Medication for pharma
Pharmaceutical business lends itself to either revulsion or eulogy with equal ease. The subject is clouded with jargon, obfuscation and emotion, owing to the high stakes. Madhusheel Arora writeschandigarh Updated: Sep 15, 2013 00:45 IST
‘It’s easy to get a thousand prescriptions but hard to get a single remedy.’ — Chinese Proverb
Pharmaceutical business lends itself to either revulsion or eulogy with equal ease. The subject is clouded with jargon, obfuscation and emotion, owing to the high stakes.The stakeholders — the manufacturers, consumer and the government — never seem to be on the same page. The consumer complains of high prices, manufacturer claims that he innovated to produce the drug and thus demands his pound of flesh, and the government wants to ensure availability of essential drugs at affordable prices.
Doctors, of course, are an important part of the equation, as they nudge the patient to a particular brand of medicines, of the thousands available. Any fair solution has to be sourced from them with the prescription of a salt and not the brand name.
A recent government order caps the prices of 348 essential medicines under the National List of Essential Medicines, making it mandatory for these to be sold at a stipulated price point. Those selling below the price cannot hike rates. But it calculates the rate as the average price of all brands in a particular segment with more than 1% market share. Previously, it allowed a mark-up of up to 100% on the cost of production. With 1 and 99 averaging 50, you can see that the government has missed the point.
The tricity’s 1,000-odd wholesalers and retailers are upset. “The order will hit margins on at least 20% of the drugs we stock. Negotiations are on. We might not stock brands of companies that impact our earnings. Discounts will also be passé,” says Paramjit Singh, president, Chandigarh Chemists’ Association. “Under the new order, if a sample stocked at a shop fails a lab test, the shopkeeper will be made party to the legal proceedings,” claims Vijay Katyal, of VK Medicos, Sector 34. Traders claim that the order will lead to some disruption in supply, till the batches of medicines with the new rates arrive in the market.
The key with drug manufacturing is, you never know what to charge for research and development. This is why we keep hearing of firms earning profits between 100 and 1,000%. It is not dissimilar to the row over spectrum charges between government and telecom firms.
What lends credence to the profiteering voice in the `80,000-crore sector is that the margins — around 13% and 6% on the notified drugs -— after the price order, are still workable. However, retail margins on non-notified drugs are a minimum of 20%.
Fundamental changes are needed in the way we administer medicines for a balanced result. Hospitals need to be more involved. One of the first things should be to set up a service which gets back to you with all the prices of a medicine circulating in the market using either e-mail or SMS. Our generic industry must be encouraged to increase efficiencies. Subsidies must be extended to the thousands of small units in packing and manufacturing.