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In the economics of health

In the economics of health

Behind the smokescreen of ram temple and nationwide protests against the new citizenship law and National Register for citizens, the slowdown of the economy has been a persistent concern. While the crucial indicators of economic health are yet to be revived from their precarious situation of decline, the pharma sector is believed to grow at 10 to 12 per cent during financial year-22, according to an assessment by Icra, a rating agency which cited abating headwinds from pricing pressure in the US and a stable growth for the Indian market driven by increasing healthcare spending. The sector is expected to maintain a stable outlook. The US is the largest regulated market and given the abating headwinds from pricing pressure there, India has the good news with regard to a stable market growth. Together with comfortable balance sheet structure and a push by increasing healthcare spending and better accessibility it is in all likelihood that these are the factors behind the key growth drivers for pharma companies in India. However, due to increased cost related to regulatory compliances, especially for the US market, price controls across markets and mandatory genericisation for Indian market remained key risks, as per the assessment. Icra said in a statement that "The domestic pharmaceutical industry has gained adequate scale and generic drug development capabilities over a decade of growth which will keep them in good stead to capture bigger opportunities, especially in the specialty/niche segments in the regulated market". Growth in the US in FY2019 to 12.1 per cent comes after a decline of 13.1 per cent in FY2018. "The growth was supported by higher market share for Indian players as several generic MNC players optimised product portfolios along with new product launches," Icra added. The rating agency also warns that while the US growth is expected to remain at high single digit to low double digit, it will face headwinds given the relatively moderate proportion of large size drugs going off patent, generic adoption reaching saturation levels in the US market and increased regulatory scrutiny as reflected in increased issuance of warning letters/import alerts. It added further that productivity of research and development expenditure, operational risk related to increased level of due diligence by regulatory agencies and price controls were key concerns. The conclusion to be drawn from the quantitative assessments is that there is some sunshine for India in the pharma sector. That said, the government recently used the Drug Price Control Order, 2013, to increase the price ceiling for 21 medicines by as much as 50 per cent to ensure their availability in the market. Considering whether the government should subsequently control prices of drugs, an aspect is that lower prices will further limit the availability of the listed drugs (some of which include those used for malaria, leprosy and allergy). The decision by the regulatory authority, usually known to reduce prices of essential drugs, was prompted by repeated petitions by the pharmaceutical industry. A related piece of information is that NITI Aayog intends to bring all medical devices under one regulatory regime in a phased manner and has proposed to do away with the need to have manufacturing licences to register a medical device. Upon discussion of the key features of the draft Medical Devices Bill, the new regime aims to bring in ease of doing business. The government also moots to have a National Register of Medical Devices—these devices are presently governed by the Drugs and Cosmetics Act, 1940. It is expected that the proposed bill will be notified within the next six months.

The commerce of drugs medical procurement and administration cannot by ultimately dissociated with the condition of general healthcare. In a country where children under the age of 5 still die of malnourishment and diseases, where young new mothers pass on their deficiencies to their young ones, where diseases like TB, diabetes, and several other social-centric are rampant and increasing in intensity, the prices of drugs, their availability and accessibility are crucial concerns with regard to public health. The growth of pharmacy as a business is at the cost of the health of people. Hence, without the relevant intervention of the government and with availability of medicines, the concern for public healthy in terms of eliminating diseases stands diluted. A way to address this is to go outside the box and increase food output by growing lesser popular foods such as sorghum and millets to help ease the burden of disease by means of nutritional intake. There is a direct correlation between enhancing food production (without being guided exclusively by the commercial interests) and public health. Understandably, it is counter-productive in the interest of a profit-seeking pharma companies to have resources diverted to alternate methods of curbing diseases. Ultimately, if public health is the concern, concerted efforts in this direction must be made.

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