Mired in allegations of kickbacks, fabricated clinical tests, and price cartelisation, the Indian pharma industry may be top dog in the generic drug market but its success is built on a foundation of lies and deceit that is only now coming to light.
In a country where the overwhelming majority pays out of pocket for prescription drugs, government-mandated price caps have made little impact. While essential medicines are available for free in public hospitals, most consumers prefer better-equipped private clinics.
Here’s the rub: inflation in the prices of medicines has been growing twice as fast as general inflation in India.
Curiously, the cost of production for drug manufacturers had remained fairly steady before COVID-19 arrived on the scene. For the sake of comparison, inflation in Over the Counter (OTC) medicines hovered around the 9.01% mark as of May 2019 when the overall rate of inflation was a modest 3.05%. Livemint reports that 55 million Indians are pushed below the poverty line as a result of heavy medical bills every year. One reason for this is the abysmally low pace of health insurance penetration in the country. But that’s not all.
A string of capers
India’s pharma industry – a cash cow for the slowing Indian economy – has been extracting its pound of flesh from the nation’s gullible consumers in the most brazen manner.
Visit any hospital and you’re likely to be greeted by hordes of medical representatives jostling obnoxiously with each other to pay the doctors a ‘courtesy call’. With a wink and a nod, thousands of rupees exchange hands behind closed doors, a sweetener for undue favours: kickbacks for referring patients for diagnostic tests and writing prescriptions that most of them could do without. Doctors, chemists, and pathology labs – all bedfellows in a murky, greed-driven enterprise that puts profit before public health, without the slightest remorse.
This is not limited to the home market alone. In her seminal book, Bottle of Lies, Catherine Eban, an American investigative journalist has laid threadbare the inner workings of the high and mighty of India’s pharmaceutical industry. She has uncovered in vivid detail how some of the Indian pharma companies hoodwink regulators on quality and safety norms in a bid to drive profits by falsifying clinical tests and compliance data. To be fair, Indian companies like Cipla do enjoy a sterling reputation in markets abroad having played a key role in combating the spread of AIDS in Africa.
Watch: Katherine Eban Interview with The Wire: How Drug Makers Are Compromising the Lives of People
Sworn to lie
However, companies like Ranbaxy, Wockhardt, and Mylan have recently made the honour roll for subversive activities like price cartelization, effectively defrauding millions of unsuspecting consumers in the US and EU. Prosecutors in multiple US states filed a lawsuit in 2019 against 7 Indian drug manufacturers which could result in hefty fines worth up to $2b and increased scrutiny in future bids. The Food and Drug Administration’s (FDA) litany of charges has left the Indian government at a loss for words though it has attributed the legal challenge to the handiwork of ‘vested interests’. There is no doubt that India’s powerful drug lobby is working hard in the corridors of power to suitably influencing the turn of events in their favour.
Watch: Top Indian drug makers accused of fixing prices in the US
Case in point: Shortly after it expanded the list of price-controlled medicines in 2019, the National Pharmaceutical Pricing Authority (NPPA) has had to make exceptions for 21 of them – raising their retail prices by as much as 50%. The reason: an alleged increase in the cost of imported inputs. Some industry sources also claim that the cost of some medicines under price cap had, in fact, increased compared to similar products that were market regulated. Drugmakers contend that shrinking margins on brand-name medicines make it hard for them to sustain production. The argument that costs have increased sounds incredible given that all this was well before COVID 19 crisis appeared on the horizon.
It is no coincidence that two successive chiefs of the National Pharmaceutical Pricing Authority (NPPA) were shunted out of office well before due time.
Both Bhupendra Singh and his immediate predecessor, Injeti Srinivas – who led the agency for a total of two years combined – had apparently earned the ire of pharmaceutical bigwigs for demanding greater accountability and transparency in conducting clinical trials and rationalising trade margins. Likewise, the Drug (Price Control) Order 2013 has also been criticised as by drug makers as being an impediment to the competitiveness of the industry.
Jugaad proving costly
While India is an undisputed leader in generic drugs, its lax regulatory framework has done little to stem the rampant reuse of devices like syringes and needles- especially in rural areas- endangering innocent lives. The practice of recycling used needles has spawned a parallel industry even in major metros like Mumbai in flagrant violation of medical safety norms. Studies have pinpointed this as the reason behind the rapid spread of deadly diseases like Hepatitis B and C.
The rural population is particularly vulnerable given the abysmal doctor to patient ratio and the non-availability of basic facilities at primary health centres in thousands of India’s villages. Though a government-funded campaign to promote single-use syringes exists, data on its efficacy is sketchy. While cost is certainly a factor, strict vigilance and enforcement is required at least until the practice takes hold among the health professionals.
Winds of change?
Since releasing a draft Medical Device Rules (MDR) policy in 2019, the government has made it mandatory for manufacturers to register medical devices including needles and syringes, cardiac stents, knee implants, and assorted devices such as CT scan machines, defibrillators, and dialysis machines. The Niti Ayog’s recommendation that trade in medical devices be governed by a dedicated Medical Devices Administration has apparently been discarded. This gives the Central Drug Standards Control Organisation (CDSCO) – India’s equivalent of the US FDA – sweeping powers to regulate the quality of medical devices used across the country.
However, the regulator’s track record is far from spotless with the CBI investing graft charges against several of its senior officers.
With the regulator itself in the dock, countless Indian consumers have virtually no defence against manipulation and price gouging.