PARLIAMENT OF INDIA RAJYA SABHA

45
DEPARTMENT-RELATED PRLIAMENTARY STANDING COMMITTEE ON HEALTH AND FAMILY WELFARE FORTY-FIFTH REPORT ON ISSUES RELATING TO AVAILABILITY OF GENERIC, GENERIC-BRANDED AND BRANDED MEDICINES, THEIR FORMULATION AND THERAPEUTIC EFFICACY AND EFFECTIVENESS

(PRESENTED TO THE RAJYA SABHA ON 4TH AUGUST, 2010) (LAID ON THE TABLE OF THE LOK SABHA ON 4TH AUGUST, 2010)

RAJYA SABHA SECRETARIAT NEW DELHI

AUGUST, 2010/ SRAVANA , 1932 (SAKA)
1

PARLIAMENT OF INDIA RAJYA SABHA

DEPARTMENT-RELATED PARLIAMENTARY STANDING COMMITTEE ON HEALTH AND FAMILY WELFARE FORTY-FIFTH REPORT ON ISSUES RELATING TO AVAILABILITY OF GENERIC, GENERIC-BRANDED AND BRANDED MEDICINES, THEIR FORMULATION AND THERAPEUTIC EFFICACY AND EFFECTIVENESS

(PRESENTED TO THE RAJYA SABHA ON 4TH AUGUST, 2010) (LAID ON THE TABLE OF THE LOK SABHA ON 4TH AUGUST, 2010)

RAJYA SABHA SECRETARIAT NEW DELHI AUGUST, 2010/ SRAVANA, 1932 (SAKA)

CONTENTS
PAGES 1. 2. 3. *4 *5. COMPOSITION OF THE COMMITTEE-------------------------------PREFACE--------------------------------------------------------------------REPORT----------------------------------------------------------------------OBSERVATIONS/RECOMMENDATIONS AT A GLANCE-------MINUTES--------------------------------------------------------------------(i) (ii) 1-12

*To be appended at printing stage

COMPOSITION OF THE COMMITTEE (2009-2010)

RAJYA SABHA 1. 2. *3. 4. 5. 6. 7. 8. @9. #10 Shri Amar Singh Shrimati Viplove Thakur Dr. Radhakant Nayak Shri Janardan Dwivedi Shri Balbir Punj Dr. Prabhakar Kore Shrimati Brinda Karat Shrimati Vasanthi Stanley Dr. M.A.M. Ramaswamy Dr. Anbumani Ramadoss Chairman

LOK SABHA 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. Shri J. M. Aaron Rashid Shri Ashok Argal Shrimati Sarika Devendra Singh Baghel Shri Vijay Bahuguna Dr. Chinta Mohan Shrimati Tabassum Hasan Dr. Sanjay Jaiswal Shri S. R. Jeyadurai Dr. (Shrimati) Kruparani Killi Shri N. Kristappa Dr. Tarun Mandal Shri Datta Meghe Dr. Jyoti Mirdha Shrimati Jayshreeben Patel Shri R.K. Singh Patel Shri M. K Raghavan Dr. Anup Kumar Saha Shrimati Meena Singh Dr. Arvind Kumar Sharma Shri Pradeep Kumar Singh Shri Ratan Singh

SECRETARIAT Shrimati Vandana Garg, Additional Secretary

Shri R.B.Gupta, Director Shrimati Arpana Mendiratta, Joint Director Shri Dinesh Singh, Assistant Director Shri Satis Mesra Committee Officer ______________________________________________________
* @ # ceased to be a member w.e.f 01/7/2010 ceased to be a member w.e.f 30/6/2010 ceased to be member w.e.f 29/6/2010

(i)

PREFACE
I, the Chairman of the Department-related Parliamentary Standing Committee on Health and Family Welfare, having been authorized by the Committee hereby present this Forty-fifth Report of the Committee on the issues relating to the availability of generic, generic-branded and branded medicines, their formulation and therapeutic efficacy and effectiveness. 2. The Committee deliberated on the issue in hand in its meetings held on the 26th

April, 20th May and 10th June, 2010. 3. During the course of examination of the subject mentioned above, the Committee

was benefited by the Status Note furnished by the Department of Health and Family Welfare on various issues concerning generic, generic branded and branded medicines, the presentation made by Dr. Samit Sharma (IAS), District Magistrate, Nagaur, Rajasthan before it on the 20th May 2010 and the oral evidence tendered by the Secretary, Department of Health and Family Welfare on the 10th June, 2010. Dr. Samit Sharma highlighted a host of issues concerning generic and branded drugs and also acquainted the Committee with the salient features of the Generic Drugs Initiative started by him in the Districts of Chittorgarh and Nagaur, Rajasthan. 4. The Committee acknowledges with thanks the assistance rendered by Dr. Samit

Sharma in enlightening the Committee about various facets of the issue under reference. 5. The Committee at its meeting held on the 21st July, 2010 considered and adopted the

Draft Report. 6. For facility of reference and convenience, observations and recommendations of the Committee have been printed in bold letters in the body of the Report.

NEW DELHI; Singh AMAR SINGH 21st July, 2010 Asadha 30, 1932 (saka)

Amar

Chairman, Department-related Parliamentary Standing Committee on Health and Family Welfare

(ii)

REPORT 1. Since independence, a number of policy interventions-both at the Central and State levels have been made to provide best possible healthcare to the people with special focus on the vulnerable sections of the society - the very poor. However,

with the ever-increasing population, insufficient funding and emergence of newer diseases (such as AIDS), the impact of State-sponsored programmes have not been very effective. 2. Drugs form a substantial portion of the out-of-the pocket spending on health by

households in India. The poor are the worst sufferers of the high cost of medicines due to their vulnerability to diseases. Studies have shown that the poor in both rural and urban areas spend a higher proportion of their income on medical treatment than those who are better-off. 3. The Committee has been informed that expenditure on drugs constitutes anywhere from 40 to 80 per cent of the total cost of treatment. Regrettably, expenditure on healthcare is the second most common cause for rural indebtedness. 4. Undeniably, universal access to quality medicines at affordable prices is of

critical importance. Through its Reports on Demands for Grants and also while examining drug-related legislations, the Committee has been constantly drawing the attention of the Government towards the urgent need for creating a mechanism whereby quality medicines at affordable prices are made available to all sections of our society. 5. Recognizing the immense importance of medicines in healthcare, the

Committee decided to examine the issues pertaining to availability and pricing of medicines, the prescribing patterns by Government and private doctors and procurement by state-run health services. Accordingly, the Committee called for a Status Note from the Department of Health and Family Welfare. 6. The Committee was informed that quality of the drugs imported,

manufactured and sold in the country is regulated under the provisions of the Drugs and Cosmetics Act, 1940 and Rules made hereunder. While the regulatory control 6

over the approval of drugs is under the Central Government, the manufacture, sale and distribution thereof is primarily regulated by the State Drug Control Authorities appointed by the State Governments. 7. The Status Note received from the Department made the Committee

understand the entire gamut of branded medicines, the so-called branded generics and generic medicines - their comparative pricing, role of pharma manufacturers and trade and Government procurement procedures 8. It was clarified that the Drugs and Cosmetics Rules do not identify the

distinction between generic, branded generics and branded medicines. The basis of categorization is as follows: a) Branded medicines: contain one or more ingredients marketed under brand names given to them by their manufacturers in India. These are normally promoted to doctors. [In western countries brand-name medicines are defined differently: the term refers to new drugs developed by the innovator patent holding companies]. Generic medicines: are those which are marketed under their chemical/salt names. [In western countries generic medicines are defined differently i.e. products that contain the same ingredient(s) as brand-name medicines but are manufactured after the expiry of patents by companies other than innovators. These are marketed under new brand names] Branded-generics: is an exclusively Indian terminology and refers to branded products [same as category (a) above] but not promoted to the medical profession but marketed through heavy incentives to retail chemists. Obviously such products are unethically and illegally sold either without prescriptions or by substituting prescribed brands.

b)

c)

9.

It was pointed out by the Department that all categories of medicines,

whether imported or manufactured, are required to comply with the standards specified in the Drugs and Cosmetics Rules. The quality is monitored by the central and state Licensing Authorities through a system of collection of random samples and testing. Therefore a generic medicine (sold under its salt name) is equivalent to the branded product meeting the same standards of quality. 10. The Committee was apprised that pricing of drugs was the responsibility of

the National Pharmaceuticals Pricing Authority (NPPA), under the Department of Pharmaceuticals in the Ministry of Chemicals & Fertilizers. Prices of scheduled 7

drugs/formulations are fixed/revised by the Authority, as per the provisions of the Drug Price Control Order (DPCO), 1995. Under the DPCO, prices of 74 bulk drugs and the formulations containing any of these scheduled drugs are controlled. In respect of drugs not covered under the DPCO i.e. non-scheduled drugs, manufacturers have the freedom to fix the prices. 11. Generic drugs are substantially cheaper than branded products. It was

admitted by the Department that the use of generics, if promoted both in the public and private sectors, would substantially reduce drug costs and increase drug availability. Bulk procurement of generics would help in procuring drugs at

competitive prices by the public sector health care services. 12. Currently there is no provision to make it mandatory to market medicines

under generic names only, without any brand name. 13. On a specific query about the procurement process of medicines by Central

Government, the Committee was informed as follows: The Medical Stores Organization (MSO) under the Directorate General of Health Services procures medicines as per the confirmed indents by its indenters and supplies to them in a competitive price after due quality tests. The MSO has got two formularies:- one for Generic drugs and another for Proprietary or Branded drugs. The generic formulary consists of 818 drugs including fixed dose combinations. The formulary for proprietary/branded drugs contains 504 drugs. On the basis of the formularies, the Rate contract is undertaken with the manufacturers/suppliers from time to time. Once the rate contract is made, it is valid for three years in the case of Generic drugs, whereas for proprietary/branded drugs, the validity of rate contract is for one year. It is a fact that the Generic drugs are comparatively cheaper than the branded drugs, even branded generic drugs. However, prescription of medicines by doctors of the Hospitals is in the form of branded drugs only. Sometimes, the doctors do prescribe the branded generic drugs. If the indent to MSO shall be for Generic drugs only, the procurement will be done only for generic drugs. Since the procurement by MSO is directly linked with indent received from its indenters, it has no choice left than to procure the indents placed by indenters, whether it is generic or proprietary. 14. In its meeting held on the 20th May, 2010, the Committee had the opportunity

to view a presentation given by Dr. Samit Sharma (IAS), District Magistrate, Nagaur, Rajasthan on the initiative taken by him with regard to availability of generic 8

medicines, prescription of such medicines by doctors and procurement mechanism thereof. The Committee was informed that Dr. Sharma was conferred a prestigious award for spearheading a campaign to provide cost-effective generic equivalents of prescribed branded medicines and building awareness among the people during his stints at Chittorgarh and presently as District Magistrate, Nagaur, Rajasthan. The following points were highlighted in the presentation: Currently there are over 1,00,000 brands of medicines sold in India by just over 8,500 drug companies. The National List of Essential Medicines (NLEM) contains 354 molecules. In 1979, the prices of 347 medicines were controlled by NPPA which was reduced to 142 medicines in 1987. In 1995, the number of medicines under price control was further reduced to 74. However controlled prices of only 63 scheduled medicines have been notified as of date. Some of these 74 medicines are now outdated and replaced by newer drugs which are all outside the price control mechanism. Hence in real terms less than 50 common drugs are today under the price control. An initiative was taken in the Chittorgarh district for making affordable medicines available to patients through Low Cost Drug Shops selling generic medicines. The first steps taken were in convincing doctors to prescribe medicines by generic/salt name as per the direction given by the State Government and removing the false notions about inferior quality of generic medicines. The next action was involvement of Government Co-operative Medical Stores in procurement of generic medicines through open tender. Drugs of reputed companies only were recommended by the Approval Committee. Against an initial approval of 22 drug companies, 57 companies stand approved at present. About 800 medicines and 200 surgical items were procured which were sold at 20% profit margin to the patients. Large gap in the procurement rate and the MRP of medicines was noticed as indicated below: Chittorgarh Tender Rate MRP (Rs.) Generic Drug Amlodipine (5 mg) Rs. 2.50 (10 Tablets) 22.00 Cetirizine (10mg) Rs. 1.20 (10 Tablets) 35.00 Ceftazidime (1000mg) Rs. 52.00 (1 Injection) 370.00

Awareness about huge difference in prices was created among all stake holders, more particularly among pharmacists and patients. Advertisements to this effect were issued by the District Health Committee (Nagaur and Chittorgarh) under the National Rural Health Mission. As a result there was sharp fall in the treatment costs. For example, for the treatment of Pneumonia involving 7 days therapy, the cost was Rs. 1136 when branded medicines were used compared to just Rs. 139.51 when generic medicines were purchased from Co-operative store. A saving of Rs. 6.05 crore in the treatment of 4.03 lakh patients in 6 months was estimated. Private Chemist Associations agreed to sell generic medicines at 50 per cent discount on MRP. The Committee noted that the Bihar Government has also taken a similar

15.

initiative. Every medical college, district hospital, PHC in the state has a shop where generic medicines at less than 50 per cent of the MRP are sold and yet Bihar Government is earning 45 per cent revenue on the project. 16. The Committee also studied the Tamil Nadu model of Essential Drug Supply,

with the following components:i. ii. iii. iv. v. vi. vii. viii. Finalizing list of Essential Drugs based on National List of Essential Medicines (NLEM). Purchasing only generics. Ensuring adequate funds and human resources for supply of drugs from its warehouses to various points of health care delivery. Testing drugs for quality Supplying drugs only in strips and blister packing Making proper arrangements for storage of drugs in modern warehouses Training of pharmacists in storage and distribution of drugs Revising store keeping procedures and storing drugs according to the principle of First come - First out basis to avoid expiries. The Committee took note of the fact that by adopting the above model of

17.

Essential Drug Supply, Tamil Nadu has been able to achieve the following: i. ii. iii. vi. Huge savings on drug expenditure. Rational use of drugs Accurate up to date stock information on the computer Linkage of all warehouses telephonically with the TNMSC headquarters in Chennai. 10

18. The Committee is of the opinion that Chittorgarh, Tamilnadu and Bihar models are worth emulating across the country as they have the potential to make drug-access easier on the pocket of the people and thus save precious human lives. 19. The Committee recommends that the Department of Health and Family

Welfare, in coordination with the Department of Pharmaceuticals, should convene a meeting of Chief Secretaries of State Governments for the purpose of formulating an effective essential drug supply policy, having the components of (a) generic prescribing, (b) adoption of essential drugs list, (c) standard treatment guidelines, (d) drug procurement by open tender system, (e) distribution of low cost drugs through Government drugs stores and (f) demand generation of generics through public awareness. The Committee desires to be kept apprised of the action taken in this regard. 20. The Committee also took note of the fact that the Department of Chemicals

and Fertilizers has introduced a new scheme where under, a one-time grant of Rs. 50,000 is made to an NGO for setting up a shop selling exclusively generic medicines. 21. The Committee was also informed that for making available medicines at

affordable prices, a campaign, Jan Aushadhi had been launched by the Department of Pharmaceuticals, to sell quality generic medicines. As of now, 46 Jan Aushadhi Stores have been opened across the country. The Committee, however, feels that in a country of 110 crores plus people, even hundreds of Jan Aushadhi stores are unlikely to make a significant dent. Therefore proactive intervention by State Governments down to District levels is required to help the people to procure life saving medicines at affordable prices. 22. The Committee noted that apart from NPPA and DCGI, import and export

policies of drugs are looked after by the Ministry of Commerce, fiscal matters by the Ministry of Finance and the policy effects on small scale pharma units is dealt with by the Ministry of Small and Medium Enterprises (MSME). At present, NPPA has no jurisdiction over the pricing of new patented medicines with the result that they are being sold at exorbitant prices, many of them by importers. 11

The Committee urges the Government to address this issue without any further delay. 23. The Committee noted that many unethical and corrupt practices had crept

into the pharma business. For example many companies while retaining the popular brand names of their price controlled products were changing the ingredients to evade ceiling prices. Example cited included Aciloc-RD of J. B. Chemicals (price controlled ranitidine replaced with omeprazole), Cetrizet-D of Sun Pharmaceuticals (price controlled pseudoephedrine replaced with phenylepherine), Normet of Emcure (price controlled norfloxacin replaced with ofloxacin) and Brakke suspension of Franco-Indian (price controlled ciprofloxacin replaced with ofloxacin). In other cases manufacturers just added another agent of hardly any clinical rationale to exorbitantly hike the prices. Examples included Norflox of Cipla (lactobacillus added to price controlled norfloxacin) and Doxy-1 of USV (lactic acid bacillus added to price controlled doxycycline). 24. The Committee, taking note of the lack of any inter-Ministerial mechanism

for checking such corrupt practices, took up the matter with the Department of Health and Family Welfare and Department of Pharmaceuticals in February, 2010. The Committee is happy to note that subsequently a High Powered InterMinisterial Coordination Committee with the following composition has been constituted: 1. 2. 3. 4. 5. 6. Secretary (Pharma) Chairman, NPPA Drug Controller General, India Secretary (Health & Family Welfare) or Joint Secretary level representative Secretary (MSME) or Joint Secretary Level representative Joint Secretary (Pharma) in charge of NPPA Chairman Member Member Member Member Member

25.

The Department of Pharmaceuticals vide its Memorandum dated 8th April,

2010 have, inter alia, informed that after deliberation on the matter the InterMinisterial Coordination Committee may recommend a framework for ensuring

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availability of quality medicines at affordable prices to the Government within a period of one year. 26. The Committee welcomes the initiative in this regard and sincerely hopes

that the constitution of the Inter-Ministerial Coordination Committee would not only ensure availability of drugs at fair prices but also result in better coordination between the office of DCGI and the NPPA. The Committee desires to be kept apprised of the findings of the Inter-Ministerial Coordination Committee and the action taken thereon after conclusion of the consultation in this regard. 27. Since all drugs whether branded, generic or branded generic, manufactured

and/or imported for sale and distribution in the country, are required to conform to the same quality parameters listed in the Drugs and Cosmetics Rules, the Committee would like the Inter-Ministerial Coordination Committee (IMCC) to give wide publicity to this fact, so that the apprehensions of general public fueled and fanned by interested quarters about generic drugs not being of good quality could be dispelled.

28.

The Committee is shocked to note that despite there being irrefutable

evidence of a strong link between high prices of medicines and poverty as also despite the fact that the Eleventh Five Year Plans one of the avowed objectives is to include all essential drugs under a system of price regulation, the number of drugs under price control still remains at a pathetic 74. The Committee is not aware of the reasons behind reducing the number of drugs under price control and, therefore, would like to be enlightened about the reasons behind restricting the controlled drugs to a mere 74. Prescription of irrational and useless drugs by many of the doctors with ulterior motives is rampant. essential and life saving drugs under price regulation. 29. The Committee simultaneously recommends that the Department of Health The Committee is, therefore, convinced that there is no other alternative but to include more

and Family Welfare take up the matter with the Department of Pharmaceuticals at 13

the highest level with a view to revisiting the issue of inclusion of drugs in the DPCO and making it more rational and patient-friendly. The Committee would like to be kept informed of the action taken in this regard. 30. Another related issue which drew the attention of the Committee was that

current prices of many drugs are highly inflated with no relation to their costs as illustrated by the following table:Name given by drug company (Brand Name) ORTHOBID Salt name of Potency medicine (Generic Name) NIMESULIDE 100 mg No. of Tablets Printed Max. Retail

10

29.19

NIMULID

NIMESULIDE

100 mg

10

38.72

NICIP NISE

NIMESULIDE NIMESULIDE

100 mg 100 mg

10 15

21 48

However, the retailers purchasing price of NICIP manufactured by Cipla is only Rs. 1.88. Obviously on this price, Cipla is making some profit. The Committee is aware that the cost of producing a strip of 10 tablets of Nimesulide is no more than Rs. 1.40. It is evident that huge margins are being pocketed by both the drug companies and traders. Similarly the cost of producing a strip of 10 tablets of Progesterone is Rs. 18 but it sells for Rs. 180; there are many more examples of this nature. 31. The Committee also notes that despite there being a code of ethics in the

Indian Medical Council Rules introduced in December 2009 forbidding doctors from accepting any gift, hospitality, trips to foreign and domestic destinations etc from healthcare industry, there is no let-up in this evil practice and the pharma companies continue to sponsor foreign trips of many doctors and shower with high value gifts like air conditioners, cars, music systems, gold chains etc. to obliging prescribers who then prescribe costlier drugs as quid pro quo. Ultimately all these expenses get added up to the cost of drugs. The Committees attention 14

was drawn to a news item in Times of India dated July 1, 2010 by Reema Nagarajan giving specific instances of violations of MCI code. The Committee calls upon the Government to take strict and speedy action on such violations. Since MCI has no jurisdiction over drug companies, the Government should take parallel action through DCGI and the Income Tax Department to penalize those companies that violate MCI rules by cancelling drug manufacturing licences and/or disallowing expenses on unethical activities. 32. One of the suggestions put forth before the Committee was to make it

mandatory for all doctors to write all prescriptions in generic names only. However, the Committee feels that going for a generic only prescription policy has its flip side. Even if the doctor prescribes a drug by 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 current situation. If the patient does not get any relief, doctor will blame the chemist. 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 criteria of selling medicines. 33. The Committee is aware that in its bid to help bring down healthcare costs

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. In order to eliminate middlemen (C&F agents, distributors, wholesalers, retailers) the Committee recommends that the Governments, both at the Centre and the States procure generic drugs in bulk from manufacturers and dispenses them directly to patients, through its health centres. 34. One option for making available affordable medicines put forth before the This step would do away with the need of

Committee was to cap the profit margin of all medicines irrespective of whether they are under DPCO or not. monitoring prescriptions, identifying the manufacturers supplying low-priced medicines and without any need to prefer generic over branded products. If fixation of MRP is done by NPPA based on a fair, transparent system keeping interests of all stake holders in mind nearly all issues on pricing would get 15

resolved. This system is already in vogue in many other fields such as electricity rates, bus and taxi fares, interest rates, insurance premium just to mention a few. Lastly, with the floating of an open tender in the market, all drug manufacturers/stockiest would come forward with the offer of lowest possible rates. 35. The Committee is aware that a legal framework is available by way of

Essential Commodities Act 1956 under which the Government can put a cap on profitability. The Committee has also been informed that in the original Drug Price Control Order, there was a proposal that in addition to price control on individual drugs, there should be a cap on the overall profitability of the drug manufacturers. The objective was to discourage manufacturers to shift from PriceControlled (less profitable) to uncontrolled (hugely profitable) medicines. The proposal was, however, never implemented. Taking into account all the above facts, the Committee, recommends that the Department of Health and Family Welfare in coordination with the Department of Pharmaceuticals immediately move the Inter-Ministerial Coordination Committee and initiate a process of examining the issue of putting a blanket cap on profit margins of all medicines across board. The Committee desires to be kept apprised of the action taken in this regard. 36. The Committee is, however, of the considered view that given the current

ground realities in the country where more than 80 per cent population is dependent on private medical care and nearly 45 crore 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. Medicines are the only item where the decision to buy is not taken by the purchaser but by a third party i.e., doctor. Therefore, if prescribers and producers join hands and take advantage of a patients helplessness, only state can stop them. 37. Another pertinent issue that attracted the attention of the Committee was a

news-item dated 31st May, 2010 published in the Hindustan Times which highlights the following issues:

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61 drugs worth over $ 80 billion are going off patent of the US Patent and Trademark Office between 2011 and 2013 making it possible for domestic pharma companies in India to produce cheaper versions of offpatent drugs.

However, promoters of some of the Indian pharma companies like Piramal Healthcare, Ranbaxy, Shanta Biotech and Dabur Pharma have already sold their controlling shares to US, Japanese and German MNCs. Many other drug manufacturers are reportedly interested in similar disinvestment. These developments would result in MNCs gaining market supremacy and essential medicines are bound to become costlier. The Committee would appreciate if the Ministry of Health and Family Welfare takes up this issue with the Ministry of Chemicals and Fertilizers without any delay to come up with policy options to ensure that major Indian pharma companies remain in Indian hands.

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