.8 6.8Andhra Pradesh 7.3 6.8 10.0

Karnataka 8.0 7.2 6.3Tamil Nadu 11.2 9.3 12.2

Himachal Pradesh 4.5 2.3 1.9J & K 6.5 5.2 4.3

State-wise Health Insurance Coverage in 2010

Andhra Pradesh

Assam

Bihar

Chattisgarh

Delhi

Gujarat

Goa

Haryana

Himachal Pradesh

Jharkhand

Karnataka

Kerala

Madhya Pradesh

Maharashtra

Orissa

Punjab

Rajasthan

Tamil Nadu

Uttar Pradesh

Uttrakhand

West Bengal

Other States and UTs

Private Health Insurance

National Covergae

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

87%

3%

15%

18%

27%

17%

29%

17%

20%

16%

17%

7%

2%

12%

6%

12%

3%

62%

11%

15%

17%

12%

5%

25%

Percentage of population covered by Health Insurance

Stat

e

State-wise Availability of Free/Partly Free Medicines at Government Facilities during 2004

Source: Morbidity & Health Survey, NSS, 2004

Tamil NaduDelhi

Karnataka Kerala

J & K Gujarat

Andhra PradeshHimachal Pradesh

AssamOdisha

Madhya PradeshMaharashtraWest Bengal

GoaChhatisgarh

RajasthanHaryana

PunjabUttar Pradesh

UttrakhandJharkhand

Bihar

0 5 10 15 20 25

Percentage Availability of Free/Partly Free Drugs in Public Health Faciliites (Outpatient Care)

A Comparative Scenario of Drug Availability in TN and Bihar

0.0

33.3

66.7

100.0

Bihar Tamil_Nadu

Drugs Stock Out at Health Facilities (%)-Bihar Vs Tamil Nadu

Dru

gs S

tock

Out

(%

)SakraManigachi

Stock-Outs at Facilities: Bihar vs Tamil Nadu(% Stock-Outs)

Trends in All-Commodity and Pharmaceutical Price Index

Drug Price Control Items under DPCO

DPCO-1979 DPCO-1987 DPCO-1995

1. No. of drugs under DPCO

347 142 76

2. No. of Drug categories

4 2 1

3. MAPE % allowed on normative/national ex-factory costs to meet post-manufacturing expenses and to provide for margin to the manufacturers 3.1. Category I 40 % 75 % 100 %3.2. Category II 55 % 100 % N.A.3.3. Category III 100 % N.A. N.A.

3.4. Category IV 60 % N.A. N.A.

4. % Covered under DPCO

90 % 70 % 20-25 %

Distribution Network & Mark-Up in Indian Pharma Market

Source: IMS-ORG, 2004

Unaffordable Drug Price - Retail & Procurement Price

National Pharmaceutical Pricing Policy, 2012

Key Features: • All 348 NLEM ; • Market Based Pricing; • Only Formulations; • WPI-linked increase; • Only single ingredient medicines; • Only NLEM dosages & strengths; • Patented Medicines not covered.

Market Leaders are Price Leaders

Market Leaders are Price Leaders

Market Share for FDCs Involving Essential Medicines

Market Share of Drugs Involving Dosages of EML vis-à-vis Non EML dosages

Continuing Trend of Profiteering in India’s Pharmaceutical Sector

Implications of NPPP, 2012Pharma market is unique because: • Market Leader is the Price Leader - When competition exists,

leading market players are expected to reduce prices substantially & yet obtain normal profits.

• Indian pharma industry behaves abnormally. • Under a therapeutic category, hundreds of players slug it out in

the Indian pharmaceutical sector, but with substantial variation in prices.

• The prices of leading players very often tend to be the highest, because of aggressive promotional campaigns.

• High margins provided by industry to stockiest & retailers encourage them to promote high priced medicines;

• Given information asymmetry that creates supplier-induced demand, pharma makers have an upper hand in pushing through medicines that are high priced.

Implications of NPPP, 2012 • MBP legitimizes trend of high prices;• Likely to induce players in lower priced segment to drive up

prices to closer to highest priced medicines;• Exempts essential medicines - weighted average price of less

than or equal to Rs. 3 - would increase in prices of essential medicines (including anti-histaminics, anti-asthmatics, some anti-diabetics, anti-hypertensive etc.).

• Prices of APIs which are only manufactured by a limited no. of suppliers in India or internationally should be monitored to ensure that a cartel does not emerge that would drive prices up.

• WPI-linked price rise; • Price controls & profitability; • Negotiation on patented medicine prices; • Unethical to use proprietary data for public policy;

Irrational Medicine Use in India Product Rank

Product Sales (in Crore Rs.)

Market Share

Product Description

1 COREX 135.88 0.497 Irrational cough mixture2 PHENSEDYL

COUGH124.31 0.455 Irrational cough mixture

5 LIV-52 95.85 0.351 Useless liver drug7 BECOSULES 92.48 0.338 Irrational vitamin

combination17 DEXORANGE 77.04 0.282 Blood tonic18 COMBIFLAM 76.03 0.278 Irrational analgesic

combination27 DIGENE 63.49 0.232 Needless antacid35 POLYBION 54.24 0.198 Irrational vitamin

combination38 GELUSIL-MPS 53.25 0.195 Needless antacid40 REVITAL 53.09 0.194 Oral ginseng tonic

Source: IMS-ORG, 2006

Irrational Prescription in Public Health Facilities

Bihar (%) Tamil Nadu (%)Average number of drugs per encounter 2.6 3.1Percentage of drugs prescribed by generic name

73.5 88.0Percentage of drugs prescribed from essential drug list

66.8 88.0

Percentage of encounters with an antibiotic prescribed

66.0 59.6Percentage of encounters with an injection prescribed

4.9 1.4Percentage of fixed dose combinations versus single agents

6.9 0.0

Percentage of encounters with a syrup prescribed

26.2 2.6

HLEG Recommendations • Scale Up Public Spending on Drugs (0.4% GDP):

– Expected to reduce OOP; • Strengthen Public Procurement System:

– Supply quality generic drugs and enforce rational use; – Centralised Procurement & Decentralised Distribution

System; – Warehouses at every district level; – Retail outlets can be set up (or contracted-in) atleast one

at every block level and 4-5 at district headquarters. – Drug supply to such stores linked to centralized

procurement at state level, so that drugs are of equal quality & costs are minimized by removing intermediaries.

Key Characteristics of an Efficient & Reliable Procurement & Distribution System

– Atleast 15% of public funds; – Procure EDL medicines (National and state level

EDL at three levels; periodic revisions); – Traditional medicines list; – Prescription and Dispensing through STGs; – A two-bid open transparent tendering process; – A 2 passbook system; – Warehouses at every district level;– An Empanelled laboratories for drug quality testing;– Enactment of Transparency in Tender Act; – Prompt Payments;– Prescription audits & social audits;

Drugs and Vaccine Security• Revive Drug PSUs by infusing capital with autonomous

status; • PSUs will offer opportunity to produce volume drugs

& help in 'benchmarking' drug costs;• Revisit FDI rules to bring down share of foreign players

to less than 49%.• Co-opt medium & small scale drug industry to

produce quality generic medicines for UHS by helping them to transit to GMP-complaint status.

• Revive old vaccine mfg. units with additional infusion of capital and new vaccine park with autonomous status.

Drug Price Caps

• A pervasive price control on all essential drugs is called for;

• Price decontrolled drugs to be monitored continuously;

• State and Central Cell for price control of drugs;

• Price of all new patented drugs to be brought under DPCO automatically;

• Weed out irrational drugs: hazardous, irrational, non-essential drugs from mkt;

Drug Quality Control

• Strengthen Central and State Drug Control Dept., for effective quality control with adequate human resource, technology & institutions;

• Regular/periodic monitoring/study of drug production and distribution for quality – blacklisting offenders;

• Build a network of drug quality testing laboratories, to be accredited by NABL in each state with periodic renewal;

Product Patents

• Restrict patenting of insignificant or minor improvements of known medicines (under section 3[d]);

• Make use of CL provision under TRIPS; • Data exclusivity clause proposed by EU as

part of Indo-EU trade pact needs to be removed to avoid ‘ever-greening’;

• Invest in neglected disease R&D by open-source drug development model.

Expected Outcomes

Expected Outcomes: – Reduction in OOP (reverse ratio – OOP:Govt); – Cost Savings;– Rationality of care ensured; – Quality Generics prescribed & dispensed; – Acute shortages & chronic stock-outs eliminated.

Time-Frame: - 1 year (Public Procurement & Public Distribution); - 3-5 years (Public Procurement & Private Distribution.

Scaling Up To Achieve Universal Access to Medicines