Increasing Healthcare Consumption in India with equity

Posted on May 14, 2012 by Tapan Ray

Along with the economic progress of India, healthcare consumption of the population of the country is also increasing at a reasonably faster pace. According to McKinsey India Report, 2007, the share of average household healthcare consumption has increased from 4 per cent in 1995 to 7 per cent in 2005 and is expected to increase to 13 per cent in 2025 with a CAGR of 9 per cent, as follows:

Share of Average Household Consumption (AHC) (%)


	Household Consumption	1995	2005 E	2015 F	2025 F	CAGR %
1.	Healthcare	4	7	9	13	9
2.	Education & Recreation	3	5	6	9	9
3.	Communication	1	2	3	6	12
4.	Transportation	11	17	19	20	7
5.	Personal Products and Services	4	8	9	11	8
6.	Household Products	2	3	3	3	5
7.	Housing & Utilities	14	12	12	10	5
8.	Apparel	5	6	5	5	5
9.	Food, Beverages & Tobacco	56	42	34	25	3

(Source; McKinsey India Report 2007)

From this study, it appears that among all common household consumption, the CAGR of ‘healthcare’ at 9 percent will be the second highest along with ‘education’ and ‘communication’ topping the growth chart at 12 percent.

As per this McKinsey study, in 2025, in terms of AHC for ‘healthcare’ (13 percent) is expected to rank third after ‘Food & Beverages’ (25 percent) and ‘transportation’ (20 percent).

Thus, over a period of time AHC for ‘healthcare’ shows a very significant growth potential in India. Hence, this important area needs much greater attention of the policymakers to help translate the potential into actual performance with requisite policy and fiscal support/incentives.

Sectoral break-up of the Healthcare Industry:

According to IDFC Securities 2010, the sectoral break-up of the US$ 40 billion healthcare industry is as follows:

Industry	%
Hospitals	50
Pharma	25
Diagnostics	10
Insurance & Medical Equipment	15

(Source: IDFC Securities Hospital Sector, November 2010)

Therefore, as per this above report, the top two sectors of the healthcare industry are hospitals with 50 percent share and pharmaceuticals at 25 percent.

Public sector drives the healthcare expenditure in the developed countries:

Almost all OECD countries now provide universal or near-universal health coverage for a core set of health services, which are primarily funded by the public sector.

The report titled, ‘Health at a Glance 2011’ indicates that adjusted for purchasing power parity United States of America (USA) at US$ 7290 per capita expenditure on health in 2007, which is almost two and a half times more than the OECD average of US$ 2984, towers above other OECD countries. However, the same for Turkey and Mexico was less than one-third of the OECD average.

India and South East Asia are different:

Unlike OECD countries, according to the World Health Organization (WHO), in South East Asia, except Thailand and Indonesia, healthcare is primarily driven by private expenditure, as seen in the following table:

Public and Private Expenditure on Health as % of Total

Country	Public %	Private %
Laos	17.60	82.40
Cambodia	23.80	76.20
India	32.40	67.60
Philippines	34.70	65.30
Vietnam	38.50	61.50
Malaysia	44.10	55.90
Indonesia	54.40	45.60
Thailand	74.30	25.70

Source: World Health Statistics 2011, World Health Organization (WHO)

In India, the critical healthcare industry is heavily dependent on private sector investments, where the total public expenditure on health is just around one third of the country’s total expenditure for the same, though in the 12th Five Year Plan period the the government is likely to increase its health expenditure as a percentage to GDP to 2.5 percent.

Healthcare – a more sensitive sector in India:

According to an article titled, ‘Financing health care for all: challenges and opportunities’, published in ‘The Lancet’ dated February 19, 2011 ‘Out of Pocket’ expenditure on health in India (78 per cent) is one of the highest as compared to its neighboring, except Pakistan (82.5 percent). The details are as follows:

	Country	‘Out of Pocket’ expenses (%)
1.	Pakistan	82.5
2.	India	78
3.	China	61
4.	Sri Lanka	53
5.	Thailand	31
6.	Bhutan	29
7.	Maldives	14

Such a high out of pocket expenditure for health in India, makes ‘affordability’ of healthcare products and services so sensitive to all concerned.

Just Hospital oriented health insurance plans are not adequate enough:

The above article from ‘The Lancet ‘also indicates that 74 per cent of the total healthcare expenditure goes for only outpatient or in-clinic treatment of the patients. Only 26 per cent of healthcare expenditure goes for inpatient treatment in the hospitals.

Thus coverage of only expenditure towards hospitalization by the health insurance companies will not be able to provide significant benefits to most of the citizens of India.

Further, the article says that from 1986 to 2004, there has been three times increase in the average real expenditure per hospital admission, both in the government and private hospitals.

Threefold increase in the drug prices from 1993-94 to 2006-07 was mentioned as the key factor for cost escalation in the medical care in India.

Private healthcare sector needs more fiscal incentives and lesser cost of capital:

As indicated above, private healthcare players will increasingly play a very significant role to increase healthcare consumption with equitable span across the population of India. To encourage them to spread their wings in the semi-urban and rural areas of the country effectively, lucrative fiscal/ financial incentives along with the availability of low cost capital, are absolutely necessary.

It is worth mentioning that the growth of rural middle class population is now faster than ever before and much more than their urban counterpart.

Exploitation of the patients must stop:

Unfortunate and deplorable incidences of exploitation of patients, mainly by the private players, are critical impediments to foster growth in quality healthcare consumption within the country.

In this context, ‘The Lancet’, January 11, 2011 highlighted as follows:

“Reported problems (which patients face while getting treated at a private doctor’s clinic) include unnecessary tests and procedures, rewards for referrals, lack of quality standards and irrational use of injection and drugs. Since no national regulations exist for provider standards and treatment protocols for healthcare, over diagnosis, over treatment and maltreatment are common.” Prevailing situation like this calls for urgent national regulations for provider-standards and treatment-protocols, at least for the common diseases in India and more importantly their stricter implementation across the country.

UHC will significantly improve healthcare consumption:

In October 2010, the Planning Commission of India constituted a ‘High Level Expert Group (HLEG)’ on Universal Health Coverage (UHC) under the chairmanship of the well-known medical professional Prof. K. Srinath Reddy. The HLEG was mandated to develop a framework for providing easily accessible and affordable health care to all Indians.

UHC will guarantee access to essential free health services to all. However, because of the uniqueness of India, HLEG proposed a hybrid system that draws on the lessons learnt not only from within India, but also from other developed and developing countries of the world.

UHC is expected to ensure guaranteed access to essential health services to every Indian, including cashless in-patient and out-patient treatment for primary, secondary and tertiary care. All these services will be available to the patients absolutely free of any cost.

Under UHC all citizens of India will be free to choose between Public sector facilities and ‘contracted-in’ private providers for healthcare services.

It is envisaged that the people would be free to supplement the free of cost healthcare services offered under UHC by opting to pay ‘out of pocket’ or going for private health insurance schemes, as per their individual requirements.

Conclusion:

India has already been globally recognized as one of the fastest growing healthcare markets of the world. All components in the healthcare space of the country including hospital and allied services are registering sustainable decent growth, riding mainly on private investments and now fueled by various government projects, such as:

National Rural Health Mission (NRHM)
National Urban Health Mission
Rashtriya Swasthya Bima Yojana (RSBY)
Universal Health Coverage (UHC)
Free Medicine from the Government hospitals
Centralized procurement by both the Central and the State Governments

Supported by newer, both public and private initiatives, like:

Increase in public spending on healthcare from 1.0 per cent to 2.5 per cent of GDP in the 12th Five Year Plan period
Increasing participation of the private players in smaller towns and hinterland of the country
Wider coverage of health insurance
Micro-financing
Greater spread of telemedicine
More number of mobile diagnosis and surgical centers

All these interesting developments adequately fueled by rising income levels and improving access to healthcare though albeit slowly at present, equitable consumption of healthcare in India, I reckon, is expected to improve by manifold in the years ahead, despite shrill voices of naysayers of vested interests, orchestrated many a times from beyond the shores of India.

By: Tapan J Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

India – Young Today, Old Tomorrow: Emerging Issues of Aging, Health and Socioeconomic Profile of the Country

Posted on April 29, 2012 by Tapan Ray

‘World Health Day’ is celebrated every year on April 7, the day ‘World Health Organization (WHO)’ was founded in 1948.

Each year, on this day, people from all walks of life across the globe are invited by WHO to focus on a particular emerging health challenge of global relevance, which becomes the theme of the ‘World Health Day’ for the year.

In 2012, the theme for this day was, “Aging and health: Good health adds life to years”. It focuses on how good health throughout the life span can help the senior citizens to lead a full and productive life and in turn makes them valuable and experienced resources not just to their respective families, but also to the societies and communities they belong to.

Aging affects all:

The process of aging, without any exception, affects the entire population, young or old, male or female, rich or poor, alike, across the world and is considered as one of the key factors of social transformations through the passage of time.

With the advancement in medical science coupled with increasing social awareness for living a healthy life, the average life expectancy of the population in the 20th century reportedly increased by around 30 years in the developed world and is expected to maintain similar growth trend in the 21st century, as well.

Now, with an increasing life expectancy even in the developing world, the issue is assuming greater magnitude and at a much faster pace.

In the language of Steve Jobs:

Steve Jobs, the global icon and the former CEO of Apple Inc., during his commencement speech to Stanford in 2005, very aptly articulated as follows:

“No one wants to die. Even people who want to go to heaven don’t want to die to get there. And yet death is the destination we all share. No one has ever escaped it. And that is, as it should be, because Death is very likely the single best invention of Life. It is Life’s change agent. It clears out the old to make way for the new. Right now the new is you, but someday not too long from now, you will gradually become the old and be cleared away. Sorry to be so dramatic, but it is quite true.”

In a normal situation old age precedes death and just like the inevitability of death, everybody, even a baby born today will need to embrace the old age before being cleared away by death. Thus, as the population will age as a natural process, there will be growing need to make even the old age more meaningful. Sounds like a tall call, but quite pertinent indeed.

Although, an average elderly person of today is much healthier than of the past generations, they will still need appropriate health management and social security plans, especially for an emerging economy, like India.

World population aging faster:

Population Division of the Department of Economic and Social Affairs of the United Nations in its publication titled, “World Population Aging: 1950-2050”, described the trend of ageing of the global population and highlighted the following:

Population aging is unprecedented : This is unparallel in human history and the current century will witness even more rapid aging than the previous one.
Population aging is pervasive: It is affecting every man, woman and child across the world, though currently it is at different stages of progress in different countries.
Population aging is enduring: The world will not return to the young populations of our ancestors.
Population aging has profound implications: It affects many facets of lives of human beings.

Increasing burden of disease:

The burden of some serious age related diseases increases by manifold as the life progresses towards its ‘twilight zone’. Even now, the treatment costs and overall burden of age related diseases, both in the developed and the developing countries, are escalating in an alarming proportion.

Age related diseases:

According WHO, in the industrialized countries over 75 percent of deaths in people of over 65 years of age are due to cancer, cardiovascular and cerebrovascular diseases, in addition to disabilities like, loss of bone density leading to osteoporosis.

As per published reports, the incidence of age related Alzheimer’s disease, which is now incurable, will almost double every 20 years to reach around 66 million in 2030 and over 115 million in 2050.

Research for delaying the onset:

Reuters in an article titled, “Is aging a disease?” published in May 20, 2010 reported that many scientists from various parts of the world are now studying the genetic mechanisms of the old persons to help delay, if not overcome, the onset of diseases like Alzheimer’s, cancers, diabetes, cardiovascular ailments and many other age-related illnesses to help leading a better quality of life during old age of the human population.

Elderly population and the impact:

As per an estimate of the United Nations (UN), there will be around 1200 million people over 65 years of age by 2025. Currently, from across the world millions of aging people are denied of proper health care for various reasons. The situation in India is much worse.

It is envisaged by many that failure, either on the part of the Government or society at large, to address this critical issue today, could have a snowballing effect tomorrow.

In Japan, currently half of the national health budget is spent on the elderly individuals, which constitute around a whopping 23 percent of the country’s population. According to another estimate of the Japanese Government, by 2055 half of their total population will constitute of retired senior citizens.

India:

With over 65 percent of the population of India being now below 30 years of age, the country is well poised to have one of the largest numbers of young and productive population in the world, though 7 percent of country’s 1.13 billion people are now over 60 years of age and the number is growing.

The Median Age of the population will keep on increasing over a period of time as follows:

Aging Profile: India and other countries

Year	2000	2015	2025	2030	2035	2040	2050
Median Age–India	23.4	27.2	30.3	31.4	33.5	35.0	37.9
Median Age–World	26.4	29.5	31.9	33.0	34.0	34.9	36.8
Median Age–More Developed Regions	37.3	41.2	43.3	44.2	45.0	45.4	45.2
Median Age–Less Developed Regions	24.1	27.5	30.0	31.2	32.4	33.5	35.7
Median Age–Least Developed Regions	18.1	19.6	21.2	22.2	23.3	24.5	27.1

(Source: Population Division, Department of Economic and Social Affairs, United

Nations Secretariat)

Growth of elderly population is much faster than the population:

As as per the paper titled, “Implications of an Aging Population in India: Challenges and Opportunities” presented at ‘The Living to 100 and Beyond Symposium’ of the Society of Actuaries in Orlando on January 12–14, 2005, the Indian population has approximately tripled during the last 50 years, but the number of elderly Indians has increased more than fourfold.

Assuming continuation of this trend, the United Nations have predicted that the Indian population will again grow by 50 percent in the next 50 years, with the elderly population recording another fourfold growth.

Changing demographic profile:

The situation in India, therefore, by no means is a trivial one and needs to be addressed with a right earnest and sooner, mainly because of the changes in the demographic profile of the country, as follows:

Projected Changes in Indian Demography (in Million)

Age Group	2000	2015	2025	2030	2035	2040	2050
0-14 Years	347	345	337	327	313	300	285
15-59 Years	593	782	865	895	919	937	938
>60 Years	77	119	167	195	223	248	308
Total	1,017	1,246	1,369	1,417	1,455	1,485	1,531

(Source: Population Division, Department of Economic and Social Affairs, United Nations Secretariat)

Thus, over a period of time in India, increasing number of less productive elderly people and the declining trend of the younger population, could adversely impact the overall socioeconomic profile and and the disease burden of the nation.

Conclusion:

In India, there has been hardly any support in terms of social security, especially for a vast majority of people, who are unable to work after becoming senior citizens of the country.

In a situation like this, the Government of India, civil society and the private sector enterprises of the country should work in tandem to give shape to appropriate policy measures to effectively address the issues of the increasing number aging population of the country, over a period of time.

This is necessary not just for the socioeconomic reasons, but also to arrest any significant increase in the overall disease burden of the nation with its possible adverse impact on the growing economy of the country.

Continuing lack of interest to work out a long term social and policy measures to address the important issues related to population aging in India, in a holistic way, could significantly impede the pace of economic growth of the country, celebration of the ‘World Health Day’ on April 7, 2012 notwithstanding.

By: Tapan J Ray

Balancing Strong IP Protection, Public Health Safeguards and Declining R&D Productivity – A Crafty Gutsy Ball Game

Posted on April 16, 2012 by Tapan Ray

Pharmaceutical innovation has always been considered the lifeblood for the pharmaceutical industry and very rightly so. However, many studies do point out that such innovation has benefited the developed world more than the developing world.

Product Price and Access:

In the paper titled ‘TRIPS, Pharmaceutical Patents and Access to Essential Medicines: Seattle, Doha and Beyond’, published in ‘Chicago Journal for International Law, Vol. 3(1), Spring 2002’, the author argues, though the reasons for the lack of access to essential medicines are manifold, there are many instances where high prices of drugs deny access to needed treatments for many patients. Prohibitive drug prices, in those cases, were the outcome of monopoly due to strong intellectual property protection.

The author adds, “the attempts of Governments in developing countries to bring down the prices of patented medicines have come under heavy pressure from industrialized countries and the multinational pharmaceutical industry”.

While the Trade-Related Aspects of Intellectual Property Rights Agreement (TRIPS) of the World Trade Organization (WTO) sets out minimum standards for the patent protection for pharmaceuticals, it also offers adequate safeguards against negative impact of patent protection or its abuse in terms of extraordinary and unjustifiable drug pricing. The levels of these safeguards vary from country to country based on the socio-economic and political requirements.

The Doha Declaration:

Many independent experts in this field consider the Doha Declaration as an important landmark for recognizing the primacy to public health interest over private intellectual property and the rights of the members of WTO to use safeguards as enumerated in TRIPS, effectively.

To protect public health interest and extend access to innovative medicines to majority of their population whenever required, even many developed/OECD countries do not allow a total freehand for the patented products pricing in their respective countries.

Early signals of global empathy:

While expressing similar sentiment ‘The Guardian’ reported that Andrew Witty, the global CEO of GlaxoSmithKline, has decided to slash prices on all medicines in the poorest countries, give back profits to be spent on hospitals and clinics and more importantly share knowledge about potential drugs that are currently protected by patents.

Witty further commented that he believes, drug companies have an obligation to help the poor patients getting appropriate treatment and reportedly challenged other pharmaceutical giants to follow his lead.

An interesting study:

A study titled, ‘Pharmaceutical innovation and the burden of disease in developing and developed countries’ of Columbia University and National Bureau of Economic Research, to ascertain the relationship across diseases between pharmaceutical innovation and the burden of disease both in the developed and developing countries, reported that pharmaceutical innovation is positively related to the burden of disease in the developed countries but not so in the developing countries.

The most plausible explanation for the lack of a relationship between the burden of disease in the developing countries and pharmaceutical innovation, as pointed out by the study, is weak incentives for firms to develop medicines for the diseases of the poor.

Point – Counterpoint:

A contrarian view to this study argues that greater focus on the development of new drugs for the diseases of the poor should not be considered as the best way to address and eradicate such diseases in the developing countries. On the contrary, strengthening basic healthcare infrastructure along with education and the means of transportation from one place to the other could improve general health of the population of the developing world quite dramatically.

The counterpoint to the above argument articulates that health infrastructure projects are certainly very essential elements of achieving longer-term health objectives of these countries, but in the near term, millions of unnecessary deaths in the developing countries can be effectively prevented by offering more innovative drugs at affordable prices to this section of the society.

A solution emerging:

Responding to the need of encouraging pharmaceutical innovation without losing focus on public health interest, in 2006 the ‘World Health Organization (WHO)‘ created the ‘Inter-governmental Working Group on Public Health, Innovation and Intellectual Property (IGWG)‘. The primary focus of IGWG is on promoting sustainable, needs-driven pharmaceutical R&D for the diseases that disproportionately affect developing countries.

Declining R&D productivity:

Declining R&D productivity adds another dimension to this raging debate with a snowballing effect, as it were.

Over a period of decades, the business models for small-molecule based blockbuster drugs have successfully catapulted the global pharmaceutical business to a high-margin, dynamic and vibrant industry. However, a time has now come when the golden path from the ‘mind to market’ of the drug discovery process is becoming increasingly arduous and prohibitively expensive.

Deploying expensive resources to discover a New Chemical Entity (NCE) with gradually diminishing returns in the milieu of very many ‘me too’ types of new drugs, does no longer promise a strong commercial incentive.

The impact of the above scenario also gets reflected in the status of International patent filings under the Patent Cooperation Treaty (PCT) of the ‘World Intellectual Property Organization (WIPO)’ as follows:

A. Last five years, PCT filings:

The last five years’ PCT filing status does not seem to be encouraging either.

Year	PCT Filings	Change %
2007	159,926
2008	163,240	2.1
2009	154,406	(5.4)
2010	164,316	6.4
2011	181,900	10.7 *(E)

* Estimate

B. Country-wise PCT Filing in 2011:

While having a closer look at the data, it becomes quite evident that in terms of percentage increase in the PCT filings two Asian countries, China and Japan, have registered their overall dominance. However, in terms of absolute number USA still ranks first.

County	No. Of PCT Filings	% Increase
USA	48,596	8
China	16,401	33.4
Japan	38,888	21
Germany	18,568	5.7
South Korea	10,447	8

C. Technical-field-wise PCT Filing in 2011:

In terms of the technical fields, pharmaceuticals ranked fifth in 2011.

Rank	Industry	No. Of PCT Filings
1.	Electrical Machinery, Apparatus, Energy	11,296
2.	Digital Communication	11,574
3.	Medical technology	10,753
4.	Computer technology	10,455
5.	Pharmaceuticals	7,683
6.	Organic fine chemistry	5,283
7.	Biotechnology	5,232

D. Biotech/Pharma companies featuring in WIPO’s Top 100 filers list:

Very few biotech and pharmaceutical companies featured in the Top 100 PCT filers’ list of WIPO as follows:

	Company
1.	Procter & Gamble
2.	Sumitomo Chemical
3.	DuPont
4.	Dow Global
5.	Novartis AG
6.	Roche
7.	Merck GmbH
8.	Sanofi-Aventis GmbH
9.	Bayer CropScience AG

E. The top five university PCT filers in 2011:

Universities of the US dominated among the PCT filings by the Academic institutions as follows:

University	No. Of PCT Filings
University of California, US	277
Massachusetts Institute of Technology, US	179
University of Texas System, US	127
Johns Hopkins University, US	111
Korea Advanced Institute of Science and Technology, South Korea	103

Need to encourage pharmaceutical innovation:

Based on the WIPO data, as mentioned above, the current status of the global pharmaceutical innovation does not seem to be very encouraging.

That said, in the environment of declining R&D productivity of the global pharmaceutical industry, there is indeed a strong requirement to encourage pharmaceutical innovation across the globe, based on the socio-economic environment of each country, together with adequate safeguards in place to protect public health interest.

Why protect patent?

The pharmaceutical major Eli Lilly has very aptly epitomized the reason for patent protection in their website called ‘LillyPad’, as follows:

“Pharmaceutical companies continue to invest in innovation not only because it is good for business, but it is what patients expect. If we want to continue to have breakthrough products, we need patent protection and incentives to invest in intellectual property. The equation is simple, patents lead to innovation – which help lead to treatments and cures”.

Conclusion:

Currently, various socio-economic expectations, demands and requirements, not just for the poor, but also of the powerful growing middle class intelligentsia are gradually getting unfolded on this subject from many parts of the globe. These collective demands cannot be either wished away or negotiated with a strong belief that the future should be a replication of the past.

There should be full respect, support and protection for innovation and the product patent system in the country. This is essential not only, for the progress of the pharmaceutical industry, but also to alleviate sufferings of the ailing population, effectively.

At the same time, available indicators point out that the civil society would continue to expect in return just, fair, responsible and reasonably affordable prices for the innovative medicines, based on the overall socio-economic status of the local population. Some experts have already opined that prices of life saving innovative drugs, unlike many other patented products, will no longer remain ‘unquestionable’ in increasing number of countries.

Thus, even at the time of declining pharmaceutical R&D productivity, striking a right balance between a strong patent regime and safeguarding overall health interest of its population, particularly of those with a very high ‘out of pocket’ expenditure towards healthcare, will indeed be a crafty gutsy ball game for a country.

By: Tapan J Ray

Pharmaceutical innovation and Public Health Interest: Ways to achieving the dual objectives

Posted on February 6, 2012 by Tapan Ray

Healthcare industry in general and the pharmaceutical sector in particular have been experiencing a plethora of innovations not only to cure and effectively manage ailments to improve the quality of life, but also to help increasing overall disease-free life expectancy of the population with various types of treatment and disease management options. Unfortunately despite all these, over half the global population is still denied of basic healthcare needs and support.

A 2011 official estimate of the current world population reads as 6.93 billion. Out of which over three billion live with a subsistence of less than US$ 2 per day. Another billion population is surviving on even less than US$ 1 per day. According to published reports around 18 million people die from poverty-related causes across the world, every year.

The World Health Organization (WHO) has estimated that over a billion population of the world still suffer from neglected tropical diseases.

On February 3, 2012, quoting a ‘World Bank and PwC report’, ‘The Economic Times’ reported that “70% of Indians spend all their income on healthcare and buying drugs.”

In a situation like this, challenges that the governments and the civil society are facing in many developing and to some extent even in some developed countries (although for different reasons), are multi-factoral. It has been well established that the humongous global healthcare challenges are mostly of economic origin.

In such a scenario, ongoing heated debate on innovation, Intellectual Property Rights (IPR) and public health interest keeps gaining momentum all over the globe and has still remained unabated.

Argumentative Indians have also got caught in this raging debate. I reckon rightly so, as India is not only the largest democracy of the world contributing 16.7% of the global population, it is also afflicted with 21% of the global burden of disease. Thus, the reason for similar heated debate in our country is indeed no brainer to any one.

Thorny issues:

One of the thorny issues in this debate is the belief that huge R&D budgets of the global pharmaceutical companies are worked out without any consideration of relative value of such investments to the vast majority of population in our society, across the world. These thought leaders argue, as the poor cannot pay for the expensive innovative drugs, they are mostly denied of the fruits of pharmaceutical innovation in their battle against diseases.

These experts also say that safeguards built into the patent system in form of compulsory licenses are not usually broad enough to improve access to innovative medicines to a larger section of the society, whenever required.

In addition, they point out that wide scope of patent grants in areas of early fundamental research, quite often is strategically leveraged by the patentee to block further R&D in related areas without significant commercial considerations to them. Such a situation comes in the way of affordable innovative drug development for public health interest, when need arises.

Inadequate access to medicines in India:

The key issue in the country is even more complicated. Inadequate or lack of access to modern medicines reportedly impacts around 50% of our population. It is intriguing to fathom, why has the nation not been able to effectively address the challenge of access to relatively affordable high quality generic medicines to the deprived population of the society over a period of so many decades?

Thus IPR in no way be considered as the reason for poor access, at least, to generic medicines, especially in India. Neither, it is the reason for inadequate availability of affordable essential medicines for the diseases of the poor.

The key reason, as is widely believed, is inadequate focus on the deprived population to address their public health concerns by the government.

Pharmaceutical innovation and the burden of disease:

A healthy debate:

Many experts argue that greater focus on the development of new drugs for the diseases of the poor, should not be considered as the best way to address and eradicate such diseases in the developing countries. On the contrary, strengthening basic healthcare infrastructure along with education and the means of transportation from one place to the other could improve general health of the population of the developing world quite dramatically.

However, another school of experts think very differently. In their opinion, health infrastructure projects are certainly very essential elements of achieving longer-term health objectives of these countries, but in the near term, millions of unnecessary deaths in the developing countries can be effectively prevented by offering more innovative drugs at affordable prices to this section of the society.

Creation of IGWG by WHO:

‘Reward Fund’ for innovation and access – an idea:

A paper titled, “Optional reward for new drug for developing countries” published by the Department of Economics, University of Calgary, Institute of Health Economics, proposed an optional reward fund for pharmaceutical innovation aimed at the developing world to the pharmaceutical companies, which would develop new drugs while ensuring their adequate access to the poor. The paper suggests that innovations with very high market value will use the existing patent system, as usual. However, the medicines with high therapeutic value but low market potential would be encouraged to opt for the optional reward system.

It was proposed that the optional reward fund should be created by the governments of the developed countries and charitable institutions to ensure a novel way for access to innovative medicines by the poor.

The positive effects of the debate:

One positive effect of this global debate is that some global pharmaceutical companies like Novartis, GSK and AstraZeneca have initiated their R&D activities for the neglected tropical diseases of the world like, Malaria and Tuberculosis.

Many charitable organizations like Bill & Melinda Gates Foundation and Clinton Foundation are allocating huge amount of funds for this purpose.

On January 30, 2012, on behalf of the research-based pharmaceutical industry, Geneva based International Federation of Pharmaceutical Manufacturers and Associations (IFPMA) by a Press Release announced donations of 14 billion treatments in this decade to support elimination or control of nine key Neglected Tropical Diseases (NTDs).

Without creating much adverse impact on pharmaceutical innovation ecosystem of the country, the Government of India is also gradually increasing its resource allocation to address the issue of public health, which is still less than adequate as of now.

All these newer developments and initiatives are definitely ushering in an era of positive change for a grand co-existence of pharmaceutical innovation and public health interest of the country, slow and gradual though, but surely a change for the better.

Innovation helps to improve public health:

In India, various stakeholders of the pharmaceutical industry feel that there is a need to communicate more on how innovation and IPR help rather than hinder public health. Some initiatives have already been taken in this direction with the pioneering ‘patent pool’ initiative of GlaxoSmithKline (GSK) in Europe and ‘Open Source Drug Discovery (OSDD)’ by the Council of Scientific and Industrial Research (CSIR) of the Government of India.

The pace needs to be accelerated:

The pace of achieving the dual objectives of fostering pharmaceutical innovation without losing focus on public health has to be accelerated, though progress is being slowly made in these areas through various initiatives. Additional efforts are warranted for sustainability of these initiatives, which have not yet gained the status of robust and sustainable work models.

However in India, the government in power should shoulder the key responsibility garnering all resources to develop and implement ‘Universal Health Coverage’ through appropriate innovative healthcare reform measures. Such steps will help achieving the country its national goal of providing affordable healthcare to all.

At the same time, creation of a variant of ‘reward fund’ to encourage smaller pharmaceutical players of India to pursue pharmaceutical innovation needs to be considered expeditiously. This will help encouraging pharmaceutical innovation in a big way within the country.

Address the basic issue of poverty:

It is a well-accepted fact that the price is one of the key determinants to improve access to modern medicines to a vast majority of the population. However, the moot question remains how does one make medicines more affordable by not addressing effectively the basic issue of general poverty in the country? Without appropriately resolving this issue, affordability of medicines will continue remain a vexing problem and a critical issue to address public health in India.

Conclusion:

Innovation, as is widely acknowledged, is the wheel of progress of any nation. This wheel should move on… on and on with the fuel of IPR, which is an economic necessity of the innovator to make the innovation sustainable.

In the book titled, ‘Pharmaceutical Innovation: Revolutionizing Human Health‘ the authors have illustrated how science has provided an astonishing array of medicines to effectively cope with human ailments over the last 150 years.

Moreover, pharmaceutical innovation is a very expensive process and grant of patents to the innovators is an incentive of the government to them for making necessary investments towards R&D projects to meet unmet needs of the patients. The system of patent grants also contributes to society significantly by making freely available patented information to other scientists to improve upon the existing innovation through non-infringing means.

Altruism, especially in the arena of public health, may be demanded by many for various considerations. Unfortunately, that is not how the economic model of pharmaceutical innovation and IPR works globally. Accepting this global reality, the civil society should deliberate on how innovation and IPR can best be used, in a sustainable manner for public health interest, especially for the marginalized section of the society.

By: Tapan J Ray

Health being a basic human right, the proposal for ‘Universal Health Coverage’ augurs well for India

Posted on December 12, 2011 by Tapan Ray

“The right to health is relevant to all States: every State has ratified at least one international human rights treaty recognizing the right to health. Moreover, States have committed themselves to protecting this right through international declarations, domestic legislation and policies, and at international conferences.”

- The Factsheet, Office of the United Nations High Commissioner for Human Rights (OHCHR) and the WHO

Universal Health Coverage or Universal Healthcare:

In this context, “Universal Health Coverage (UHC)” is a healthcare system where all citizens of a country are covered for the basic healthcare services. In many countries UHC is also known as “Universal Healthcare” and may have different system types as follows:

Single Payer: The government provides insurance to all citizens.

Two-Tier: The government provides basic insurance coverage to citizens and allows purchase of additional voluntary insurance whenever a citizen wants to.

Insurance Mandate: The government mandates that insurance must be bought by all its citizens, like what happened in the USA in 2010.

Global scenario for UHC:

As per published reports, all 33 developed nations have UHC in place. The United States was the only exception until recently, till President Barack Obama administration implemented the ‘path breaking’ new healthcare reform policy in the country in 2010 against tough political opposition.

The new healthcare reform measures in the US had raised a storm within the local pharmaceutical industry, as well, at that time for various reasons.

The countries providing UHC:

Based on an article titled, ‘ Analyzing our economy, government policy and society through the lens of cost-benefit’ published in ‘True Cost’ following is the list of the countries where UHC is currently in place:

Country	Start Date of Universal Health Care	System Type

Norway	1912	Single Payer
New Zealand	1938	Two Tier
Japan	1938	Single Payer
Germany	1941	Insurance Mandate
Belgium	1945	Insurance Mandate
United Kingdom	1948	Single Payer
Kuwait	1950	Single Payer
Sweden	1955	Single Payer
Bahrain	1957	Single Payer
Brunei	1958	Single Payer
Canada	1966	Single Payer
Netherlands	1966	Two-Tier
Austria	1967	Insurance Mandate
United Arab Emirates	1971	Single Payer
Finland	1972	Single Payer
Slovenia	1972	Single Payer
Denmark	1973	Two-Tier
Luxembourg	1973	Insurance Mandate
France	1974	Two-Tier
Australia	1975	Two Tier
Ireland	1977	Two-Tier
Italy	1978	Single Payer
Portugal	1979	Single Payer
Cyprus	1980	Single Payer
Greece	1983	Insurance Mandate
Spain	1986	Single Payer
South Korea	1988	Insurance Mandate
Iceland	1990	Single Payer
Hong Kong	1993	Two-Tier
Singapore	1993	Two-Tier
Switzerland	1994	Insurance Mandate
Israel	1995	Two-Tier
United States	2010	Insurance Mandate

Highest per capita health spending has no relevance to the quality of health services/ outcome, but early implementation of UHC has:

The following table shows, although per capita spending on health is the highest in the US, the number of doctors, nurses and hospital beds per 10,000 population are highest in Cuba, UK and Japan, respectively. Japan also records the highest life expectancy at birth.Thus it appears, by and large, those countries which have an efficient UHC scheme running since quite some time from now are doing better in the health parameters as indicated below, especially, as compared to the US with the highest per capita health spending.
Country	Per capita spending on health (US $)	Doctors/ 10,000 pop	Nurses and midwives/ 10,000 pop	Hospital beds/10,000 pop	Life expectancy at birth
USA	6719**	26	94	31	78
UK	2815	23	128**	39	80
Russia	698	43	85	97	66
Japan	2581	21	95	140**	83**
Italy	2631	37	72	39	82
Germany	3465	34	80	83	80
France	3420	34	80	73	81
Cuba	674	59**	74	49	78
China	216	14	10	22	74
Canada	3673	19	101	34	81

** Highest

Source: The Guardian, Data Blog, Facts are Sacred)

The current situation in India:

In October 2010, the Planning Commission of India constituted a ‘High Level Expert Group (HLEG)’ on Universal Health Coverage (UHC) under the chairmanship of the well-known medical professional Prof. K. Srinath Reddy. The HLEG was mandated to develop ‘a framework for providing easily accessible and affordable health care to all Indians’.

The HLEG Report starts with:

“This report is dedicated to the people of India whose health is our most precious asset and whose care is our most sacred duty.”

The HLEG defined UHC for India as follows:

“Ensuring equitable access for all Indian citizens, resident in any part of the country, regardless of income level, social status, gender, caste or religion, to affordable, accountable, appropriate health services of assured quality ( promotive, preventive, curative and rehabilitative) as well as public health services addressing the wider determinants of health delivered to individuals and populations, with the government being the guarantor and enabler, although not necessarily the only provider, of health and related services”.

Ten principles for UHC in India:

Following are the ‘Ten Principles’, which guided the HLEG for the formulation of the recommendations for the UHC in India:

Universality
Equity
Non-exclusion and non-discrimination
Comprehensive care that is rational and of good quality
Financial protection
Protection of patients’ rights that guarantee appropriateness of care, patient choice, portability and continuity of care
Consolidated and strengthened public health provisioning
Accountability and transparency
Community participation
Putting health in people’s hands

UHC guarantees access to essential free health services for all:

Because of the uniqueness of India, HLEG proposed a hybrid system that draws on the lessons learned from within India as well as other developed and developing countries of the world.

UHC will ensure guaranteed access to essential health services for every citizen of India, including cashless in-patient and out-patient treatment for primary, secondary and tertiary care. All these services will be available to the patients absolutely free of any cost.

Under UHC all citizens of India will be free to choose between Public sector facilities and ‘contracted-in’ private providers for healthcare services.

It is envisaged that people would be free to supplement the free of cost healthcare services offered under UHC by opting to pay ‘out of pocket’ or going for private health insurance schemes

HLEG recommends ‘Price Control’ of ‘Essential Medicines’, just like draft NPPP 2011:

In its recommendation no. 3.5.1, HLEG postulated price controls and price regulation especially on essential drugs, which is quite in line with the draft National Pharmaceutical Pricing Policy 2011 (NPPP 2011). The HLEG report says:

“We recommend the use of ‘essentiality’ as a criterion and applying price controls on formulations rather than basic drugs. Direct price control applied to formulations, rather than basic drugs, is likely to minimize intra-industry distortion in transactions and prevent a substantial rise in drug prices. It may also be necessary to consider caps on trade margins to rein in drug prices while ensuring reasonable returns to manufacturers and distributors. All therapeutic products should be covered and producers should be prevented from circumventing controls by creating nonstandard combinations. This would also discourage producers from moving away from controlled to non-controlled drugs. At the same time, it is necessary to strengthen Central and State regulatory agencies to effectively perform quality and price control functions.”

Price control on essential medicines is also in force in China:

Chinese Government has put a cap on the prices of about 300 drugs featuring in their ‘National List of Essential Medicines (NLEM).’ Perhaps following the similar concept both the NLEG and NPPP 2011 have recommended price control of about 348 drugs falling under ‘The National List of Essential Medicines 2011 (NLEM 2011)’ of India.

Another recent report on ‘Free Medicines for All’:

Meanwhile,the working group of the Planning Commission on health, constituted for the 12th Five Year Plan (2012-2017) headed by the Secretary of Health and Family Welfare Mr. K. Chandramouli (now retired), has also submitted its report recently.

The Part II of the report titled, “Provisions of ’free medicines for all in public health facilities … recommends that health being a state subject, all the state governments of the country should adopt the successful and well proven Tamil Nadu model of healthcare procurement.

Tamil Nadu government through Tamil Nadu Medical Supplies Corporation (TNMSC) reportedly makes bulk purchases of drugs and pharmaceuticals directly from the manufacturers through a transparent bidding process, which reduces the cost of medicines to 1/10th and even to 1/15th of the Maximum Retail Price (MRP) of the respective product packs.

As per this report, the total running cost for the ‘Free Medicines for All’ project during the plan period would be Rs. 28,675 Crores and an additional allocation of Rs. 1293 Crores will be required as one‐time capital costs. The contribution of the Central Government at 85 % of the total cost would be around Rs 25667 crores for the entire Plan period.

Conclusion:

It was good to read that Ms. Nata Menabde, WHO country-head, India in her interview to ‘The Financial Express’ dated December 7, 2011 said, “We at WHO have been fortunate enough to be consulted on this (UHC). The meeting at planning commission was very productive and positive and we think the recommendations on the road map to Universal Health Coverage in the country is a step in the right direction.”

UHC, I reckon, will also be able to address simultaneously the critical issue of high ‘out of pocket’ healthcare expenses by the common man of the country. Implemented sooner ignoring the motivated stalling tactics, if any, by the vested interests, could usher in an era of a new healthcare reform process in the country.

That said, the proposal of the UHC in its current form does have some ‘loose knots’,which should be appropriately tightened-up through informed public discourse by the stakeholders in the healthcare space of India, sooner.

State funded ‘Universal Healthcare’ in India: A laudable initiative of the Government

Posted on August 29, 2011 by Tapan Ray

January 11, 2011 edition of ‘The Lancet’, in the article authored by Prof. K. Srinath Reddy et al titled, “Towards achievement of universal health care in India by 2020: a call to action”, proposed creation of an Integrated National Health System in India through provision of universal health insurance, establishment of autonomous organizations to enable accountable and evidence-based good-quality health-care practices and at the same time reduce the high out-of-pocket expenditure on health care through a well regulated integration of the private sector within the national health-care system of India, by 2020.

About six months later, in its August 16, 2011 issue ‘The Times of India’ reported that the Planning Commission of India is currently framing up the blue print for a universal health insurance scheme which would provide a minimum cover to everyone in the country. It is expected that a surcharge will be levied for this Universal Health Care (UHC) initiative.

Though UHC is indeed a very commendably initiative for India as a nation, some dubious and self-styled ‘healthcare crusaders’ have already started raising the bogey of ‘the inadequacy’ of the scheme as a diversionary measure to misguide the easily vulnerable common man of the country.

Efforts being made to sensationalize the current status of the Indian healthcare system:

Even in the backdrop of UHC initiative, the following sensational headlines could be fallacious at times, which more often than not are being misused by the vested interests:

“About 1.8 million children under age of 5 die in India every year; 68,000 mothers die due to maternal causes, and 52 million children in the country are stunted”.
“With 70% people living in more than 600,000 villages across rural India, not more than an estimated 30% have access to modern medicine”.

It is unfortunate that many key stakeholders, interested in improved healthcare system, are continuously engaged in an eternal blame game of ‘it is not my monkey’. At the same time, taking advantage of this confused situation, some other groups plan to facilitate their vested interests by projecting a ‘weaker India’ with contentious planted reports both overtly and covertly.

In this prevailing scenario, which has been continuing since the last several decades, there is no dearth of people who would attempt to hijack the health interest of the nation to harvest mega commercial benefits.

While all concerned should keep a vigil on such sinister design, let me now try to place some hard facts before you on the current healthcare scenario in India in the context of UHC.

The facts on access to ‘round the year’ healthcare facilities in India:

As reported by the Government of India in 2004, access to healthcare infrastructure and services for the rural villages in terms of percentages were as follows (Source: India Health Report 2010) :

Primary Health Centers: 68.3
Sub-Centers: 43.2
Government Dispensaries: 67.9
Government hospitals in urban areas: 79
Private Clinics: 62.7
Private Hospitals: 76.7

I reckon, after implementation of National Rural Health Mission (NRHM) and National Urban Health Mission (NRUM), this situation prevailing in 2004 has improved. However, the scope for further improvement in all these areas still remains very high. UHC could be a key facilitator.

In any case, the shrill voice highlighting around 65% of population of India does not have access to healthcare or medicines seem to be highly misplaced.

‘Access to Modern Medicines’ is improving in India, slowly but surely:

Contrary to the above propaganda, in the real life situation the access to modern medicines by the common man in the country even in the rural India is steadily increasing.

This is evidenced by the facts, CAGR (volume) of the pharmaceutical industry since the last ten years has been around 13%, leaving aside another robust growth factor being contributed through the introduction of newer brands, every year. Encouraging growth of the Indian Pharmaceutical Market (IPM), since the last decade, both from the urban and the rural areas, certainly signals towards significant increase in the domestic consumption of medicines in India.

IPM maintained a scorching pace of 16.5% growth in 2010. A recent forecast of IMS highlights near similar growth trend in 2011, as well.

In addition, extension of focus of the Indian pharmaceutical Industry, in general, to the fast growing rural markets, which are currently growing at a much faster pace than ever before, clearly supports the argument of increasing ‘Access to Modern Medicines’ even in rural India. The improvement in access may not exactly be commensurate to the volume growth of the industry during this period, but a major part of the industry growth could certainly be attributed towards increase in access to modern medicines in India.

For arguments sake, out of this rapid growth of the IPM, year after year consistently, if I attribute just 5% growth per year, for even the last nine years over the base year of 1998 (as reported in 2004 by WHO) to improved access to medicines, it will indicate, at least, 57% of the population of India currently has access to modern medicines and NOT just 35%, as I wrote in my blog earlier, quoting the numbers from the above WHO report of 2004.

Unfortunately, even the Government of India does not seem to be aware of this gradually improving trend. Official communications of the government still quote the outdated statistics, which states that 65% of the population of India does not have ‘Access to Modern Medicines’ even today. No wonder, why many of us still prefer to live on to our past.

Be that as it may, around 43% of the population will perhaps still not have ‘Access to Modern Medicines’ in India. This issue needs immediate attention of the policy makers and can be resolved with a holistic approach. UHC initiative together with improvement of healthcare infrastructure and delivery systems are the needs of the hour.

So called ‘Diseases of the Poor’ are no longer the ‘Leading Causes of Death’ in India:

As stated above, the disproportionate diversionary focus on the diseases of the poor by the vested interests, being the leading causes of death in India, should be re-validated with the data available with the office of the Registrar General of India (2009). This report highlights a totally different scenario, where the top five leading causes of death in terms of percentage, have been reported as follows:

Cardiovascular diseases: 24.8
Chronic Obstructive Pulmonary Disease (COPD): 10.2
Tuberculosis: 10.1
Cancer: 9.4
Ill-defined conditions: 5.3

Thus the diseases of the developed world, like cardiovascular diseases, COPD and Cancer cause over 45% of the total deaths in India, whereas Tuberculosis, Malaria, Diarrhea and digestive diseases cause around 23% deaths in the country. I reckon, UHC will take care of this emerging disease pattern in India.

The key reasons for not seeking medical treatment are not always poor ‘Access to Healthcare’:

While promoting the UHC, the government should take note of the key reasons for not seeking medical treatment, across socioeconomic milieu in the country. These reasons are not predominantly due to ‘Poor Access to Healthcare ‘. The following data will vindicate this point:

Reason	Rural Poorest 20%	Rural Richest 20%	Urban Poorest 20%	Urban Richest 20%
*Financial Reasons*	39.7	21.2	37.2	2.3
*Ailments not considered serious*	27.2	45.6	44.3	84.4
No Medical facilities	12.8	10.0	1.6	_
Others	20.3	23.2	16.9	13.3
Total	100	100	100	100

(Source: India Health Report 2010)

All these are happening probably because we do not have, as yet, any ‘well-structured healthcare financing system’ for all section of the society. The UHC initiative could well be a very significant part to the solution of this long standing problem together with other specific important measures, some of which I have already deliberated above.

While addressing the healthcare financing issue of India, January 11, 2011 edition of ‘The Lancet’ in its article titled, “Financing health care for all: challenges and opportunities” commented:

“India’s health financing system is a cause of and an exacerbating factor in the challenges of health inequity, inadequate availability and reach, unequal access, and poor-quality and costly health-care services. The Government of India has made a commitment to increase public spending on health from less than 1% to 3% of the gross domestic product during the next few years…. Enhanced public spending can be used to introduce universal medical insurance that can help to substantially reduce the burden of private out-of-pocket expenditures on health.”

I reiterate in this context, UHC initiative brings a breadth of fresh air to the prevailing rather gloomy healthcare financing scenario in India.

A comparison of private (out of pocket) health expenditure:

Look at it from, any angle, the general population of India is most burdened with high’ out of pocket healthcare expenses’ compared to even all of our neighboring countries:

1. Pakistan: 82.5% 2. India: 78% 3. China: 61% 4. Sri Lanka: 53% 5. Thailand: 31% 6. Bhutan: 29% 7. Maldives: 14%

(Source: The Lancet)

This factor itself, in case of just one or couple of serious illnesses, could make a middle class household of India poor and a poor could be pushed even Below the Poverty Line (BPL). UHC initiative of the Government is expected to change this scenario significantly in the years ahead.

The key unresolved issue of ‘affordability’ will get partially unresolved with UHC:

The above edition of ‘The Lancet’ highlighted that outpatient (non-hospitalization) expenses in India is around 74% of the total health expenses and the drugs account for 72% of this total outpatient expenditure. The study has also pointed out that 47% and 31% hospitalization in rural and urban areas respectively, are financed by loans and sell off assets.

This critical issue of ‘affordability’ of modern medicines is expected to get, at least partially resolved with the UHC scheme of the Government.

Around 32% of Indian BPL population can’t afford to spend on medicines:

While framing the UHC scheme, the government should keep in mind that a population of around 32% in India, still lives below the poverty line (BPL) and will not be able to afford any expenditure, however minor it may be, towards medicines. Proper implementation of the RSBY scheme with military precision, will be the right approach to this marginalized section of the society.

National Health Entitlement Card:

According to the Planning Commission, to enable the citizens availing the facilities provided by the ‘Universal Healthcare,’ the government will issue a ‘National Health Entitlement Card’, which will guarantee free access to relevant healthcare packages designed for the primary, secondary and tertiary healthcare for all. This scheme will be fully funded by the Central Government and cover both inpatient and outpatient services.

Conclusion:

Thus in the current scenario, the initiative of ‘Universal healthcare’ to provide access to healthcare to all citizens of India by addressing the critical issue of high incidence of ‘out of pocket’ expenses towards health care, is indeed a laudable initiative and ushers in a breadth of fresh air, despite all motivated comments against it.

We need also to keep in mind, although the ‘Universal healthcare’ is a fascinating mega initiative by the Planning Commission of India, this may not resolve all health related maladies of the country in one stroke.

Even in the changed scenario, a large section of the population both rich and poor and from both urban as well as rural India, may continue to not seek medical treatment assuming initially many of their ailments are not serious enough. Such a situation will definitely not materially improve the healthcare scenario of India, quite adversely affecting the economic progress of the country.

Such a situation, if continues, will necessitate continuous disease awareness campaigns with active participation of all stakeholders, including the civil society across the country, sooner than later, in tandem with all other measures as may deem necessary from time to time.

Disclaimer:The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

Restructure, reposition and empower the DoP to deliver more to the nation: Break the Silos

Posted on August 1, 2011 by Tapan Ray

A news item on July 25, 2011 reported, “DoP (Department of Pharmaceuticals) moots National Authority for Drugs & Therapeutics (NADT) with Central Drugs Standard Control Organization (CDSCO) under it”.

If I recall, some years ago, a Government of India (GoI) appointed taskforce had also suggested integration of the offices of the DCGI, CDSCO and NPPA along with all their powers and functions. However, nothing has fructified, as yet, not even the Central Drug Authority (CDA) Bill, which was mooted in 2007.

In the same context while taking a pause to look back, we note that in 2008 to help accelerating the growth momentum of the pharmaceutical industry of India through a more efficient government administrative and policy machinery, the GoI created a new department called the ‘Department of Pharmaceuticals’ under the MOC&F.

It was widely expected at that time that the DoP will be able to address the following key pharmaceutical industry related issues with an integrated approach to strike a right balance between the growth fundamentals of the industry and the Public Health Interest (PHI):

Drug policy and pricing
Providing access to high quality and affordable modern medicines to all
A facilitating drug regulatory system
An appropriate ecosystem to encourage R&D and protect Intellectual Property Rights (IPR)
Addressing the issue of high out of pocket expenses of the general population for healthcare
Fiscal and tax incentives required by the Micro-Small and Medium Enterprises (MSME) within the pharmaceutical industry of India.

As stated above, all these will necessitate close coordination and integration of work of various departments falling under the different ministries of the government.

The key Objectives of the DoP:

Following are the stated key objectives of the DoP:

1 Ensure availability of quality drugs at reasonable prices as per the Pharma Policy

2 Facilitate growth of Central pharma PSUs with required support

3 Develop Pharma Infrastructure and Catalyze Drug Discovery and Innovation

4 Launch and Position Pharma India Brand.

The moot questions:

Considering all these, the moot questions that could follow are as follows:

Do the objectives of the DoP effectively address the need to improving access to quality and affordable medicines to the common man with an integrated approach between all concerned departments of MOC&F and MOH&FW?
Is the nodal department of the pharmaceutical industry – the DoP currently placed in the right Ministry to contribute more effectively to achieve the ultimate national goal of ‘ affordable healthcare for all’ ?

Need for greater co-ordinated approach:

The issue of access to quality and affordability medicines, reaching patients in conformance to a strict regulatory framework, will need to be addressed with an integrated systems approach.

As is commonly believed, increasing access to modern medicines will depend mainly on the following key requirements:

Creating an appropriate healthcare infrastructure and delivery system across the country.
Making prices of medicines reasonable/affordable to a large section of the population.
Reducing high (80%) ‘Out of Pocket’ healthcare expenses of the common man through a well-structured healthcare financing/health-insurance model for all strata of society.

All these measures will entail very closely working together between the DoP and the related departments of MOH&FW. This situation calls for consideration of repositioning the DoP by making it a part of MOH&FW and NOT of MOC&F.

Pharmaceutical Industry: The areas of key importance:

Be that as it may, let us now try to have a closer look at the other aspect – the key areas of importance of the pharmaceutical industry for its accelerated growth and development and try to ascertain, if DoP is made responsible for all these critical areas, which Ministry they will need to deal with, the most:

1. Drug Policy and Pricing:

Currently DoP is responsible for an inclusive growth oriented drug policy and drugs pricing (through National Pharmaceutical Pricing Authority, NPPA) under the MOC&F. This key activity of the department has immense impact on the performance of the pharmaceutical industry of India.

2. ‘Access’ and ‘Availability’ of modern medicines across the country:
Availability of pharmaceutical products is intimately linked to the quality of access to pharmaceuticals by a vast majority of population of India, as indicated above, depends on availability of requisite healthcare infrastructure and the delivery systems, besides the prices of medicines.

‘Jan Aushadhi’ scheme – a praiseworthy initiative of the DoP now seems to be a near disaster in terms of the project implementation. This scheme could have been more meaningful with the support of adequate health related infrastructural facilities and in tandem with the projects like, National Rural Health Mission (NRHM), National Urban Health Mission (NUHM), Rashtriya Swasthaya Bima Yojna (RSBY) targeted to offer better healthcare to the common man with a robust and integrated healthcare delivery initiative.

Ministry of Health and Family Welfare (MOH&FW) is responsible to create such healthcare related infrastructure and delivery system.

3. Drug Regulatory System:

The drug regulatory system of the country, which is so important to the pharmaceutical industry for its rapid growth and development, is now operating at a sub-optimal level for various reasons. The dissatisfaction of the industry with this key regulator reportedly has reached its nadir.

Almost the entire Drug Regulatory System in India is being run and governed by the office of the Drug Controller General of India (DCGI), which comes under the MOH&FW. DCGI’s office is responsible for effective and speedy implementation of the Drugs and Cosmetics Act of India (DCA), which includes world class and ethical clinical trial standards in the country, marketing approval of all new products including exports, implementation of Schedule M (cGMP), all pharmaceuticals site registrations and effectively addressing the issue of spurious and counterfeit drugs, just to name a few. DoP has hardly any direct or indirect control over any of these key activities falling under the purview of the MOH&FW.

4. Biopharmaceuticals:

The Department of Biotechnology under the Ministry of Science and Technology currently looks after this emerging area of pharmaceuticals sector. DoP has no direct control over these activities.

5. R&D and IPR:

R&D and IPR related issues in pharmaceuticals/biopharmaceuticals are very important areas of the pharmaceutical business in the country. Although IP Policy related areas are looked after by the Department of Industrial policy and Promotion (DIPP), some contentious and highly debated IP related issues like, Regulatory Data Protection (RDP), Patent Linkage etc. are currently within the domain of DCGI under MOH&FW. DoP has no direct role to play in these areas.

6. High out of pocket expenses for healthcare:

In India ‘Out of Pocket Expenses (OPE)’ towards healthcare is around 80%. Such high OPE, especially in case of very serious and life threatening illnesses, like cancer, cardiovascular emergencies etc. could make a middle class household poor and a poor household could even be pushed ‘Below the Poverty Line (BPL)’.

Thus high OPE is indeed a very serious issue of the country, which can only be addressed through policy initiatives by designing appropriate health insurance/healthcare financing scheme for all strata of society in India.

For a large section of the society, this issue can be addressed by MOH&FW in consultation with Ministry of Finance, just as they have come out with an innovative and praiseworthy RSBY scheme for the BPL families. DoP does not seem to have much role to play in this area, as well.

Thus the objective of GoI to have greater focus on healthcare in general and the pharmaceuticals in particular could be better achieved, if the DoP is made a part of MOH&FW by breaking the independent silos in form of the NPPA, CDSCO, DCGI etc., now operating, especially, in these two ministries.

Key issues of pharma industry versus key objectives of the DoP: From the above details, if one compares the key issues and success factors of the pharmaceutical industry of India versus the key objectives of the DoP, one will notice a dis-conformity.

If this is allowed to continue even the all-important first objective of the department, ”Ensuring availability of quality drugs at reasonable prices as per the Pharma Policy” will continue to remain an illusion. It is indeed surprising to note that this objective does not talk anything about improved access to modern medicines by the common man, either.

Over a period of over last four decades India has experienced that only through increased focus on affordability, the objective of increased access to medicines by the common man could not be achieved in India. Besides other healthcare infrastructure related factors, high OPE still remains a key barrier to access to modern medicines by the common man.

Why is DoP trying to revive the loss making pharmaceutical Public Sector Units (PSUs)?

As stated above, the second objective of the DoP, which states, “Facilitate growth of Central pharma PSUs with required support” is equally intriguing. Everyone knows that all these PSUs created by spending tax payers’ money , miserably failed to perform and deliver even when the Indian pharmaceutical industry continues to register a CAGR growth of around 15% decade after decade. It is indeed difficult to fathom, which magic wand of the DoP will be able to bring these loss making and heavily bleeding PSUs out of continuous non-performance and governance failure in an era of fierce competitive pressure within the industry, by pouring even more from the national exchequer’s fund in the bottomless pits of losses of these PSUs?

I reckon, if these PSUs still attract interest of some good private buyers/investors with reasonable valuation, the government should unhesitatingly decide to unlock these values, sooner the better.

Conclusion:

In my view, if the DoP is expected to ensure improved “access to affordable and quality modern medicines to all”, as discussed above, the department should be repositioned and made a part of MOH&FW, rather than keeping it with the MOC&F, ignoring any possible political squabbles between the two concerned ministries, even in the coalition politics of India.

Such restructuring, repositioning and empowerment of the DoP in turn, will help achieving one of the key healthcare objectives of the nation, simultaneously fostering rapid growth of the industry making it a formidable global force to reckon with, both in the innovative and generic pharmaceutical business of the world.

This expected scenario, if gets translated into reality will justify the creation and existence of the DoP at the cost of huge amount of public fund.

NRHM of India: Yet to ‘Tick all the Right Boxes’

Posted on June 27, 2011 by Tapan Ray

‘National Rural Health Mission (NRHM)’, one of the largest and a very ambitious healthcare initiative for the rural population of India, was launched by the Government of India on April 12, 2005.

The primary purpose of NRHM, as announced by the Government, was to ensure universal access to affordable and quality healthcare for the rural poor of 18 states of India, namely, Arunachal Pradesh, Assam, Bihar, Chhattisgarh, Himachal Pradesh, Jharkhand, Jammu and Kashmir, Manipur, Mizoram, Meghalaya, Madhya Pradesh, Nagaland, Orissa, Rajasthan, Sikkim, Tripura, Uttarakhand and Uttar Pradesh, to start with.
During the launch of NRHM, the then Health Minister of India announced that the nation would see the results of these efforts in three years’ time.

The key objectives of NRHM:

• Decrease the infant and maternal mortality rate • Provide access to public health services for every citizen • Prevent and control communicable and non-communicable diseases • Control population as well as ensure gender and demographic balance • Encourage a healthy lifestyle and alternative systems of medicine through AYUSH

As announced by the government NRHM envisages achieving its objective by strengthening “Panchayati Raj Institutions” and promoting access to improved healthcare through the “Accredited Social Health Activist” (ASHA). It also plans on strengthening existing Primary Health Centers, Community Health Centers and District Health Missions, in addition to making maximum use of Non-Governmental Organizations.

NRHM was to improve access to healthcare by 20 to 25% in 3 years’ time:
To many the National Rural Health Mission (NRHM) has made a significant difference to the rural health care system in India. It now appears that many more state governments are envisaging to come out with innovative ideas to attract and retain public healthcare professionals in rural areas.
On January 11, 2010, the Health Minister of India Mr. Ghulam Nabi Azad, while inaugurating the FDA headquarters of the Western Zone located in Mumbai, clearly articulated that the NRHM initiative will help improving access to affordable healthcare and modern medicines by around 20 to 25 percent during the next three years. This means that during this period access to modern medicines will increase from the current 35 percent to 60 percent of the population.
If this good intention of the minister ultimately gets translated into reality, India will make tremendous progress in the space of healthcare, confirming the remarks made by Professor Sir Andrew Haines, Director, London School of Hygiene and Tropical Medicine, as quoted above.

The Achievements:

More than five years are over now. Let us have a look at the key achievements of this ambitious health scheme as on January 2010, as available from the Ministry of Health:

71.6% (10.86 million) institutional deliveries across India as compared to only 41%
78.8% (19.82 million) children across the country fully immunized
A total of 23,458 primary health centers (PHC) have been set up against NRHM goals of 27,000 during the same period.
5,907 community health centers were upgraded against 7,000 as was planned under the NRHM.
462,000 Associated Social Health Activists were trained
177,924 villages have sanitation committees functional
323 district hospitals have been taken for up gradation

Free Care to Mothers and Children: A new initiative

In the recent publication of the Ministry of Health and Family Welfare (MoHFW) titled, ‘Two years (2009-2011): Achievements & New Initiatives’, the ministry has highlighted another commendable initiative to provide free care to the mothers and children, which includes as follows:

Provision of free drugs,

Free Consumables and Diagnostics,
Free Diet during stay and
Free transport to health facility and drop back home.

Still to ‘Tick all the Right Boxes’:

Despite all these, a recent study done by ‘Chronic Care Foundation’ indicates that in India about 86% of highly populated rural districts still do not have provisions for basic diagnostic tests for chronic ailments.

The study also highlights that in rural areas, as a percentage of total healthcare expenses, out of pocket costs are more than the urban areas, with hospitalization expenses contributing the most to the total costs. In many rural areas the healthcare costs have been reported to be as high as around 80% of the total expenses. Such a high out of pocket expenses have mainly been attributed to the lack of facilities in these rural areas, requiring patients to travel to distant areas for medical treatment. It was also reported that even in rural areas due to inefficient and inadequate services at the Government healthcare units there has been a very high dependence on more expensive private healthcare facilities.

Obvious questions:

Thus even after over five years from the inception of NRHM, the current status of rural public healthcare system, poses the following obvious questions:
• How is the huge money allocated for NRHM being utilized? • Who all are accountable for the current state of affairs of this great scheme?
Even our Prime Minister Mr. Manmohan Singh has admitted recently that “the shortage of human resources was becoming an impediment in strengthening the public health delivery system through the National Rural Health Mission (NRHM)”.

Economic Survey 2010 did raise a flag:

The Economic Survey 2010 highlighted that ‘several glitches in the flagship NRHM needed to be ironed out to improve health infrastructure’, some of these are the following:

Shortage of over 6,800 more hospitals in rural areas to provide basic health facilities to people
Shortage of 4,477 primary healthcare centers and 2,337 community healthcare centers as per the 2001 population norms.
Almost 29% of the existing health infrastructure is in rented buildings.
Poor upkeep and maintenance, and high absenteeism of manpower in the rural areas are the main problems in the health delivery system.
Basic facilities are still absent in many Primary Health Centers (PHCs) and Community Health Centers (CHCs) to provide guaranteed services such as in-patient care, operation theatres, labor rooms, pathological tests, X-ray facilities and emergency care.

The Economic Survey further highlighted that “An assessment of the health related indicators would suggest that significant gains have been made over the years. However, India fares poorly in most of the indicators in comparison to the developing countries like China and Sri Lanka. The progress in health has been quite uneven, across regions, gender, as well as space.”

It now appears that this great initiative of the government of India called the NRHM, has made, if at all, only marginal impact on the healthcare needs and systems of the nation.

Leveraging capacity of the Private Healthcare sector is critical:

Though the private sector contributes over 70% in healthcare space, unfortunately NRHM has not yet been successful to leverage this key strength. Participation of the private healthcare players through Public Private Partnership (PPP) initiatives could be one of the key determinants of success of NRHM of India. Electronic Media outreach program, though quite sporadic, has started creating some awareness about this project within the general population.

Role of the State Governments:

In the federal governance structure of India, health being a state subject, respective state governments should play more creative and proactive role with requisite allocation of fund, freedom of operation and accountability to make NRHM successful across the country.

Who will bell the cat?

To make NRHM deliver desired results the Government should at the very outset significantly increase in health expenditure to around 3% to 5% of GDP and simultaneously outline, decide and announce the key measurable success parameters for performance evaluation of the scheme. This is to be done by uploading for public scrutiny in the respective Health Ministry websites of both the Central and State Governments the names and designations of the responsible senior Government officials who will be held accountable for the success or failure to deliver the deliverables for NRHM. All these details should be updated at least half yearly.

With tax-payers money being utilized for this important and critical public health arena, no non-performance should escape attention and go unpunished.
Moreover, with the help of experts, the Government should decide which elements of each identified success parameters the Government will be able to deliver better with its own internal resources and what are those areas where the Government should outsource from the private players.
Such an approach when worked out in great details will be able to ensure whether through NHRM the country is making progress to improve access to affordable and quality healthcare for a vast majority of its rural population. Otherwise this scheme may well be treated just as one of those which failed to deliver and over a period of time vanished in the oblivion.

Conclusion:

Thus, in my view, despite publication of all the details done for NRHM by the MoHFW in its latest publication titled, ‘‘Two years (2009-2011): Achievements & New Initiatives’ and witnessing some sporadic flashes of brilliance here or there, I reckon, the overall implementation of this excellent healthcare project called NRHM has failed to tick many of the important boxes as was eagerly expected by the common man of India.

By: Tapan J Ray

Disclaimer:The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

PILMAN

A Tapan Ray Website

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