A much needed reform – Deregulating drug prices

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Has Government regulation over pricing of critical drugs helped India? In a recent development, the Government, as per a notification of the National Pharmaceutical Pricing Authority (NPPA), has withdrawn certain powers of the drug pricing regulator that allowed price caps of some widely prescribed anti-diabetes, cancer, HIV, tuberculosis and cardiac medicines. In a way regulating prices has been one of the sticking points in all sectors. Indian healthcare sector which was estimated at $ 40 billion in 2010 is expected to grow up to $158 billion by 2017. Despite this 40 per cent of the population is still deprived of healthcare amenities.

This itself reflects the disconnect between healthcare costs and the out-reach to people that has been there. So to say that deregulating price caps is going to hurt people is mere populism. Indian social support for healthcare to the economically weaker segments is either through PHC (Primary Health Centres) or especially for TB patients, what is called the DOTS centre. For those who can afford expensive medication they anyways avail of the best of the private setups. Whereas those who cannot afford it can avail it through direct cash benefit for the subsidies that are desirable for making life saving drugs available for the needy.

On the other hand an open market doesn’t mean sky-rocketting prices of medicines. Rather reasonable earnings for a pharma-company may help better research. In cases where Indian companies have made path breaking innovations is primarily in HIV medication and primarily by Cipla chairman, Yusuf Hameid had done pioneering work. An introduction to his work is best expressed in this statement by Treat Asia Report.

Dr Yusuf Hamied burst onto the world stage in February 2001 when his company, Mumbai-based Cipla limited, offered a three-drug anti-HIV regimen to poor African countries and aid groups like Médecins Sans Frontières for $350 a year-one thirtieth of the standard price.

This has not only helped the people in Asia and Africa, but it has also helped his company grow. That is exactly why it is said that the market is the best regulator. With Cipla’s low-cost drugs in these markets drawing holes in multinational pharmaceutical companies’ pockets, there was enough reason for them to bring down costs. Moreover and over-regulated sector has not helped increase research, productivity and efficiency. It is market regulated pricing, quality control and a better customer efficient healthcare system that is going to help the industry and the people.

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