Time for Public Sector Take up the Healthcare Responsibility
The recent decision by the Pharmaceutical Pricing Authority to notify the prices of 150 medicines (what is termed as the first step in the series) which are regarded as essential as per the international standards, is something that will prove to be extremely beneficial to the poor Indians. These prices will be notified as per the Dug Price Control Order of 2013 according to which 348 medicines (essential) should have a price cap determined by the arithmetical average of all the variants that share a market capitalization of more than 1% , in total.
Undoubtedly, the prices of medicines in our country are very high for anyone from the middle or lower income segment of the society to afford comfortably. As per the National Sample Survey, expenditure on medicines alone accounts for around 85% of the total healthcare budget for the poorest 20% of the Indians.
Even World Bank states that escalated medical costs push 2.2% of the population below poverty line annually —- something that should be considered in the interests of society, at the earliest.
Even though the order brings good times ahead for the poorest of poor in the country, medicine manufacturing firms are sure to lose on profits – which are already hard to come by in India.
Those who track pharma sector closely can easily explain that the rate of profits (Profit after Tax) have been in the range of 10% – 12% since 2009 onwards. Even the MNC’s workings in the pharma sector are working with 12.5% profits which are actually very low by any standards.
Therefore, this decision will lead to further reduction in profits of the pharmaceutical companies which can bleed more with the implementation of the decision.
However, the present step by the government won’t facilitate for the longer term as these companies will sooner or later come up with a solution in form of medicinal substitutes to those essential drugs placed on the essential list. Thereon, the companies will approach physicians with incentives to sell their new products (as in the past) and the similar problem will re-appear.
Consequently, the government should try to revive medicine manufacturers in the public sector as well and not rely on the private entities only to supply medicines to the citizens of the country —- public sector should take upon the mantle of supplying cheap and quality drugs to people as the case in the developed nations. This will provide right amount of competition to the private entities and make our healthcare system robust in its true sense.