ABSTRACT
Pharmaceutical products play a significant role in the provision of healthcare services. Medicine consumption worldwide has grown, and the Indian pharmaceutical industry supplies affordable and low-cost generic drugs to millions across the globe. The goal of universal health coverage (UHC) is to ensure accessibility and affordability of quality pharmaceutical products. Unfortunately, several barriers limit access to medicines globally and in India. India spent just 3.3% of its GDP on health in 2019–2020. Pharmaceutical expenditure as a share of the current health expenditure (CHE) was 35.1%. Different Indian states employ diverse mechanisms for public procurement of medicines. The states with autonomous procurement bodies have witnessed improved governance, reduced wastage, improved availability of quality drugs, and lower out-of-pocket expenditure (OOPE) burden. Nonetheless, several states suffer from chronic unavailability and frequent stockout of essential medicines, resulting in an overwhelming reliance on the private market.
The pharmaceutical market in India was worth INR 1,671.23 billion in 2021. Fixed dose combinations (FDCs) account for about half the market. Studies have pointed out that several antibiotic FDCs not recommended by WHO are being marketed, and many are being sold without regulatory approvals and have continued to be sold even when banned. Rampant over-the-counter sales of medicines is another worrisome feature of the Indian market. Inappropriate prescribing practices by clinicians are often to blame for the inappropriate use of medicines.
The overwhelming majority of generics sold in Indian private markets are branded, meaning they are sold under a brand name rather than the international non-proprietary name (INN). Product differentiation is introduced via brand differentiation, and consumers typically pay a premium for brands. Market leaders often charge a higher price in comparison to that charged by other. Generics are conspicuous through their absence in the private market. The pharmaceutical supply chain is complex with multiple intermediaries. Manufacturers often compete by offering higher margins to pharmacies to encourage them to stock and sell their products. Even though pharmacies are disallowed by law to substitute one brand for another, inadequate enforcement allows such practices to continue.
As a signatory to the Trade-Related Intellectual Property Rights (TRIPS) agreement, India grants product patent on pharmaceuticals. Certain flexibilities allowed under the TRIPS agreement in accordance with the Doha Declaration are also incorporated in the Indian Patent Act, such as section 3(d), compulsory licensing, and pre- and post-grant oppositions. However, studies suggest inadequate utilisation of such flexibilities.
Affordability is a challenge in the private market. The National Pharmaceutical Pricing Policy (NPPP) 2012 regulates prices of essential medicines (defined as medicines under the National List of Essential Medicines) using a market-based formula. The policy has been critiqued for its limited coverage and unimpressive price reduction. Trade margins on select anti-cancer medicines were capped in 2019. A significant reduction in prices of these medicines was reported, but the flat rate capping is contrary to WHO’s recommendation of regressive margins.
Other barriers to medicine access are linked with drug quality and regulatory enforcement. Addressing each of the challenges discussed requires concerted policy efforts. Increasing public spending and encouraging generic prescribing on healthcare and medicines are required, along with generic promotion through the expansion of Jan Aushadhi stores. There is a need to explore other measures for regulating medicine prices besides market-based pricing and expand the coverage of the existing policy. Trade margin rationalisation should be expanded to cover other segments, but there’s a need to move towards regressive margins. The government must also consider tax exemptions for essential medicines. India must reduce its substantial reliance on active pharmaceutical ingredient (API) imports, mainly from China, and encourage local production of at least key APIs. Finally, supportive policies are required to balance the commercial interests of the industry with the health needs of the population.
