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Journalism of Courage
Price caps may not always be the right solution if India wants to ensure its population gets access to newer, innovative and often patented medicines, says A Vaideesh, president of the Organisation of Pharmaceutical Producers of India (OPPI), which represents multinational drug makers. Vaideesh, who was recently re-elected as the group’s head, tells PRABHA RAGHAVAN in an interview how different financing models and schemes like Ayushman Bharat could help bring such expensive medicines within reach of low and middle-income patients. Edited excerpts:
How are multinational drug makers with high-priced, often patented drugs, evolving to cater to the Indian population?
The way in which multinational companies participate is … if it is a significant public health issue, we end up actually giving (the medicine) more or less free. For HIV, GSK has (a) deal with a third party and the government gives it at a very low price … every company does. Now, what happens is, (with) some of those oncology drugs … there is a reference pricing that happens all over the world, so you can’t give any special prices. So, what the companies do is something called Patient Assistance Program.
One of the (other) ways that we are trying to overcome (issues with affordability and access is), there are various financing models that are being looked into, (like) micro-insurance … some companies are looking at how to come up with insurance products on this. I think this whole concept of insurance has to develop, where the insurance companies are also interested in working (directly) with the pharmaceutical companies … It hasn’t fully evolved. It’s still in the early stages. Insurance or a financing mechanism is the only way to get the latest drugs in this country. Not price control.
Where price control is concerned, the government has been exploring a shift from ceiling price caps to trade margin rationalisation. It even piloted this on over 40 cancer medicines earlier this year. What is your stance on such a move?
We support (trade margin rationalisation) … (But), oncology (as a therapy) is a hospital-based product. So, the oncology model will not work, because other therapies are all retail-based products … The margins are generally fixed in retail, which is the standard norm of 10 (per cent) and (20 per cent) anyway. Whereas, in a hospital … the difference between the MRP (maximum retail price) billed and the hospital billing price (the price billed to hospitals by the pharmaceutical company or distributor) is significant. So, you can’t apply the same principles (of trade margin rationalisation) to retail-based products. Around 90 per cent (of the drugs in the country) would be retail-based.
Unlike in oncology, where the value of the prices are also very high, in many of our products, they are not (priced at) Rs 50,000 or a lakh (rupees). They are all Rs 30 and Rs 40 … so you (government) may only want to look at a high value product (for trade margin rationalisation) — cardiology, oncology, neurology. For small value drugs, I don’t see how materially it (trade margin rationalisation) is going to have an impact.
(On pricing of innovative or patented products), this (the price of the drugs) cannot be paid out of pocket. Nowhere in the world, barring a few markets, does the individual pay out of pocket. It is all managed through a financing mechanism. We’ve got to find the (right finance) model. Expecting an individual to pay out of the pocket Rs 2 lakh per dose, it’s impossible. And expecting companies also to … sell it (the drug) at Rs 2,000 is also not a workable proposition … How many times are you going to say (go for) compulsory licencing? You may (do it), say, once or twice. It is not a sustainable (model) for every drug which is expensive. Future drugs are all going to be expensive — biologics. The sooner we find a financing model instead of a pricing model, (it will be better).
With affordable, life-saving medicines an important component towards achieving India’s goal of universal healthcare through programmes like Ayushman Bharat, what scope do you see to participate?
In Ayushman Bharat 1.0, I don’t think we will be able to participate because of the L1 tender and all that … I think where we will have a chance is when they start moving towards Ayushman Bharat 2.0, where they will open it up for a middle class population … I don’t think the government is opening it up (yet), but that is very much in the cards.
That is the time where the middle class population will be asked to pay a small premium (and) that is the time where we will start having a conversation with the insurance companies, saying I am willing to give (the medicine) to you at this price.
Because, the size of the population — around 200 million — will be governed under that. Then the volume goes up and the company can also say, “If I am getting x amount of cases, I’m willing to give it … at so much of a price.” So the insurance companies will start dealing with the (pharmaceutical) companies directly. That is what we are expecting to happen.
