CHAPTER 7

PRICE CONTROL POLICY AND PUBLIC HEALTH:

IRRELEVANCE AND DANGER OF APPLYING ONLY ECONOMIC CRITERIA

--Anurag Bhargava

There is increasing concern about the rising costs of health care in India. National
Sample Surveys from the mid 1980s and 1990s point to significant increases in the cost
of both in-patient and out-patient health care in rural and urban areas. Drug costs and
rising fees for different health services undoubtedly played a major role in this.
According to NSS data, in the 1990s. Compared to 1986-87, the proportion of those who
said they were unable to access health care because of 'financial reasons' went up
significantly in both rural and urban areas.

With the objective of making essential drugs available to the people, the Government has
been implementing drug price control orders (DPCO) since 1979. The first order covered
347 drugs and included all the drugs, which were deemed essential to meeting India’s
public health problems. But over the years, with the changing socio-political climate and
perhaps pressure from the influential pharmaceutical industry, the span of these price
control orders has been reduced successively. Another regressive trend has been the
increasing divergence between the priorities of public health in India and the drugs
covered under the DPCO.

The 1995 drug price order is the last price control order to have been implemented. It was
the first such order in the decade of accelerated economic reforms in the country. It was
decided in 1994 (as described in the modification of the drug policy 1986) to employ
criteria based on retail sales of drugs as recorded by a private organisation ORG to decide
the list of drugs to be brought under price control. Only drugs with annual turnover
greater than 4 crores, where there was insufficient competition (defined by one
formulator having more than 40% share of the market inspite of having at least 5 bulk
producers and 10 formulators) were to be considered for price control. Monopoly
situations in which any formulator with an annual turnover greater than 1 crore in which
a single formulator had more than 90% share were also to be covered under price control.
All other drugs and formulations were to be exempt from price control. The policy
modification of the drug policy 1986 and the order did not take into account any other
factor like the essentiality of the drug, and its need for meeting the priority health care
needs of people.

The application of these criteria in the 1995 order saw the number of drugs whose prices
were regulated cut to 74 from the previous 142, covered by Drug Price control order
1987. But what did it do to the drugs which are needed to meet the public health
problems? An analysis of the list of drugs listed for price control in the DPCO (Drug
Price Control Order) 1995 is necessary to understand the danger and irrelevance of the
economic criteria in the 1995 drug policy. as also that which is offered in Pharmaceutical
Policy 2002

What is striking in this analysis is that the drugs for a majority of public health problems
are either under-represented or unrepresented, which is a matter of serious concern. Also
we find that many drugs are surprisingly included in the list even if non-essential, or
even hazardous in nature. The reader is invited to study Table 1.

Table 1: Public Health Problems and their Absence in the Drug Price Control
Basket

Public health Drugs required for the Drug listed in Remarks

problem problem 1995 DPCO
for the
problem
1. Iron Ferrous sulphate NONE Anemia is a major
Deficiency anemia Folic acid public health problem
in women and
children with a
prevalence of 74.3 in
children of 6-35
months and a
prevalence of 49-56%
in women .(NFHS
1998/99) Anemia
contributes to 1/3 of
maternal mortaltiy.
Exclusion is
against interests of
public health.
2. Tuberculosis INH, Rifampicin, Rifampicin TB is the single
Ethambutol, largest killer disease
Pyrazinamide. in India with 5 lakh
deaths per year.
Also in view of the According to WHO
increasing prevalence of estimates TB patients
drug resistant TB, drugs spend Rs.645 crore on
like Ofloxacin, private TB care in
Ethionamide, 1997 (Ref. TB in
Cycloserine, which are India: WHO SEARO).
required but are Rural patients have to
exhorbitantly priced spend Rs.1000 per
should be included month on diagnosis
and treatment which
invariably results in
mortgaging of assets
and valuables
3.Malaria including Chloroquine, Chloroquine Quinine is essential in
chloroquine Primaquine, treatment of
resistant falciparum Quinine chloroquine resistant
malaria which has falciparum malaria
become prevalent which can otherwise
in many parts of be fatal amd which is
 India. increasing in its
prevalence in India.
4. HIV disease/AIDS Zidovudine, Lamivudine, NONE India has the second
Nevirapine, Indinavir, highest number of
HIV disease patients
in the world.(3-4
million ) Yet no drug
under price controls to
make them more
affordable.
4.Agents to prevent Oral Rehydration Salts NONE 1 lakh children under
dehydration in 5 years of age die due
diarrheal diseases. to diarrhea and
Dehydration due to dehydration.
diarrheal diseases There are more than 1
killls thousands of crore diarrheal
children every year in episodes/year
India. Why is ORS then not
represented?
4. Leprosy Dapsone, Clofazimine, Rifampicin the exclusion of the
Rifampicin other 2 drugs which
are used in greater
quantities is
inexplicable
6. Filariasis Diethylcarbamazine NONE 6 million Indians
citrate develop acute filaria
and 45 million have
chronic filarial
lesions.

7. Hypertension Atenolol, Enalapril, Captopril, Hypertension is an

Hydrochlorthiazide, Methyldopa increasingly common
Amlodipine problem in rural
andurban areas
Different kinds of
antihypertensives are
required depending on
the patient’s
associated conditions.
8. Coronary artery Glyceryl trinitrate, NONE Coronary artery
disease: Isosorbide dinitrate, disease has prevalence
Beta blocker, Calcium of 80-120/1000 in
blocker urban areas, and 30-
60/1000 persons.
Drugs for such a
problem should be
there in such a list.
9.Vaccines (new) for Cell culture derived
Rabies, Hepatitis B: rabies vaccine.
Rabies kills thousands
of people every year The current vaccines for
in India. rabies are very
Hepatitis B is an expensive.The old
important public vaccine based on sheep
health problem which brain is outdated and
causes acute, chronic occasionally hazardous.
hepatitis and liver
cancer.
10. Many drugs are available
CANCER: which are however
Over 7 lakh patients prohibitively expensive
develop cancer every which can play a curative
year or palliative role in
different types of cancer .
11. Sera for use in Anti-tetanus serum
tetanus, diphtheria, Anti-diphtheria antitoxin
Rh isoimmunisation. Anti-D immunoglobulin
NONE Nearly 1.1-1.5 million
people are
administered rabies
vaccine every year.
The reported mortality
with rabies is 30000-
40000 per year, which
is an underestimation.
A single dose of cell
culture derived costs
Rs.300 in the
market.As in the
immunization of a
single patient 5 doses
are required, the cost
per patient turns out to
be Rs.1500, which is
beyond the reach of
the poor.
NONE Many forms of cancer
especially in children
and many in adults are
completely curable
with effective
chemotherapy.
However anti-cancer
drugs are mainly still
sourced from abroad,
and are prohibitively
expensive. They can
costs thousands of
rupees per dose.
NONE Its exclusion is
inexplicable
 12. Analgesic- Paracetamol is the drug Paracetamol is The exclusion of this
antipyretic: of choice for relief of excluded from drug, which is
Fever and pain are the fever and is a safe the list essential, and of mass
most common of analgesic consumption defies
symptoms which need logic.
to be relieved

13. Anticonvulsants Phenytoin, NONE Seizure disorders are

Carbamazepine, Valproic common and require
acid prolonged even
lifelong therapy and
should have been
included

The authorities of the Govt of India seem to have erred seriously not only by excluding drugs
which were required in the interest of public health in India but also including in the list many
drugs, which are non-essential, outdated and even hazardous. See Table 2.

Table 2: Examples of Non-Essential, Outdated and Hazardous Drugs From DPCO

1995

Name Of Drug Remark

1.Analgin(Metamizole) Hazardous .
Can cause serious
blood disorders.
Banned even for use
in animals in the
USA.
2. Phenylbutazone Hazardous.
Can cause serious
blood disorders.
3. Sulphadimidine Outdated
4. Vitamin E No clear therapeutic
value. Non-essential.
It is not mentioned in
any essential drug list
in the world.
5. Mebhydrolin Non-essential
6. Diosmine Non-essential
7. Panthonate and panthenols. Non-essential
8. Bacampicilin Non-essential.Other
cheaper alternatives
exist.
The 1995 list of drugs under price control has been analysed in detail in order to arrive at
an understanding of what can happen if sales and market share based criteria rather than
public health priority based criteria are followed in drafting a price control order. The
result of application of such criteria very clearly produces a list of drug antithetical to the
interests of millions of Indians suffering the burden of public health problems in a
situation where private expenditure health is 80% of the total.

If a list can exclude essential drugs for public health problems like ORS, drugs for
anemia, drugs for tuberculosis, malaria, leprosy, filariasis, vaccines for killer diseases,
drugs for major non-communicable diseases like hypertension, coronary artery disease,
cancer, and exclude a drug like paracetamol, then what is the relevance of such a list for
India?

If a list can include drugs like analgin, which is banned almost all over the world, include
a drug like Vitamin E, which has no clear therapeutic value, rather than Vit. B12 and Vit.
D which do have, and include a host of non-essential and even hazardous drugs at the
cost of drugs which have been mentioned above, then is the logic or rationale behind the
framing of such a list not deeply flawed ?

The process of selection of drugs for the 1995 list is clearly against all priorities of public
health in India. It results in essential drugs to be used in public health problems escaping
price control and becoming more expensive. The perpetuation of this use of selective and
arbitrary market sales and share based criteria in the pharmaceutical policy 2002 is bound
to worsen the divergence between public health interests and the policy which was
supposed to serve them. The pharmaceutical policy of 2002 does intend to apply these
criteria to the National Essential Drug List of 1996, but given the kind of turnover and
share based criteria which are now being suggested in the Pharmaceutical policy it will
again produce anomalous price control orders with lists of drugs like the one of 1995..
In a country like India where 40% of the people live below the poverty line, who have
make virtually all the expenses for health care out of pocket, where communicable
diseases kill hundreds of thousands of people annually, public health interests should
dictate the framing of the drug policy rather than arbitrarily defined sales criteria based
on turnover.