Did you know that when the compound clopidogrel is used by Zydus Cadila in Noklot, the price is Rs78 for 10 tablets? When Sanofi uses it for Plavix, the price is Rs1,020—a difference of nearly 1,300%. The cost of risperidone is Rs17 for Rispidon made by Torrent but Rs270 for Risperdal (J&J)—a difference of 1,600%. Did you know that the price of even a simple compound like erythromycin made by two companies can differ by 300%? The more expensive one is made by an unknown manufacturer. Or that the cost of producing a strip of 10 tablets of progesterone is Rs18 but it sells for Rs180? Or that an enterprising Indian Administrative Service (IAS) officer in Rajasthan managed to bring down medicine costs by 90%, exposing the fat margins that drug companies enjoy with impunity? Did you know that competition, which is supposed to be the best antidote to anomalies in market price, does not work in the drug market?
A few weeks ago, insurance companies were compelled to band together and initiate action because galloping healthcare and hospitalisation costs were forcing them into losses. As industry doyen, Fali Poncha, said at a Moneylife Foundation workshop, medical insurance can work only if the insurer as well the service-provider make some money. But the soaring costs of medicines and hospitalisation (caused mainly by the acute shortage of quality healthcare facilities in India) had turned medical insurance into a loss-making proposition for insurance companies.
The public sector insurers have put in place an alternative—in the form of a preferred provider network (PPN)—which alone will be entitled to the cashless insurance facility. PPN is a network of medical service-providers who agree to standardisation of procedure costs and charges based on hospital location, hospital grade, etc. But the other major expense that needs examination is the cost of medicines.
The issues regarding drug prices are horrific. In a report tabled in Parliament on 4 August 2010, the parliamentary standing committee on health and family welfare has suggested drastic measures like increasing the number of drugs under price control, a blanket cap on profit margins of all medicines and promoting the use of generic drugs to make medicines more affordable.
We know that healthcare in India is in a mess. But, while the public is somewhat aware of the problems of health insurance (insurers are losing money, thanks to over-billing and exorbitant charges by some hospitals), hardly anything is known about drug price abuse.
According to the parliamentary standing committee on health and family welfare report of 4 August 2010, medicines constitute 40%-80% of insurance claims. On detailed investigation, we found that there is an enormous difference in the price of the same drug, branded differently by each pharmaceutical company and consumers are completely unaware of it. Doctors and hospitals end up dictating what you pay—they can prescribe an expensive or cheaper drug with the same efficacy. So clearly, there is a good case for insurers demanding price control or parity to reduce claim costs. This is not easy; but it is not impossible either—the urgent need is for customer awareness and the political will to make the healthcare industry healthier.
The exorbitant price you pay!
Moneylife’s detailed probe into medicine prices throws up shocking revelations. Check the table for details of the same drug under different brand names and the wide variation in prices. Why does this happen? The National Pharmaceutical Pricing Authority (NPPA), which is a decade old, agrees that overpricing of medicines is a major problem, but it hasn’t succeeded in doing much about it. Until June 2010, the NPPA has issued 762 demand notices for a penalty of Rs2,190.48 crore but has realised only Rs199.84 crore—an abysmal 9.1% of the total penalty. The rest of it, almost entirely, is under litigation.
Meanwhile, consumers continue to pay exorbitant prices and pharma companies are getting away with impunity. The violation of the price ceiling is rampant even in the 74 drugs under price control. Of these, 24 drugs are barely used. And, on 50% of the drugs on the list, NPPA has imposed a penalty on one or more manufacturers for overcharging. NPPA’s statement of ‘Overcharging and Recovery Thereof’ on its website lists many of the big pharma companies led by Cipla (Rs1,384 crore) and Ranbaxy (Rs136 crore) which account for 69% of the total overcharge. Cipla itself is the top penalised company with 63% of total overcharge, but has not paid a single rupee to NPPA till now. Cipla’s net profit for FY10-11 Q1 rose 6.5% (Rs257.4 crore). The 600-odd firms listed for overcharging include Lyka Labs, Modi Mundi, Okasa, Lupin, Dr Reddy’s and Cadila Healthcare. (See table above). Let us look at four examples of how price ceilings were violated leading to the penalty. (See table above). Shockingly, the same companies overcharge even today.
According to NPPA chairman, SM Jharwal, “We know it takes time to recover dues as the legal battle is a long process. We are now looking at out-of-court settlement with pharma companies as it would save time on recovering dues. We will not reduce the fine at any cost but may look at making the payment process easier. The objective of this exercise is to recover the dues as fast as possible.” We are not sure how this helps consumers.
Since ordinary customers do not understand drugs and their composition and combinations, it is a breeding ground for unethical practices and mis-selling by pharma manufacturers. There are many ways in which this happens. Companies evade the price ceiling by the simple trick of adding or changing one or more ingredients in a price-controlled drug. Among the examples given to us by Dr Chandra M Gulhati, editor, Monthly Index of Medical Specialities were: Aciloc-RD of J Chemicals (where the price-controlled ranitidine was replaced with omeprazole); Cetrizet-D of Sun Pharmaceutical (price-controlled pseudoephedrine replaced with phenylepherine), Normet of Emcure (price-controlled norfloxacin replaced with ofloxacin) and Brakke Suspension of Franco-Indian Pharmaceuticals (price-controlled ciprofloxacin replaced with ofloxacin). The brand name was never changed in the above-mentioned cases.
In some cases, companies added another ingredient as an excuse to hike prices exorbitantly without any clinical rationale. Examples include Norflox of Okasa (lactobacillus added to price-controlled norfloxacin) and Doxy-1 of Astalife (lactic acid bacillus added to price-controlled doxycycline). The ceiling price for controlled drug norfloxacin 400mg and doxycycline 100mg is approximately Rs10 for 10 tablets, but the price of branded Norflox and Doxy-1 is approximately Rs48 for 10 tablets. One can get plain norfloxacin 400mg (brand-Norbid; company-Alembic) for Rs10.38, while plain doxycycline 100mg (brand-Microdox; company-Micro Labs Ltd) is available for Rs7.72.
This is an illustrative list of drugs that are sold at hugely inflated prices with no relation to their costs. Importantly, nimesulide is banned by the US and many countries, but continues to be openly sold in India. It is especially harmful for children. The retailer’s purchasing price of NICIP (branded-generic) manufactured by Cipla is only Rs1.88 for 10 tablets. Cipla is clearly making some profit even at this price, which means that the cost of production cannot be more than Rs1.40. The huge price mark-up is shared by the drug companies and traders—a nexus that ensures there is no action; there are many more examples of this nature.
One chemist at Prabhadevi (Mumbai) explained the racket to us, revealing that not everybody approves of unethical selling. Moneylife invites readers to write in with their experiences, and send us names of ethical pharmacies. It would make sense for buyers to purchase medicine from such ethical pharmacists. Aggressively advertised, multi-ingredient vitamin and mineral formulations such as Revital, A to Z and Supractiv, etc, are being produced and sold without a mandatory manufacturing licence from drug control authorities. Their producers claim that the products are ‘food’ and not drugs and, hence, subject only to Prevention of Food Adulteration (PFA) rules!
For producers, there are many benefits to selling medicine as food. Prices of medicines that contain vitamins A, B-1, B-2, C and E are controlled by the NPPA, to prevent profiteering, which they avoid. The obligatory standards for manufacturing infrastructure are also not applicable. This is a bad practice because ordinary people do not realise that excessive intake of vitamins can have serious side-effects which are never disclosed; they get away with extravagant pricing as well. Will the Drug Controller General of India (DCGI) and NPPA protect interests of patients by enforcing laws?
What is the government doing?
The Drugs Price Control Order (DPCO) of 1995, issued under Section 3 of the Essential Commodities Act, 1955, was meant to regulate drug prices. The NPPA was set up in 1997 and vested with the powers to implement the DPCO but with little impact. The NPPA is an autonomous and independent body of experts that monitors, fixes and revises drug prices. It is attached to the ministry of chemicals and fertilisers and is hobbled by the requirement of having to refer all actions to the ministry before issuing orders.
Dr Gulhati says, “The objective of the drug price regulation is to help people to get quality drugs at affordable prices. Over the years, the number of drugs under price control has steadily decreased from 347 (in 1979), to 142 (in 1987), to 76 (in 1995); now it is just 74. Of these 74, the 24 molecules currently under DPCO (such as captopril, chlorpromazine, phenylbutazone, etc) are outdated and superseded by newer molecules which are naturally outside the price control. Of these 74, only 63 drugs have been notified. Hence, 11 drugs have no ceiling prices. And, the number would have dropped to 34 under the Pharmaceutical Policy 2002 but for a legal stay granted by the Karnataka High Court. This corresponds to less than 5% of all major molecules in India.”
Clearly, there is an urgent need to make NPPA effective and enlarge the list of price-controlled drugs to at least cover the National List of Essential Medicines (NLEM), which has 354 drugs and covers a market size of Rs7,000 crore. Based on demands from NGOs and social organisations, the health ministry has mooted a proposal to amend the NLEM to cover cancer drugs. These are mostly manufactured and sold by multinationals such as Novartis, Roche and GSK and can cost up to Rs1.25 lakh for a month’s treatment.
Companies manufacturing drugs that are not in the price control list can raise prices by 10% annually. If the rise is more than 10%, the NPPA requests them to reduce prices, says NPPA chairman Mr Jharwal. Dr Gulhati says, “NPPA’s power to monitor and control prices needs to be vigorously used.” He also says that the base price which is the starting point for subsequent hikes, also needs to be reviewed to “prevent acute, recurrent and chronic profiteering” and “in no case should the MRP exceed the current retail price of an existing equivalent brand for setting the base price of a new brand in the decontrolled category. Otherwise companies will launch products at a high price and still claim an annual hike of 10%.”
In any case, companies continued to violate the 10% ceiling on price hikes too. We found that 22 brands in the non-controlled categories had hiked prices by 20% in 2007. They reduced the prices after an NPPA order. There has been continuation of stray violations in later years. NPPA needs to be better empowered. For instance, if a multi-ingredient formulation with one price-controlled molecule is launched, it should be mandatory to seek NPPA approval for pricing. Otherwise, action is initiated only when NPPA notices over-charging. Even here, it cannot take drastic action. It can only issue notices to seek reimbursement of the excess charged. This ends up in a legal battle and does not help the customer.
New move by MPs, please implement it too!
The parliamentary standing committee on health and family welfare has, on 4 August 2010, suggested a series of measures like increasing the number of drugs under price control, a blanket cap on profit margins of all medicines and promoting the use of generic drugs to make drugs more affordable and accessible to the common man. The measures seek to check rising drug prices but have already triggered lobbying by the pharmaceutical industry. Will it lead to the usual compromise behind closed doors?
The committee expressed shock at the irrefutable evidence of a strong link between high prices of medicines and poverty and says it is convinced that there is no alternative but to include more essential and life-saving drugs under price regulation. According to industry sources, “It is a long battle and a lot will depend on the lobbying power and clout of the pharma industry, which is bound to pull out every stop to prevent an expansion of the price-control list.”
One suggestion to the committee was to cap the profit margin of all medicines irrespective of whether they are under DPCO or not. If the retail price is fixed by the NPPA based on a fair, transparent system keeping interests of all stakeholders in mind, nearly all issues on pricing would get resolved, say its proponents. They point out that this is already in vogue—for example, in fixing electricity rates, bus and taxi-fares, etc. But, as we know, this process too is not free from political pressure and the influence of lobbyists.
Given that more than 80% of the population is dependent on private medical care and nearly 450 million people live below the poverty line, the most effective and direct approach would be to put a blanket cap on profit margins of all medicines across the board, according to the committee. Medicines are among the very few items where the decision to buy is not taken by the purchaser but by a third party, namely, a doctor. Therefore, if prescribers and producers join hands and take advantage of a patient’s helplessness, only the State can stop them.
The report also pointed out that since the NPPA had no jurisdiction over the pricing of patented medicines, they were being sold at exorbitant prices, many of them by importers. All categories of medicines, whether imported or manufactured, are required to comply with the standards specified in the Drugs and Cosmetics Rules. Therefore, a generic medicine is equivalent to the branded product, meeting the same standards of quality, noted the report. It asked the government to make efforts to give wide publicity to this fact, so that the apprehensions of the general public, fuelled and fanned by interested quarters about generic drugs not being of good quality, could be dispelled.
Theoretically, Indian pharma companies launching copycat products should have driven prices down. But this traditional strength (much derided by the West) is almost gone now. Structural changes in the industry have ensured that there are few large Indian pharma companies making generic versions of off-patent drugs and driving prices down. Some 61 drugs, worth over $80 billion, will go off patent in the US between 2011 and 2013. However, Indian pharma companies are in an exit mode. Piramal Healthcare was just sold to Abbott Labs of US. Ranbaxy was bought over by Daiichi Sankyo of Japan. Controlling shares of smaller outfits, like Shantha Biotech and Dabur Pharma, have also been sold to foreigners. Even Dr Reddy’s may be selling out. Far from Indian companies delivering cheaper drugs, MNCs are gaining market supremacy and essential medicines are bound to become costlier. This is in complete contrast to China where the drug industry is almost completely controlled by Chinese drug giants. India’s drug retail market grew 19.6% in the first six months of the year, headed by new leader—US company Abbott Lab, as foreign drug-makers strengthen their dominance in seven out of the top 10 brands. MNCs have taken three slots among the country’s top-five drug-makers.
One of the ideas being discussed is to make it mandatory for all doctors to write all prescriptions only in generic names. The Union health ministry had recently issued directions to doctors in the Central Government-run hospitals to prescribe only generic drugs as far as possible and not branded drugs. The Rajasthan and Delhi governments too issued a similar directive.
But there are major issues in implementing this. Even if the doctor prescribes a drug by its generic name, the chemist will be free to dispense any equivalent. Thus, the power will shift from doctors to the chemists. The pharma companies would unethically start wooing the chemists instead of doctors. This will be worse than the current situation. If the patient does not get any relief, doctors will blame the chemists. Moreover, while the doctor has some interest in the continued patronage from the patients, chemists could not care less. For them, profits will be the only criterion for selling medicines.
Apart from all these measures, regulating and penalising pharma companies caught bribing doctors has to happen frequently and demonstrably. The ban on doctors accepting gifts and hospitality from the pharmaceutical industry is relegated to the backburner with the new panel that replaced the Medical Council of India (MCI) seeming to go easy on its implementation. Ever since the ban was enforced at the beginning of the year, the MCI has received numerous complaints of doctors being wined and dined by various pharma companies. So far, little or no action has been taken on these complaints. The newly-appointed panel has been busy with the problem of irregularities in medical colleges and medical education.
MCI has no jurisdiction over companies. Pharma firms can be penalised through DCGI or the income-tax department. The parliamentary committee pointed out that the legal framework to put a cap on profiteering from medicines was available with the government under the Essential Services Maintenance Act (ESMA). In the original DPCO, there was a proposal for a cap on overall profitability of drug manufacturers to discourage them from shifting from price-controlled (less profitable) to decontrolled (hugely profitable) medicines. The proposal was never implemented.
In an interesting experiment, the All India Organisation of Chemists and Druggists (AICOD) decided to bring private-label generics to the market. In the first stage of an ambitious plan, AIOCD started distribution in 15 states with 100 products introducing these private-label generic products under the name JAVA. One hitch is that AIOCD has to buy products from manufacturers and then pass them on to retailers, making it a middleman. Also, only few molecules are available for OTC sale in India; the number cannot increase without drastic regulatory change.
S Srinivasan, managing trustee, LOCOST, Vadodara says, “The AIOCD move is, indeed, interesting. I would watch their sale prices. It would be a let-down if they sell irrational formulations or useless, harmless, and sometimes harmful, OTC products. Also, will they put pressure on 550 thousand members to sell and at what margins? What will be their unique selling proposition (USP)? Our experience shows that the common man, unfortunately, does not think low drug price is good, let alone better. So, AIOCD’s stated aims seem noble and worthy of support at this point of time.” LOCOST (Low Cost Standard Therapeutics) is a non-profit organisation that makes essential medicines and sells at affordable prices. According to a well-known pharmacist, “The prices may not be much lower than those of branded drugs and, hence, retailers will push JAVA products to gain more profits.”
Another issue is with foreign medicines sold at exorbitant prices in India. Plavix, a product of Sanofi Aventis, is manufactured in France and sold in India at an exorbitant price of over Rs1,020 for 10 tablets. The Indian equivalent generic, known as Clopidogrel, is available for as low as Rs40 for 10 tablets and even the higher-end product costs just Rs112 for 10 tabs. Why permit the import of drugs that are locally made? Many underdeveloped countries ban the import of products, once they are manufactured locally. Many would argue that people must be allowed to choose what they want; but, when it comes to medicines, people always go by what the doctor prescribes or says is the best.
We contacted many pharma companies, but did not get any proper response to the irrational pricing of branded drugs except from Sanofi-Aventis. They had nothing substantive to say about the issues we discussed. The media routinely exposes the pharmaceutical industry’s malpractices, but the more we delved into this subject, it became apparent that it was murkier. Fortunately, there are several people within the industry who want to help break the vicious circle of weak drug price control, irrational pricing by pharmaceutical companies, the nexus between some private hospitals/doctors and rising costs of healthcare in India.
Branded, Generics and Branded-Generics
What exactly do these mean?
In India, branded medicines contain one or more ingredients marketed under brand names given to them by their manufacturers. It allows doctors to promote the brands and it is an open secret that many receive a kickback from manufacturers for doing so. In Western countries, it refers to new drugs developed by the innovator patent-holding companies. (After India signed the WTO agreement, all medicines patented after January 2005 are monopoly products of manufacturers and are sold under brand names).
Generics are medicines sold under their chemical names. In Western countries, it refers to medicines whose patents have expired and can be produced by anyone under new brand names. The term ‘Branded-generics’ is an Indian coinage that refers to branded products that are marketed through heavy incentives to retail chemists (not promoted by doctors). Obviously, such products are unethically and illegally sold either without prescription or by substituting prescribed brands. This is a well-kept secret. Moneylife discovered, quite by chance, that whenever you ask for a product by a generic name (we asked for vitamin E and erythromycin in two separate cases, with two different pharmacies at different times), many pharmacies immediately offer you the product of an unknown company at a hugely inflated price. Naturally, they don’t bother with a prescription or a bill. In both cases, the packaging and the colour were very similar to those of the market leaders such as Pfizer’s Erythrocin 250 and Merck’s Evion 400 for vitamin E.
A Remarkable Experiment
How Dr Samit Sharma delivered medicines at one-tenth the cost!
Dr Samit Sharma, currently district magistrate, Nagaur (Rajasthan), has created history of sorts. In Chittorgarh (Rajasthan), medicines are being sold at a fraction of the maximum retail prices through 23 cooperative stores. Dr Sharma broke the monopoly of drug manufacturers by persuading doctors to prescribe by the chemical name and made arrangements to sell medicines below the MRP at government drug counters. The demonstration effect worked. Once the choice of low-cost drugs was available to the consumer, market competition ensured that private medical shops also reduced their prices.
“If the Government is serious about reducing healthcare costs, it will have to take cost-related measures—either price controls or ensuring that doctors prescribe generics. Doctors are never taught about generics in medical colleges. Many of them are simply ignorant about the efficacy of generic medicines and come around pretty quickly,” says Dr Sharma. The impact is spreading to other parts of Rajasthan too. Nine districts—including Jaipur, Bhilwara, Jalore and Sirohi—are now procuring drugs from the Chittorgarh cooperatives. In some cases, just by removing the middleman, there was as much as 95% price reduction. Individual patients from adjoining districts have now started rushing to Chittorgarh for medical supplies. In Chittorgarh, a technical panel of doctors has pre-selected 57 drug companies (Cipla, Ranbaxy, Cadila, etc.) who are welcome to participate in the tenders. ‘Surprise checks’ on medicines sold through cooperatives show that they have ‘same results as branded drugs’.
All this clearly is due to the extraordinary initiative of one individual. After all, the government has tried to eliminate middlemen by procuring generic drugs in bulk directly from the manufacturers and dispensing them through Jan Aushadhi (people’s dispensary). But only 46 such stores have been opened till now; in a country of over 1.12-billion people, this is unlikely to make a significant dent.
The Generic Option
Dr Anant Phadke believes that cost of medicines can be cut by 50%-75% and he is actually delivering it!
Dr Anant Phadke is leader of the People’s Health Movement in Maharashtra; he is also active with Shramik Mukti Dal movement. The Aurangabad bench of the Bombay High Court took suo-moto note of his article in Sakaal (a popular Marathi daily) on 20 November 2009 on profiteering in the pharma trade and has appointed an amicus curiae to help in understanding the issue. Dr Phadke has argued in his article that prices of medicines in India can be halved or brought down to a quarter, if the government takes steps to stop reckless profiteering and waste. He advocates abolition of brands as one option, but also suggests other remedies.
Two years ago, Dr Phadke started the Lokayat Medical Centre in Pune which is managed by a socially-oriented doctor under expert guidance. Patients with chronic health problems (like diabetes, high blood pressure, heart disease and infections requiring high-value antibiotics) come to the Centre for a ‘second opinion’ about the brand of medicine prescribed by their consultants.
Each patient’s story is heard, their weight, blood pressure and other parameters verified and the findings and the treatment recorded on a case-paper. In many cases, generic medicines manufactured by LOCOST or by other reputed companies like Cipla, Dr Reddys, Alembic or Blue Cross are available at a half to one-fourth of the price of the branded medicines prescribed by consultants. If the patient is willing to use these substitute generic medicines, they are provided to the patient at a nominal margin to cover costs including a nominal fee of Rs10 per patient that the doctor charges. Typically, an aged person who has diabetes, hypertension, high cholesterol, ischaemic heart disease saves around Rs500 per month by going to Lokayat Medical Centre. The centre does not change the medicine prescribed by the consultant. It merely acts like a second opinion centre for the choice of the brand of medicine.
Barring exceptions, none of the doctors in Pune send their patients to Lokayat Medical Centre. But the reputation of the Centre has spread by word-of-mouth and through social activists. It has also started a Shramik Aushadhalaya (Toiling Peoples’ Store) which is a generic drug store at Aajara in Kolhapur district.
Dr Phadke says general practitioners (GPs) can also make good-quality generic medicines available to their patients. In earlier days, GPs used to dispense medicines; and prescriptions were an exception. The medicines they dispensed were cheaper generic products. Socially -conscious doctors, social activists, enlightened citizens can come together to restart this healthy practice of using generics. Many hospital-pharmacies are buying drugs from the bulk market and are earning huge margins by selling at MRP. They can help to bring prices down for consumers.
Lastly, a socially-conscious doctor can decide not to prescribe a ‘me too drug’. A ‘me too drug’ is one that has only a slightly different chemical composition from the regularly used older drug, with no significant difference in benefits. Yet, they are touted as superior medicines and are two to four times costlier. Dr Phadke cites Lisinopril, Ramipril, Perindopril as ‘me too’ drugs that are frequently prescribed by physicians to lower blood pressure instead of Enalapril, the older, well-researched, scientifically-established medicine. All four are ‘ace-inhibitors’ with hardly any justification for the huge price-difference between enalapril and others. The generic version of enalapril 5mg costs Rs5 per strip of 10 tablets; its branded version costs around Rs20, while lisinopril, ramipril and perindopril cost around Rs35, Rs70 and Rs100, respectively, for equivalent dosage! Unless the government acts to curb the galloping prices of medicines, we will require socially-oriented doctors to take the lead in helping people buy the right medicine at a reasonable price.
4 Myths of Drug Pricing
Dr Chandra M Gulhati, editor, Monthly Index of Medical Specialities (MIMS), debunks some of the myths about pharma company profits
Myth1 – Drug manufacturers in India do not make adequate profits and need to keep prices high
• India has the highest number of pharmaceutical manufacturers in the world: 10,563 as per data compiled by the NPPA. This is because of high profitability.
• The tender procurement prices for government agencies are a fraction of the MRP in India. Example: the Tamil Nadu government buys a 400mg tablet of albendazole for 35 paise while its MRP ranges from Rs6 to Rs17. Thus, even the MRP is 1700% more than the government’s procurement price. Even without taking into account promotional and middlemen’s margins, the difference is appallingly high.
• Ten out of the 40 richest persons on the Forbes India list are in the pharma business and even first-generation entrepreneurs have acquired massive wealth in the business. Salary packages in professionally managed companies are also very attractive and they also spend on lavish bonuses for chemists and kickbacks to doctors.
Myth2 – Competition should decide drug prices
Let’s start by looking at the prices of the same molecules sold under different brand names. The variations are enormous.
1. Albendazole 400mg: Milibend, a Glenmark brand, costs Rs6/tablet while Zentel of GlaxoSmithKline is priced at Rs17: a 300% difference.
2. Two brands of amlodipine—Amlodac and Amlogard—are priced at Rs21 and Rs77, respectively, for 10 tablets: 360% difference.
3. Clopidogrel: Noklot (Zydus Cadila) is priced at Rs78/10 tablets compared to Rs1,020 for Plavix (Sanofi): a difference of nearly 1300%.
4. Risperidone: The difference is astronomical. Torrent’s product Rispidon costs less than Rs17 while Risperdal of Johnson & Johnson costs Rs270: 1,600% difference.
5. Escitalopram, an antidepressant, also has wide variation in prices. Stalopam 10mg (Lupin) is priced at Rs6/tablet while Cipralex (Lundbeck) of similar strength costs Rs14: 230% difference.
There are hundreds of such examples. The question is: Why don’t the needlessly expensive brands die a natural death in the marketplace?
1. Cyclovir (Zydus) brand of acyclovir with the therapy cost of Rs812 had a total annual sale of Rs57 lakh compared to Rs3.17 crore for more expensive Herpex (Torrent) brand with the cost of therapy at Rs1,666.
2. Diamicron (Serdia brand of gliclazide at Rs69 for 10 tablets) was worth Rs19 crore of annual sales against Rs15 lakh of Lycazid brand (of Jagsonpal at Rs35/10 tablets).
3. The most expensive brand of clopidogrel (Plavix at Rs1,020/10 tablets) sells far more (Rs12.5 crore) than the much cheaper, but equally reputed, brands including Zydus Cadila’s Noklot (Rs78/10 tablets), which does not appear in the top 5 brands of clopidogrel!
Are doctors oblivious of the cost to patients? A more logical explanation is that doctors get easily ‘convinced’ by companies which can spend large sums of money on aggressive promotion to offer huge incentives to prescribers. This can be in various forms—of conferences abroad, high-value gifts, etc. Ultimately, the money comes from patients, since the cost of expensive gifts and lavish hospitality gets added to drug prices.
Myth3 – If drug prices are controlled, there will be no money to fund drug research
Companies expect poorer patients of India to pay the artificially high prices of existing medicines that do not involve any original research on their part. Also, while the claim is about original research, many pharma companies’ balance sheets show huge reserves rather than investment in R&D.
R&D can also be encouraged through government incentives and rebates. Besides, as of date, not one successful new molecule marketed internationally has come out of India in the past four decades!
Myth4 – Indian prices are among world’s lowest
The claim that drug prices in India are the ‘lowest’ is incorrect because most imported formulations are being sold at very high prices. The comparison must also be based on respective wage structures rather than a simple currency conversion. Also, since drug companies are paying royalties only for drugs patented after January 2005, the prices should be lower.