Availability, Affordability and Pricing of the Essential

Drugs: A Case Study of Bathinda City (Punjab)

Dissertation submitted to the Central University of Punjab

For the award of

Master of Philosophy

In

Economic Studies

By

Indu Bala

Supervisor

Dr. Sandeep Kaur Bhatia

Centre for Economic Studies

School of Social Science

Central University of Punjab, Bathinda

August, 2016

i

ABSTRACT

Availability, Affordability and Pricing of the Essential Drugs: A Case Study of

Bathinda city (Punjab)

Name of Student : Indu Bala

Registration Number : CUPB/MPH/SSS/CES/2014-2015/04

Degree for which submitted : Master of Philosophy

Name of Supervisor : Dr. Sandeep Kaur Bhatia

Centre : Centre for Economic Studies

School of Studies : School of Social Sciences

Key words : Drugs, Availability, Affordability, Prices

Differences, International Comparison of

Drugs Prices, Drug Price Control, Patent.

In recent times individual spending on health care is the common issue. This issue is

manifold as linked with the availability, affordability and pricing of drugs. The present

study evaluates these issues related to essential drugs in Bathinda city which is one

of the blocks of Malwa region. Availability, affordability and price differences are

examined across two types of drugs generic and, branded-generic at public and

private drug stores, using a primary survey of patients, drug retailers and wholesalers

mainly. The study also analyses the evolution of government drug pricing policies and

the impact of patents on drugs. Data on drug prices is collected of commonly used

essential drugs of different therapeutic classes. Affordability of the essential

medicines to the ordinary people is measured by comparing the treatment cost with

the wages earned by them. To compare the domestic prices with international

reference prices, median price ratios (MPR) are obtained by dividing the local public

and private sector median prices with international reference prices. The study

discovers that availability of essential drugs in the public sector is not sufficient to

meet the challenge of providing essential drugs to the entire population of the city.

The Private sector is dominating for providing drugs and better treatment which has

very less transparency in the pricing system and variations in the retail prices and

markups are very high. Affordability level of essential drugs for different treatments to

ii

the ordinary people is satisfactory but not for the people living below the poverty line.

Policies should be targeted to maintain a transparent pricing system and should be

affordable for all as well as making them more widely available. The drug price control

order should be properly implemented in fixing the MRP of branded-generic drugs.

(Indu Bala) (Dr. Sandeep Kaur Bhatia)

iii

ACKNOWLEDGEMENTS

First of all, I offer my humble thanks with folded hands and bowed head to the

almighty for his grace, kindness and blessing that gave me patience and motivation

during the course of my work.

I have the great honor to express my deep sense of gratitude and indebtedness to

my supervisor, Dr. Sandeep Kaur Bhatia, Assistant Professor, Center for Economic

studies, Central University of Punjab for her constant guidance, constant

encouragement, healthy criticism and generosity shown throughout the period of my

study and preparation of this manuscript.

I would like to give my special thanks to COC Dr. P.K Mishra, Dr. Naresh Singla, Dr.

J. K Parida, Centre for Economic Studies for their valuable suggestions pleasant

atmosphere of knowledge. I would also like to thanks Dr. R.K. Kohli, present Vice-

Chancellor of the university, Prof. Dr. P. Ramarao, Dean of academic affairs and Prof

A. K. Jain. Without their constant help, support and encouragement, this dissertation

would not have been possible.

I got immense pleasure to express my thanks to all my friends Jashanpreet Kaur

Jagdeep Kaur, Poonam Rani, Arif Gulzar Hajam, Zahoor Ahmad Paray, Harmeet

Kaur, Harpreet Kaur, Gagandeep Kaur, Sareena Goel for always supporting and

believing in me with enormous affection and valuable suggestions.

Finally, my family has supported and helped me along the course of this dissertation

by giving encouragement and providing the moral and emotional support I needed to

complete my dissertation. To them, I am eternally grateful.

Indu Bala

iv

Table of Contents

Sr. No. Contents Page No.

1 Chapter 1: Introduction 1-8

2 Chapter 2: Literature Review 9-18

3 Chapter 3: Data and Methodology 19-24

4 Chapter4: Availability, Affordability and Prices

Differences of Essential Drugs

25-55

5 Chapter 5: Evaluation of Indian Drug Pricing Policies

and TRIPS

56-67

6 Chapter 6: Conclusion 68-76

7 Bibliography 77-83

v

LIST OF TABLES

Table

No. List of Tables

Page

No.

3.1 Selected Drugs by Brand and Manufacturer name 22

4.1 Availability of Essential Drugs in Public Sector 29

4.2 Affordability of Standard Treatment 32

4.3 Price Differences between Public and Private Sector 36

4.4 High- Low Price Ratios of Various Essential Drugs 39

4.5 Drug Price differences within Private Sector 41

4.6 High-/Low Drug Price Ratio within Private Sector 43

4.7 Differences in Wholesale and Retail Drug Price 44

4.8 Actual Drug Price Differences in Private Sector 46

4.9 Retailer mark-ups 49-50

4.10 Minimum and Maximum level of Retail and Wholesaler Margins 51

4.11 Comparison of Indian Drug Prices with International Reference

Prices 52-53

4.12 Differences in Drug Prices Public and Private Sector with

International Reference Price 54

5.1 Drug Policies by Government 56

5.2 Actual Prices according to DPCO (2013) 60

5.3 Various Patent Acts in India 64

vi

LIST OF FIGURES

Figure No. Name of the Figure Page No.

3.1 Bathinda City Map 20

4.1 Availability of Essential Drugs in Public Sector 30

4.2 Price Differences between Public and Private Sector 37

4.3 Drug Price Differences within Private Sector 42

4.4 Drug Distribution System in Bathinda 48

5.1 Measures to Control Drug Prices (DPCO-13) 61

vii

LIST OF APPENDICES

Serial No. Description of Appendix Page Number

A. Schedules i-v

B. Essential Drug List of Punjab vi-xiv

C. Basic Definitions by DPCO (2013) xv-xvi

viii

List of Abbreviations

Sr. No Full Form Abbreviations

1 Active Pharmaceutical Ingredients API

2 Bureau of Pharma Public Sector Undertakings of India BPPI

3 Cost Based Pricing CBP

4 Clearing and Forwarding Agency CFA

5 Central Sell Tax CST

6 Co-coordinating procurement, supply and marketing of generic drugs

CPSUs

7 Department of Pharmaceuticals DOP

8 Drug Price Control Order DPCO

9 Essential Drug List EDL

10 Employee State Insurance Corporation ESIC

11 Foreign Direct Investment FDI

12 Food and Drug Administration FDA

13 Government Govt.

14 Health Action International HAI

15 International Reference Price IRP

16 Lowest Priced Generic LPG

17 Market Based Pricing MBP

18 Maximum Allowable Post Manufacturing Expenses MAPE

19 Medicine Price Data Collection MPDC

20 Medicine Price Ratio MPR

21 Maximum Retail Price MRP

22 Most Sold Generic MSG

23 Management Sciences for Health MSH

24 National List of Essential Medicines NLEM

25 National Pharmaceutical Pricing Authority NPPA

26 National Sample Survey Organization NSSO

27 Out of Pocket OOP

28 Primary Health Centre PHC

ix

29 Price to Retailor PTR

30 Price to Patient PPP

31 Research And Development R&D

32 Trade Related Intellectual Property Rights TRIPS

33 Value Added Tax VAT

34 World Health Organization WHO

35 World Trade Organization WTO

1

CHAPTER - 1

INTRODUCTION

The large population in developing countries has been suffering from the health care

burden due to malnutrition, non-availability of facilities and lesser budget proposals

for health care in these countries. Indian Health Care Outlook (2015) reveals that in

developing countries, households usually have to purchase drugs and other health

facilities ‘Out of Pocket’ (OOP). The Indian health care system is also highly

dependent on personal spending as India is one of the world’s highest out-of-pocket

spending nations because of low government’s expenditures for health creating a

burden on patients and their families. World Health Organization (WHO) data reveals

that in 2012 only 33 percent of Indian health care expenditure originated from

government sources while remaining 86 percent was from private (Deloitte United

States, 2016).

Surveys conducted in six states during 2004–2005 sites involved Chennai (southern

India), Haryana (northern India), Karnataka (southern India), West Bengal (eastern

India), and two surveys sites in Maharashtra State (western India) through “World

Health Organization/ Health Action International” (WHO/HAI) a standardized

methodology exposes poor availability of drugs in public sector hospitals as only up

to 30 per cent . Therefore, low-income patients are enforced to buy more expensive

drugs from private sources or simply go without treatment. The main barrier to access

essential drugs makes health care unaffordable one is the low public sector

expenditure and other high medicine prices. In order to ensure availability at

reasonable prices, the Government of India (Ministry of Chemicals and Fertilizers)

has established an independent body of experts the National Pharmaceutical Pricing

Authority (NPPA) in 1997 which have the primary function of price determination,

revision, and related activities, such as updating the list of medicines under price

control by the inclusion and exclusion of drugs on the basis of established criteria and

guidelines. However, the NPPA monitors the prices of medicines sold in all sectors,

but still there are issues regarding the prices of drug (Kotwani et al., 2007).

2

Economic Health Care Scenario of Punjab State

According to a study by Chaudhuri (2012) examines that hospitalization and

outpatient services at public health facilities are quite low in Haryana (30 percent) and

in Punjab 20 percent. The specified reasons are the high cost of care including high

prices of drugs. In the Punjab, State the Health Systems Corporation includes public

hospitals and public clinics over which the poor people can access health facilities.

Two schemes were announced in 2008, to decrease out-of-pocket expenses for poor

families i.e. ‘Jan Aushadhi’ to provide inexpensive generic drugs through public health

care centers and ‘Rashtriya Swasthya Bima Yojna’ under which a family of five below

the poverty line would receive the cashless treatment maximum 30,000 annually.

PGRC Eighth Report (2013) viewed that health indicators in Punjab are slightly better

than many other states. It ranks third in the country in terms of birth rate (16.2 per

1000 population). The infant mortality rate of 30 per 1000 live births places it at fifth

rank. It has a maternal mortality ratio of 172 per 100,000 live births. Around 61

percent of deliveries are conducted in health institutions; the share of government and

private institutions stands at 22 percent and 39 percent respectively. A major concern

is the rising cost of medical care. The average expenditure for hospitalization in

Punjab is Rs. 15,431 which is one among the highest across the country. Even in

government health institutions, average out-of-pocket expenditure is Rs. 270/- per

OPD consultation and Rs. 7,700/- per hospitalization. User charges, inadequate

supply of medicines and other surgical supplies and lab reagents has led to an

escalation in the cost of medical care in government health institutions. The state

does not allocate adequate budget for medicines and supplies. At least 20 percent of

the health budget should be allocated for medical and surgical supplies. Clearly,

decreasing outlay on social sectors is responsible for a cut on soft items in the budget

such as medicines. A survey conducted by National Sample Survey Organization

(NSSO) in the first half of 2014, concluded that Punjab ranks top in terms of out-of-

pocket health expenditure because the people of Punjab spend a major portion of the

money income on medical treatment in the country. The out-of-pocket health

expenditure is any direct expenditure by households on drugs and health services

practitioners. It is a part of private health expenditure. According to head of School of

3

Public Health (PGIMER), people of Punjab bear the highest medical expenditure (in

terms of hospitalization), and in the area-wise break-up, the out-of-pocket health

expenditure in urban areas is Rs 29, 971 as compared to Rs 27,718 in rural areas of

the state. On an average in the Punjab state the expenditure of hospitalized per

person, Rs 28,539. In Haryana, Rs 24,000 against the national average of Rs 18,628.

Among union territories, Delhi and Chandigarh spend the highest with 34,604 and

34,658, respectively.

National Health Profile (2015) briefs Punjab’s per capita spending on health is Rs 728

and monthly per capita household out-of-pocket expenditure in the state is Rs 196.5.

In Haryana, it is Rs 131, Rs 95 in Jammu and Kashmir, Rs 134.5 in Himachal

Pradesh, Rs 103 in Chandigarh and Rs 132 in the national capital. The reason found

by experts of health expenditure burdens on common people that the lack of public

(government) expenditure. Punjab’s per capita spending on health is just Rs 728.The

state government is expensed on health are just 0.72 per cent of the gross state

domestic product. This profile of Punjab state shows the higher burden of health care

as compared to other states. (Bharti, 2016).

Role of Generic Drugs

India Pharmaceuticals position is well-known as ‘branded’ and ‘branded-generic and

most of the products are sold by a brand (trade) name. Till January 2005 all

medicines were the generic product when patents were not relevant in India. Branded

medicines were manufactured by multinational and good reputated manufacturers of

Indian. Branded medicines are promoted by manufacturers at higher prices while

almost all drugs easily available with trade-names. The public sector acquires drugs

as unbranded generics with the chemical or ‘International Nonproprietary Name’ on

the labeled product. The Indian pharmaceutical sector is communal under the

‘Ministries of Health and Family Welfare’ (Department of Chemicals and

Petrochemicals under the Ministry of Chemicals and Fertilizers) and the ‘Office of

Drugs Controller’. The government’s main thrust of pharmaceutical policies has been

on the manufacturing of the private sector and marketing of drugs and for the

common man there are not more improvements in accessibility of essential

medicines. The Indian health sector has been affected by structural adjustment,

4

economic liberalization reforms by the World Bank and increasing production cost in

pharmaceuticals (Roy et al., 2012).

Due to the high economic pressure on drug budgets the use of generic drugs is

progressively growing internationally because since they are usually substantially

lower in price than the innovative brands and these drugs provide the opportunity for

major savings in health care expenditure. However, physicians are apprehensive

regarding the quality of generic drugs and have concerns about their reliability as well

as interchange of certain drug categories. Although the generic medicines are bio-

equivalents of their innovator counterparts and are produced in similar facilities,

according to good manufacturing practices, these are widely believed as inferior in

their therapeutic efficacy and quality to branded products. Marketing practices

adopted by manufacturers of imported branded medicines also propagate the belief

that generics are inferior quality as reported from countries in Central and Eastern

Europe and independent countries emerged from the former Soviet Union. In India,

generic substitution is legally not allowed because of limited awareness about

generics to patents, and patients do not want pharmacist to change the trade name

written by doctor. Hence, consumer awareness for the generics, variety of trade

names available in the market and price variation is very limited. (Singal et al., 2011).

In developing countries, policymakers are confronted to increase the availability and

affordability of essential medicines. The government of India recently opened

‘Generic Drug Stores’ to make access to drugs, at some public channels of drug

distribution who sell generic drugs produced by the public sector. Their prices are

lower than market price. India also faces the task of equal access to affordable and

quality essential drugs for its own people despite pharmaceutical industry growth in

the last two decades, access to essential drugs remnants an issue of common

people. As for the poor population affordability remains to be the main barrier to

access to medicines. In April 2008, the ‘Department of Pharmaceuticals’ (DOP) under

the ‘Chairmanship of Minister of Chemicals and Fertilizer’ responsible for drug policy

and pricing launched a campaign to open generic drug stores called ‘Jan Aushadhi

stores’. Quality generic drugs are to be available at lower prices in these stores.

Opening generic drug stores and making essential medicines available at affordable

5

prices seems to be a step in the right direction. So far implementation of the policy

raises several concerns related to low availability (Kotwani, 2010).

Various drug policies are approved from time to time to manage the task of sustaining

balance between pharmaceutical, industrial growth and ensuring affordable and

reasonably priced medicines to the consumers at the same time, particularly the poor

common people. In India firstly control over the price of drugs was the outcome of the

Chinese aggression with the promulgation of the ‘Drugs Display of Prices Order’

(1962) and the Drugs Control of Prices Order, 1963. These were circulated under the

Act ‘Defenses of India’. With these orders, the prices of drugs were fixed from 1st

April, 1963. Consequently, arrangement of price control systems was notified through

various orders with different principles, in which the span of regulator of prices as well

as the nature of control of prices varied from order to order as per the respective drug

policies.

The latest Drug Price Control Order (DPCO-2013) was issued on 15.05.2013. All the

previous DPCOs, 1970, 1979, 1987 and 1995 were based on cost to manufacturers

with allowance for post manufacturing expenses. As per the provisions of DPCO

(2013) ceiling prices are now being fixed at the average retail price of the medicine,

produced by all those companies engaged in its production with a market share of ≥

1percent of the total market turnover, and adding 16percent margin to the

retailer. While most of the ‘Drug Pricing Policies’ in the past have been implemented

in light of various objectives, the 2012 National Pharmaceutical Policy is aimed mainly

at making drugs affordable. The main objective of the policy is to put in place a

regulatory basis to ensure the availability of essential drugs listed in the NLEM at

affordable prices (Arthapedia, 2016).

Availability and affordability of drugs is greatly affected by Intellectual Property Rights

(IPR) i.e. of India Patents Act (1970) and Amendments (2005). It has generated a

solid impression on the modern day life. These IPRs were encouraged in an ever

seen manner by the TRIPs agreement. The TRIPs agreement has directed its

member states to implement the requirements of the agreement in order to

encourage and protect IPRs. Members’ states are asked to provide protection to

different IPRs by making necessary amendments in their existing laws or enacting

6

new laws. India, being a member state of the TRIPs agreement brought changes in

its IPRs laws. The preceding fifteen years have seen many new IPR performances.

With globalization, liberalization and privatization, the field of IPR has grown multifold

and its importance has amplified, having a profound impact on commercial welfares

(Malik, 2013).

Although government increasing expending on public health facilities and managing

the drug prices polices to make drugs affordable, but the conditions of the health care

burden are not improving. A large part of the population depends upon the private

sector for heath treatment because of facilities available to patients, but the treatment

costs are mostly uncompromising for the ordinary people. As Indian’s generic drugs

are famous and demanded all over the world because of cheap prices. India can

achieve the highest level to provide availability of drugs for any health problem and

make them affordable to all.

Significance of the study

It is a matter of high concern that high prices of drugs directly make drugs beyond the

reach of million people in developing countries. Large numbers of the population in

India also do not have regular access to essential medicines. According to the

‘National Pharmaceutical Pricing Policy’ (NPPP) 2012 Indian Pharmaceutical industry

is producing drugs at 3rd position of by volume and 14th in terms of value at global

level. As India is very efficient in the pharmaceutical sector to produce drugs at very

cheap cost relative to world level and provide low price in the world, despite the fact

domestic consumers suffer from the high retail price of very cheap drugs. Commonly,

individuals have to bear the full cost of their drugs and health treatment, since drugs

are not fully subsidized through Indian government. To overcome this economic

burden of drugs the use of generic drugs is a good substitute but, consumer’s

awareness for the generics, variety of trade names available in the market, and price

variation is very limited. Hence, there is need to conduct a study that can analyze the

uses and price structure of pharma products manufactured in India. The study has

purposively selected Bathinda city situated in the Malwa region of Punjab, where the

health problem has major concern. High prices and price differences in the private

7

sector and low availability in the public sector are major barriers to the use of drugs

and better health. High prices of drugs is one of the issue, while as issues related to

the price differences within the same sector is another one. By keeping in view, the

present study is an attempt to discuss various issues related to h availability and

affordability of essential drugs Therefore the study has tried to examine the gap in

cost, wholesale, retail price and profit margin at different levels of distribution of drugs

from a manufacture unit to consumers of commonly demanded drugs in Bathinda city.

An attempt is also made to study the evaluation of drug policy and the impact of

TRIPS on drug prices. Therefore, keeping in view the above literature gap, the

present study attempts to carry out the following objectives to contribute the literature

and provide further knowledge about the subject.

Objectives of the Study

To evaluate the availability and affordability of essential drugs in a Bathinda

city.

To calculate the differences in drug prices at various stages of distribution in

different sectors i.e. public and private.

To evaluate the various Indian Drug Pricing Policies and TRIPS.

To give some policy suggestions for a sustainable and affordable health care

system.

Plan of the Present Study

The present study is scheduled into six chapters as:

The first chapter deals with the introduction about the problems related to the

essential drugs, health status of India and Punjab. Discussion about role of generic

drugs in the health care is also given. Objectives and significance of the present study

are explained.

The second chapter deals with a review of various studies related to the subject

matter of the study, which helps to deal with the research problem. By reviewing the

literature the research gap also given in this chapter.

8

The third chapter consists with the data and methodology used for analyzing the

objectives. In other words, it demonstrates source of data and different indices used

to know the facts related to different objectives of the study.

The fourth chapter deals with the analysis of the collected data related to the

availability, affordability, price differences and different markups of common essential

drugs. The international price comparisons are also taken into account.

The fifth chapter describes the evaluation of Indian drug price policies and current

drug price control order in detail also the impact of TRIPS on Indian pharmaceuticals.

The sixth chapter is an attempt to summarize the findings of the study. It also

includes some possible suggestions for policy building to access essential drugs for

ordinary people, stabilize the prices and to promote the generic affordable drugs.

9

CHAPTER - 2

LITERATURE REVIEW

The purpose of reviewing the literature is to study an overview of important literature

published on the subject of the study. Several studies have examined the Indian

pharmaceutical industry as per the availability of drugs, price differences and in a

different way as price mechanism, differences, and cost of production. In this context

an attempt has been made to review the related studies in a systematic order. First

section relates to availability, affordability and differences in drug prices and various

issues of usage of generic drugs in India. The second section deals with studies

related to drug control pricing policies and impacts of TRIPS.

Section I

Godwin and Varatharajan (2002) works on, differences in drug price across different

retail market settings in Thiruvananthapuram district of Kerala. The study determined

retail markup of 12 commonly used branded drugs with charged high drug prices is

estimated to capture the variability in mark-up across five different drug stores as

Government-owned drug stores, Private drug stores in a competitive setting, Society-

owned drug stores, Private drug stores in spatial monopoly setting, and Private drug

stores within hospitals. The sample was used as twelve Generic Name Paracetamol

,Ampicilin , Amoxycilin Mox, Ranitidine Rantac, Cetrizine Zetzine, Alprazolan Alprax ,

Penicillin G Voveran ,Atenolol Aten,Glyben Glamade Daoni,.Enaprel Envas,

Ciprofloxacilin. The results of study show there exists 32 percent price differential of

between different retail drug stores retailing the similar brand of the same drug; the

difference is huge as 120 percent of Amoxycilin. High difference in retail prices

attributable to the built-in markup in the MRP. However, retail margins in India are

estimated as near 32.7 percent (WHO/WTO, 2001). Studies also described a

difference of 150-200 percent between wholesale and retail prices. The formal and

informal factors as, Wholesale and retail markups, Import duties and taxes, can

double the price of a drug between manufacturers and consumer.

10

Kotwani (2003) works a report of medicine prices, availability, and affordability in the

state of Rajasthan on the basis of standardized methodology published by WHO/HAI

to analyses components of prices of a basket of essential medicines in the public,

private-for-profit and co-operative sectors. The results show that the government of

Rajasthan purchases medicines at a reasonable price for patients who are eligible for

free medicines at public health facilities. Almost half of medicines surveyed were

priced less than twice the international reference prices in private pharmacies. The

medicines such as albendazole, diazepam, diclofenace, amoxicilline, atenolol,

paracetamol, and hydrochlorothizide were expensive in the private sector. The prices

of albendazole, diazepam and diclofenac in the private was 8, 26 and 14 times the

procurement price in the public sector, including wholesale and retail margins are

very high or the manufacture prices are higher in the private sector than the public

sector. In case of public sector availability was low, so poor patients sometimes go

without treatment or buy medicines from private pharmacies forcefully. The availability

of medicines to treat HIV/AIDS was very low in all sectors.

Singal et al., (2011) examine the comparison between the quality and price of

generic (branded-generic) drug to their costly popular brand (branded) manufactured

by the same pharmaceutical company in India. The study considered materials and

methods on five medicines: alprazolam, cetirizine, ciprofloxacin, fluoxetine, and

pantoprazole which are commonly used and manufactured in branded and branded-

generic versions of the same company were selected. Price-to-patient and price-to-

retailers were found for five “pair” of medicines with results that retailer margin for

five branded medicines were in the range of 25-30percent, but for their branded-

generics version manufactured by the same company it was in the range of 201-1016

percent and price-to-patient for the branded version of cetirizine, fluoxetine,

ciprofloxacin, lansoprazole, and alprozolam was higher by 41percent, 33 percent, 20

percent, 14 percent, and 31percent than branded-generic. The study concludes that

the difference in price-to-patient was not as huge as it is expected for generics, but

the margins for retailer were very high for branded-generics. Quality of branded-

generics is same as for their branded version. It is suggested that there is a need to

modify the drug price policy, regulate the markups in the generic supply chain,

11

conduct and widely publicize the quality testing of generics for awareness of all

stakeholders.

Basak and Sathyanarayana (2012) depicts the evaluation of knowledge and

perceptions about generic medicines in community pharmacists' and drug retailers' in

two towns of Tamil Nadu, India, through a cross-sectional descriptive study, with a

questionnaire method, to survey community pharmacists and drug retailers working in

39 randomly selected private pharmacies from Among 66 respondents (pharmacists

and drug retailers), 39 (59.1percent) were drug retailers; 52 (78.8percent) were self-

employed; majority in the age group 31-40 (31.8percent); and mostly males

(83.3percent). Overall, 21 respondents (31.8percent) did not have knowledge about

generic drugs and 30 percent of the respondents believed that generic drugs are of

inferior quality compared to branded drugs. Only 63.6percent of the surveyed

pharmacists and drug retailers agreed that generic drugs can be considered

therapeutically equivalent with the branded ones. The majority of the respondents

(80percent) did not support generic substitution, even in case of approved drugs are

not available. Many community pharmacists and drug retailers have misconceptions

regarding generic medicines. It is concluded that lack of knowledge may negatively

affect the community pharmacists' support towards generic medicines in India and

this issue should be addressed by academicians and other relevant bodies.

Chaudhuri (2012) examines that hospitalization and outpatient services at public

health facilities are quite low as in Haryana (30percent) and in Punjab (20percent).

The specified reasons are the high cost of care including high prices of drugs. In the

Punjab, State the Health Systems Corporation includes public hospitals and public

clinics over which the poor people can access health facilities. Two schemes were

announced in 2008, to decrease out-of-pocket expenses for poor families. These two

schemes were ‘Jan Aushadhi’ where inexpensive generic drugs were made available

through public health care centers and ‘Rashtriya Swasthya Bima Yojna’ under which

a family of five below the poverty line would receive cashless treatment maximum

30,000 annually.

12

Roy et al., (2012) analysis the medicines cost and their affordability in private

pharmacies in Delhi (India), using a method of primary survey to measure the costs of

prescribed medicines and treatment of community acquired pneumonia (CAP), with

medicines purchased from 27 private pharmacies. Measurement of affordability is

taken by making a comparison of the monthly per capita expenditure, to the costs of

treatment (medicines). The results show observed costs of prescriptions (129.37+

217.99) in the cost of treatment of community acquired pneumonia varied huge

inconsistency from Rs. 34.50 to Rs.244.75 with azithromycin and Rs.72.20 to

Rs.277.30 with levofloxacin. The study finds show that there are large variations in

the costs of medicines are and economically not affordable for the poor in India.

Reforms in ‘National Pharmaceutical Policy’ are required immediately.

Eighth Report of PGRC (2013) observes that Punjab is somewhat better in health

indicators than many other states because of third rank in terms of birth rate (16.2 per

1000 population) in the country. The infant mortality rate of 30 per 1000 live births

places it at fifth rank. It has a maternal mortality ratio of 172 per 100,000 live births.

Around 61percent of deliveries are conducted in health institutions; the share of

government and private institutions stands at 22 percent and 39 percent respectively.

A major concern is the rising cost of medical care. The average expenditure for

hospitalization in Punjab is Rs. 15,431 which is one among the highest across the

country. Even in government health institutions, average out-of-pocket expenditure is

Rs. 270/- per OPD consultation and Rs. 7,700/- per hospitalization. User charges,

inadequate supply of medicines and other surgical supplies and lab reagents has led

to an escalation in the cost of medical care in government health institutions. The

state does not allocate adequate budget for medicines and supplies. At least

20percent of the health budget should be allocated for medical and surgical supplies.

Clearly, decreasing outlay on social sectors is responsible for a cut on soft items in

the budget such as medicines.

Hinsch et al., (2014) works on improving medicines price transparency and Price

information Mechanism through data collected during the course of a WHO project

focusing on the development of a vaccine price and procurement information

13

mechanism. The project collected information from six medicine price information

mechanisms and interviewed data managers and technical experts on key aspects as

well as observed market effects of these mechanisms. These include the uptake of

high quality medicines, more favorable results from contract negotiations, changes in

national pricing policies, and the decrease of prices in certain segments for countries

participating in or deriving data from the various mechanisms. In conclusion the

reviewed mechanisms avoid the methodological challenges observed

for medicine price comparisons that only use national price databases. It is suggested

that medicine price information mechanisms respond to the need for

increased medicine price transparency and have the potential to contribute to

improved access to medicines in developing countries.

Ahmad et al., (2015) examines that nearly half of India’s population has lack of

access to essential rugs in government hospitals due to the heavy dependency of

most of the patients in the private sector in spite of India’s greater exports in drugs to

more than 200 nations consisting of more than 20,000 manufacturers and with

3rd largest market by volume in the world. The main emphasis of in Indian

pharmaceutical, health policies is to focus on the progression of the industrial sector

rather than the issues of law availability, high pricing, and less affordability of drugs.

As it is a common view that drug prices in India are comparatively low, but studies

have reported that medications in India are costly and unaffordable. The margin on

drug sales across the same generic class is extremely high, often ranging from 1000

percent to 4000 percent. Since independence the objectives of the Indian

pharmaceutical industry have remained the same as the growth of domestic industry

and manufacture qualitative drugs. In India, more than 80 percent of healthcare

expenditure is borne by patients while the income of 70 percent of Indian population

is less than 2$. The most essential medications that are needed by the majority of the

Indian population should be reviewed for inclusion in the drug price control list. There

is a large difference in the prices of different branded drugs and generics that are

selling in the market even though they might characterize the same drug fragment.

Health experts should be advised to suggest cost-effective drugs in the attention of

the patients without being influenced by pharmaceutical companies. Consumer

14

knowledge about generics could be improved through effective educational

interferences. The issue of pricing needs an all-inclusive solution generated by the

coordinated efforts of stakeholders, pharmaceutical companies, and healthcare

professionals in order to catalyze equity in access to health care.

Rana and Roy (2015) examine the issues and relevance of generic drugs which are

bioequivalent to the innovator product in terms of dosage form, strength, and route of

administration, quality, safety, performance characteristics and intended use of global

health. Generic drugs are considered as a basis for providing affordable drugs to

patients. The major generic markets in the world include United States of America

(USA) followed by European Union (EU), Canada, Japan and Australia. The major

suppliers of generic medicines in China and India are showing fabulous growth in the

generic drugs sector. There are many legal and regulatory issues along with quality

concerns associated with the use of the generic products. Lately, bilateral

international agreements called Free Trade Agreements (FTA), delaying tactics by

originator companies like strategic patenting and litigations on generic manufacturers

have been a major setback for the generic medicine industry. These issues need to

be addressed to optimize use of generic Drugs. The sustainability of generic drugs in

public sector is crucial for improving access to essential medicines to the worldwide.

Section II

Lanjouw (1997) disclose the outcomes of a field survey conducted in order to

evaluate the impact of pharmaceutical product patents in India and her main

concludes that Indian firms, profit the level of generic drug production will decrease

for as they will possibly have to pay some of royals to the original innovators. An

increase in the incentives for investment in R & D in diseases relevant to developing

countries, as well as in the formation of innovations in general. However, this may be

basically due to the fact that the strategy of imitation is no longer available, rather

than being a direct incentive effect. Another impact can be that stronger IPR would

not enlarge the R & D activity of foreign firms in India, since in multinationals

pharmaceutical R & D is a highly centralized process, where cost is not the

paramount concern.

15

Lall (2003) reviews the case for uniform and strong IPR by developing country

groupings using various procedures of domestic technology imports and innovation.

This indicates that in India, "it is possible to argue, however, that India has now

reached a stage in pharmaceutical production where stronger IPRs would induce

greater innovation by local firms the benefits of which would have to be set off against

the closure of other firms.

Hoen (2003) examine that the causes for the shortage of access to essential

medicines are diverse, but in some cases of necessary treatments where drugs are

very costly are the major barrier. Unaffordability of drug prices can be the result of

strong intellectual property protection. While TRIPS does offer safeguards to remedy

the negative effects of patent protection or patent abuse, in practice it is unclear

whether and how countries can make use of these safeguards when patents

increasingly present barriers to medicine access. Public health supporters the Doha

Declaration as an important accomplishment because it gave dominance to public

health over private intellectual property on the other hand the Doha declaration did

not solve all of the problems associated with intellectual property protection and

public health. The recent failure of the WTO to resolve the outstanding issue to

ensure production and export of generic medicines to countries that do not produce

may even indicate that the optimism felt at Doha was premature.

Dhar and Gopakumar (2006) works to specify the performance of Indian

pharmaceutical firms by interacting the changes in the patent regime required by the

Agreement on TRIPS. In Post- TRIPS period the R & D spending of some of the top

firms as Ranbaxy and Dr Reddy’s has shown an increase which results, R&D

strengths of the firms have enhanced significantly.

Mani (2006) reveals a detailed mapping out of the sectoral system of innovation of

India’s pharmaceutical industry. The study shows that the TRIPS compliance of the

intellectual property right regime has not reduced the innovation capacity of the

domestic pharmaceutical industry, which has visualized an increase in both research

budget and patenting.

16

Chaturvedi and Chataway (2006) explain in the paper that Indian firms are investing

in R & D not only for innovative drug discovery also for developing capabilities to

assimilate and exploit knowledge available outside. Indian firms are acclimatizing to

the changing environments. R & D is predictable as the ‘survival kit’ in the post-TRIPs

scenario. They are also placing themselves as a partner of choice for technology

savvy national and multinational firms.

Birla and Gupta (2007) explain that Indian firms are increasing their innovative

capacity. The Indian Pharmaceutical Industry is moving, chances in Post- TRIPS

period. The participation of Indian generic companies are also growing their

participation in the progressive markets, particularly the US. R&D growth rate is also

increasing rapidly.

Manikandan and Gitanjali (2012) review the national list of essential medicines of

India. The Ministry of Health, Government of India revised the National List of

Essential Medicines of India (NLEMI 2011) in June 2011, eight years after the last

revision. The NLEMI 2011 contains 348 medicines and was prepared over one and a

half years by 87 experts. Though there are some positive aspects of the list such as

the documentation of a detailed description of the revision process, the inclusion of

many experts from various fields in the review committee, well written description of

the essential medicines concept and others, a critical review of the list reveals areas

of major and minor concerns. Improper medicine selection like the inclusion of a

nearly obsolete medicine such as ether, an anesthetic agent; non-inclusion of

pediatric formulations; spelling errors; and errors in the strengths of formulations

diminishes the significance of the NLEMI 2011. In its present form, the NLEMI 2011

did not align with the Indian Pharmacopoeia, and the National Health Programs as

well as the National Formulary of India 2010. Formatting errors, non-inclusion of an

index page, syntax and spelling errors may also undermine the usefulness of the

NLEMI 2011 as a reference material. An urgent revision of the NLEMI 2011 is

advised so as to avert misinforming the wider international and local readers.

17

Malik (2013) revises that TRIPs was one of the most contentious issues in the

Uruguay Round of multilateral trade negotiations, concluded in 1994 at Marrakesh.

India has decided to comply with all the instruments and annexes of GATT, including

Trade Related Aspects of Intellectual Property Rights (TRIPs) as a member of the

World Trade Organization (WTO), and having signed the General Agreement on

Tariff and Trade (GATT). Because of the WTO, India has to amend its intellectual

property laws. India was forced to comply with the TRIPs agreement. After the

formation of WTO in 1995, the India is being its member has to implement the TRIPs

agreement in to. The commitment under the TRIPs agreement compelled India to

amend its intellectual property laws.

Kumar (2014) view for comparison between old and latest systems in DPCO as

DPCO act 1995 and DPCO act 2013. The new pricing guideline, DPCO has come in

to effect from May 15, 2013. In past before implementing DPCO 2013, the prices of

74 bulk drugs are controlled by DPCO 1995, but when the DPCO 2013 has come into

effect, 652 new drugs are added to the list national list of essential medicines

(NLEM). It is required that the duty of government to make the lifesaving drugs

affordable to the common man. It is suggested for the implementation of new policies

that the government has to reduce the prices of the drug which is needful for common

man, to improve the research and development of new drugs, it has to be liberal in

fining the prices in such a way that the industries cannot be suffered and it has to

support the research in the nation. It controls the market prices of the drugs and it

supports research by exempting the price control of new drugs by giving the patent up

to 5 years.

Kanwar and Hall (2014) analyses the impacts of TRIPS Patents. TRIPS which are

the Agreement on Trade Related Aspect of Intellectual Property Rights attempt the

difficult assignment of balancing private and public rights. On one hand, it protects the

interest of the pharmaceutical companies that invest heavily in R and D of Drugs and,

on the other; it allows nations that belong to the WTO to promote public health in their

respective countries. However, patents on pharmaceutical products have adversely

affected industrially developing and least developed countries, hampering their ability

18

to formulate suitable public health policies that would enable their ailing citizen to

access medicines. For instance Pharmaceutical patents have raised the cost of life

saving drugs, effectively placing them out of the reach of the mainstream of the

World’s population.

Most of the studies are found which emphasized on availability, affordability and

prices in some states of India. Studies related to price differences are very few and

explained the only difference between the retail prices in different markets. Price

differences at different stages of distribution are not done in the earlier studies in India

and none of the study found in the Punjab. Therefore, the present study is an attempt

to examine the price differences at various stages from manufacture to consumer

along with the availability and affordability in the Bathinda city of Malwa region

(Punjab) known as health sensitive.

19

CHAPTER - 3

DATABASE AND METHODOLOGY

This chapter deals with the data collection and methodology used in the present study

for analyzing the availability, affordability and price differences of essential drugs in a

Bathinda city (Punjab).

Data Base

To achieve the different objectives of the present study, the study primarily relies on

the survey of the Bathinda city with the help of WHO/HAI methodology (2003),

described in the manual entitled ‘Medicine Prices – a new approach to measurement’

which has been designed to collect data, analyze and interpret the result in a

standardized way. To understand the methodology “International Drug Price indicator

Guide 2014” published by WHO is also used. This methodology helps in the present

study for selection of health facilities, the comparison of prices at international level

and to calculate affordability, and pricing components. The secondary data sources

have been used for:

1) The collection of Global Core and regional drug drugs lists, mentioned in the

WHO/HAI manual (2003) published for international price comparison.

2) To calculate the affordability minimum wages in the government sector of

Bathinda district is collected from ‘Labour Department of Punjab’ (Statistical

Section, 2013) and poverty estimates by (Tendulkar Method, 2011-12).

Selection of Area

Bathinda city is purposefully selected for primary survey. It is located in the Malwa

region in the state of Punjab which is known as health sensitive region. It is divided

into the 4 tehsils of Bathinda, Rampura Phul, Maur and Talwandi Sabo. These tehsils

are further divided into nine Blocks of Bathinda, Sangat, Nathana, Rampura, Phul,

Balianwali, Bhagta Bhaika, and Talwandi Sabo and there are total 21 cities and towns

in this district from which first Bathinda (Municipal Corporation) is selected

20

purposively because this is the only city of Malwa region where a government drug

store is established by central government.

For the primary survey the three main stakeholders, i.e. drug consumers as patients,

drug retailers as chemists, and the wholesalers are surveyed on the basis of random

sampling technique. The sample size for the patients is selected 150 from different

areas of the city to collect the general prescription of patients on the use of health

facilities, use of generic or branded drugs and the sources of purchasing drugs. The

size of selected drug retailers is 50 and the wholesalers are 10. Bathinda city map

describes the demographic picture of selected areas of the city covering all sides from

a center point. (Figure 3.1)

Source: Modified from Google Earth Map

21

Two sectors are surveyed in the city for drug price comparison. The sectors are:

1) Public Sector Prices: Data for drug prices and drug availability are

collected from the public sector drug store in Bathinda city known as “Jan

Aushadhi” located in Civil Hospital Bathinda. This drug store works under a

Central government at very less price of essential medicines.

2) Private Sector Prices: Private sector drug prices are those, at which

patients pay for medicines to private retail drug stores. In this sector also

printed price, i.e. (MRP) maximum retail price is charged by retailers. So the

data on (MRP) prices in this sector are collected through printed price on the

strip.

In Public sector one drug store is available in the city “Jan Aushadhi drug” store and

profile of private drug distributors in the city is collected from the President of the

wholesalers and retailers of the Bathinda city. In private sector 50 retail drug stores

are randomly surveyed from the different areas such as retail drug stores near Civil

Hospital, Gandhi Market, Near Bus stand, Power house road, Ajit Road, Mall road,

Bibi wala road, Haji Rattan B.C.C road, Mati Das Nagar, Mini Sectriate, Guru Gobind

Singh Nagar. Famous wholesales who provide branded-generic drugs to different

private retail drug stores are also surveyed, because almost all the private retailers

buy medicines from local wholesalers and all the wholesalers provide the drugs at

the same prices to retailers.

Selection of Drugs

In the Bathinda city number of medicines are purchased from private drug stores, the

selection of medicines is very difficult on the basis of patients’ views, so the common

medicines are sorted out on the basis of views of doctors and retailors, final selection

is made by comparing these common medicines with Punjab Essential Drug List

(EDL) containing (235) name of all types of drugs including injections, (1 to 71), I.V

Fluids (72 to 82) Eye/Ear/Nasal Drops, (83 to 85), Tablets and capsules, (86 to 187),

Solution, Creams, Applications (188 to 204), Syrup/ Suspension (205 to 235) The

selected medicines are under the number (86 to 187) tablets and capsules.

(Annexure-B)

22

Table: 3.1 Selected Drugs by Brand and Manufacturer Name

Therapeutic

Class

Drug Name Brand

Name

Manufacturer

Name

Antacid Tab. Pentaperazole 40 mg Pantocip Cipla

Tab. Rantidine 150 mg Rantax Cipla

Antibacterial

Tab. Cotrimoxazole S.S (Trimethoprim 80mg

+ Sulphamethoxazole 400mg)

Ciplin Ds Cipla

Tab. Levoflexine 250 mg Lovolkm Alkem

Tab. Azithromycine 250mg Azx Ranbaxy

Tab. Ciprofloxacin Coated 250 mg Floxip Abbott

Tab. Ciprofloxacin Coated 500mg Ciprotas Intas

Tab. Cefixime 200 mg Fexim-O Zydus

Anti-Allergic Tab. Levo Cetirizine 5mg Cetipen Lv Morpen

Tab. Cetirizine Hcl 10 mg Okacet Cipla

Pain Killer,

Fever

Tab. Paracetamol 500 mg Pacipr Cipla

Tab.Paracetamol 500 mg + Diclofenac

Sodium 50 mg

Fenak Ranbaxy

Antifungal Tab. Fluconazole 150 mg FCN Intas

Antihypertensi

ve

Tab. Atenolol 50 mg Hipras Cipla

Anti-infective

Cap. Amoxycillin 500 mg Cipmox Cipla

Tab. Amoxycillin + Clauvinic Acid -500mg

+125 mg

Amoxyclv Abbot

Tab. Ofloxacin 200 mg Okaflox Cipla

Tab. Ofloxacin + Ornidazole

( 200mg + 500mg)

Oflotas Intas

Anti Helminthic Tab. Albendazole 400 mg Gentre Glexo

Laxatives Tab. Bisacodyl 10 mg Delkoflex Boenginer

Source: Sample Survey

23

For each drug two types of products are surveyed, generic without any brand name,

i.e. Lowest Price Generic, (LPG) and the Most Sold brand Generic (MSG). Generic

drugs with the lowest price are available in the public store. The wholesale prices are

only surveyed in the private sector because of wholesalers are the part of the drug

distribution chain in the private sector only.

In the public sector the drugs are directly supplied by center government and there is

no issue of whole and retail prices. In the private sector, which is dominating to

provide each type of drugs has many issues regarding the price differences within

sector and high markups mostly in generic-branded drugs. Thus, the brand and

manufacture name is also asked of most sold medicines to compare the different

prices and markups.

Drug Price distribution channel

With the help of the drug distribution chain in Bathinda, drug price components are

analyzed to establish that how the retail price of a medicine is determined and how

different markups and taxes are contributing in the price.

The manufacturer provides medicines to the wholesalers through Clearing and

Forwarding Agents (CFA), and central warehouse, then supplied to substockist or

wholesalers who distribute to different retail stores, lastly patients purchased from

chemists. Thus the chain internally within the city is started from wholesaler to

patients. So to find information about prices in an accurate way, wholesalers and

retailers are contacted and asked to provide information on price components of

selected medicines

Analysis of Data and Outcome Variables

Primary survey is followed by data analysis. Data collected in this study has been

analyzed through:

(i) Appropriate statistical tools are used in computerized excel, such as

averages, percentage, price ratios, sector wise unit prices, minimum and

maximum.

24

(ii) To explain the international comparison ‘Median Price Ratios’ are calculated.

These ratios are the median unit prices across the facilities surveyed in a

sector (in local currency) divided by the international reference price (also in

local currency) to compare the external standard price.

MPR= Median local unit price / Reference unit price (MSH).

The reference price serves as an external standard for evaluating local prices. WHO

and HAI recommend using the ‘Management Sciences for Health (MSH)

International Drug Price Indicator Guide 2014 as the reference source’.

Limitations of the Study

The study attempts to use the standardized methodology provided by WHO/HAI for

attaining the objectives, some guidelines of methodology cannot be satisfied.

According to WHO methodology originated brands of drugs are also surveyed, but in

the present study only commonly used brands are surveyed.

25

CHAPTER - 4

AVAILABILITY, AFFORDABILITY AND PRICING OF ESSENTIAL DRUGS

Introduction

This chapter is an attempt to examine the issues related to essential drugs, i.e.

availability, affordability and price differences, through the primary survey of Bathinda

city. The present survey is an amalgam of different respondents from various fields

suc h as doctors, druggists (wholesalers and retailers) and patients to verify and

examine the use of drugs from branded to generic and preference towards health

facilities. The present chapter is divided into two parts: first part explains the

availability and affordability of commonly used essential drugs in public and private

sector. The second part deals with the drug price differences between public and

private sectors, differences within the private sector and international price

differences i.e. international price comparison. Through prices differences, different

markups are also analyzed for reviewing the drug price policies to make them more

effective.

Overview of Respondents

The different respondents involved in the study are the first source to analyze the

issue of availability, affordability and price differences of common essential drugs by

surveying of doctors, patients and druggists in the city. Patient’s opinion towards

public sector health facilities is not adequate as the majority of the respondents about

68 percent are not interested to use the public sector health facilities and prefer to the

private sector health care facilities due to the availability of drugs and provision of

satisfactory treatment. The remaining respondents use the public facilities but not for

entire treatment and then go to private facilities because of they are not much

contented with the prevailing facilities due to low availability of drugs in the civil

hospital and then they have to purchase the drugs and health treatment from the

private sector out of pocket with a higher cost. The reason for the positive opinion

towards the private sector hospitals and drug stores instead of high cost is the

availability in a large number at any time this concludes that the majority of the

population in the city depends on private health care facilities with compensating the

26

higher cost of treatment for temporary and regular basis. Lack of knowledge of the

respondent’s about the public drug store ‘Jan Aushadhi’ for the drugs at very less

price is one of the reasons for preferring private drug stores while lack of availability

of all drugs is the second reason.

The patient’s perspective about prevailing drug prices indicates that nearly 30 percent

of the respondents are fully dissatisfied from prevailing prices of drugs, 27 percent are

somewhat satisfied, 16 percent are neutral, 22 percent are satisfied and only 7

percent are fully satisfied. It is observed that the fully satisfied respondents are with

higher income which is the main reason for not much burden of higher prices of drugs

to them and the around 30 percent respondents are dissatisfied bearing the health

care burden due to higher prices of drugs at private drug stores.

The results related to general prescription explain that patients do not have

knowledge about the generic drugs. Around 70 percent of the respondents do not

familiar with the term generic drugs, only distinguish that in generally known is, the

less cost of drugs in provided in the public sector. But because of low availability of

drugs in the hospital, doctors also prefer drugs from private retail shops. In this case,

it’s very difficult for any patient to substitute any type of generic which is less costly

than branded. Normally any individual cannot understand about the difference

between generic branded and branded medicines because of the same expression of

all drugs and patients have to choose the branded drugs as preferred by doctors

which results the high burden of drug prices is taken by the patients.

The perspective of doctors and druggists play a significant role for the prescription

about use of drugs because opinions of patients extremely depend upon these two for

use of any drug. Public sector doctors attempt to prefer generic drugs the most and

branded in very rare cases, on the other side private doctors favor to branded drugs

which are more expensive than generic drugs. The results of the present study depict

that 40 percent doctors in private sector favor only branded drugs because of their

quality and their belief generic drugs are less effective and not good in quality.

Remaining around 60 percent doctors have viewed that generics are good substitutes

for branded to make drugs more affordable and they prefer both types of drugs

27

according to the treatment for diseases. So doctors of different hospitals in the city

responses about the drug preference that, usually they prefer both branded and

generic, but ordinarily favor to the branded because of more effectiveness.

The perspective of the drug retailers (chemists) is also interrelated to the doctor’s

view. The patients make more demand of branded drugs from the druggist preferred

by the doctors to them. On the other side in public sector generic, drug store (Jan

Aushadhi) the generics without any brand name are sold. In private medical stores,

both branded and branded-generic are preferred to patient for both regular and

temporary basis. Around 60 percent retailers have viewed that there is a more

demand of branded drugs with a maximum 16 percent to 20 percent margin, but in

case of branded-generic drugs, there is a huge level of margin sometimes nearly

more than 100 percent. When retailers are asked about their views related to this

phenomenon of differences in margins, they expressed that we charge the prices with

a limit of margin according to patients can be minimum or maximum level of margins.

According to the drug wholesaler’s viewpoint, there is not much variation in the

demand of branded and branded generic drugs. The viewpoint of drug wholesalers is

that the print price of generic medicines is many times higher than the company price,

they contracted drugs from the company’s warehouses at very less price, then by

adding their profit margin maximum 10 percent according to drug’s price and drugs

distributed to the retailers in the city. Retailers have no link with wholesalers about

their margin levels, once the wholesalers distribute the drugs then its retailer’s own

choice of charge the price to patients.

The opinions of different respondents can be summed up that preference of branded

or generic drugs is not decided by patients because of lack of knowledge. It depends

upon the doctors or the chemists who suggests drugs. The reason for more

preference to branded drugs by doctor’s views is the better quality and the chemists

prefers to generic drugs because of two reasons, first the low price of generic and

patients can easily afford, secondly the margin level is many times higher than

branded. The differences in mark-up levels of branded generic drugs are the reason

of price difference in the markets. By considering the opinions of different

28

respondents discussed above the present study is an exertion to disclose the

differences in prices and markups charged by retailers which shows the non-

transparency and variations of drug prices in the market.

Availability of Essential Drugs

Availability of essential drugs is one major part of health care in the society. Essential

drugs availability is required in both public as well as in private sectors. By reviewing

the opinions of patients, it comes out that low availability of drugs is the issue of

public sector. As in private sector, there are number of sources available for the

patients to purchase drugs, i.e. medical stores in a large number almost in every

area, but they provide mainly very costly drugs and private doctors also prefer

branded drugs which are costlier than generics. Generics with different brand names

are available in the private sector, which are also sold at the printed price i.e.

maximum retail price (MRP). The generic drugs with lowest price are available in the

public sector drug store known as “Jan Aushadhi” within a civil hospital in Bathinda

city. This generic, drug store is working under the central government to provide

cheaper non-branded essential drugs. There is always issue of lower availability in

the public sector rather than the private sector because of profit- oriented strategy of

the private sector. The insufficient availability issue relates to the public sector is the

reason to select the public sector in the study.

The availability of all essential drugs mentioned in survey is listed from “Drug

essential list of Punjab” (2011) including (235) number of different items of drugs,

which including injections, (1 to 71), I.V Fluids (72 to 82) Eye/Ear/Nasal Drops, (83 to

85), Tablets and capsules, (86 to 187), Solution, Creams, Applications (188 to 204),

Syrup/ Suspension (205 to 235) are surveyed. None of the brands are available in the

drug store. Only generics with salt name are provided there. The price which is

printed on the strip of drug is charged similarly. Overall availability of essential drugs

is found very less only 28.51percent. When patients found the low availability of drugs

in public sector facilities, they forcefully have to purchase drugs from the private drug

stores with high prices, which may also lead to excessive out-of-pocket spending.

29

Table: 4.1 Availability of Essential Drugs in Public Sector

List Sr. No Items of Drug Total No.

of items

Availability no. of different

items (percent)

(1 to 71) Injections 71 14 (19.72)

(72 to 82) I.V Fluids 11 5 (45.45)

(83 to 85) Eye/Ear/Nasal Drops, 3 1 (33.33)

(86 to 187) Tablets and Capsules 102 37 (36.27)

(188 to 204) Solution, Creams,

Applications

17 6 (35.29)

(205 to 235) Syrup/ Suspension 31 4 (12.90)

Total (235) N= 235 67 (28.51)

Source: Sample Survey

Note: list is mentioned in Appendix (B)

Table 4.1 clarifies the percentage availability of different items of drugs in the public

sector of the Drug Essential list. According to availability criteria provided in WHO/HAI

methodology, < 30 percent availability is considered as very low, 30-40 percent

means low, 50-80 percent fairly high and > 80 percent is considered as high. By

following this criterion availability of injections and Syrup/ Suspension is very low, and

I.V Fluids Eye/Ear/Nasal Drops, Tablets and Capsules are under low availability, no

items on the essential list have fairly high availability. Total number of required

Injections is 71 but the availability is only 14 which mean only 19.72 percent. I.V

Fluids consists availability is 45.45 percent. In case of Eye/Ear/Nasal Drops are

available around 33.3 percent only, in case of Tablets and Capsules availability is

low 36.27percent, Solution, Creams, Applications cover 35 percent availability and

Syrup/ Suspension have very low availability just 12.90 percent. So the overall

availability is just 28.51percent containing 67 numbers, including all items out of 235

numbers. It can be shown in following figure 2.

30

Given a figure 4.1 clearly shows the availability of essential drugs in the public sector.

Syrup/ Suspension has overall less availability and I.V Fluids have highest.

Availability is very less for all types of drugs, i.e. less than 50 percent. This low

availability in the public sector can be the reason of more dependency of patients in

the private sector as above discussed the patient’s perspective towards the use of

public sector facilities is extremely related to this given result about low availability of

essential drugs in the public sector.

Affordability

Affordability of essential drugs which can be termed as access to drugs is a foremost

element of the right to health for the implementation of many other rights in

specifically the right to development, and essential for living a life in dignity. According

to the human rights perspective by ‘United Nations High Commissioner for Human

Rights’ (OHCHR), access to medicines is naturally linked with the ideologies of ‘non-

discrimination and equality, involvement, transparency and accountability’. National

health systems consist that states are obliged to strengthen their nation by developing

national health legislation and policies. For this purpose, key issues related to access

to medicines must be taken into account such as sustainable financing, affordability of

11%

25%

18%

20%

19%

7%

Figure: 4.1 Availibility of Essential drugs in Public Sector

Injections ( 11%)

I.V Fluids (25%)

Eye/Ear/Nasal Drops(18%)

Tablets and Capsules(20%)

Solution, Creams,Applications (19%)

Syrup/ Suspension (7%)

31

essential drugs, price and quality control, dosage and efficacy of drugs, procurement

practices and procedures, supply chains, etc.

One method to measure the affordability is used given in the WHO/HAI methodology.

This comparison is given to the ordinary people, i.e. lowest paid unskilled government

worker. This is measured by comparing the treatment cost with the wages they earn.

The salary of the lowest paid government worker is identified by the government

source. It determines the number of days of wages required by this worker for

purchasing medicines for a standard duration of treatment for a common condition.

The wage rate in Bathinda of the lowest paid unskilled government worker is Rs.

219.20 on the daily basis. The lowest paid unskilled worker in the private sector or

unorganized sector could be earning more or less.

The second method is used to determine the affordability, by considering the number

of poor people. In Punjab, according to Tendulkar methodology (2011-12) the

population below poverty line is 7.66 percent in rural areas, 9.24 percent in urban

areas and 8.26percent overall which means no. of persons are 23.18 (lakhs). Punjab

state has poverty lines limit in monthly per capita (RS) 1,054 for rural and 1,155 for

urban. This means 35.13 Rs per day in rural and 38.5 in urban areas. So the

affordability of the essential medicines for 23.18 (lakhs) people is very low in Punjab.

The poverty status in the district Bathinda 32141 families are living below the poverty

line in addition to 6491 families in even more miserable conditions i.e. having an

income equal to half of the BPL families, thus making a total of 38632 families in all in

the BPL category. In the profile of city Bathinda 5177 families are living below the

poverty out of which 1093 families having the status of the poorest of the poor and

4084 families are poor who have less than Rs 47 per day spending.(2011-12) Even

the treatment cost of minor health problems is burden for these poor people. The

essential drugs surveyed have calculated the treatment cost both in public and private

sector by daily dose and duration of days for treatment.

32

Table: 4.2 Affordability of Standard Treatment

Therapeutic

class Drug Name

Daily Dose

Duration Days

Treatment Cost (Rs.)

Public

Sector

Private

Sector

Antacid Tab. Pentaperazole 40 mg OD 30 days 23.16 250.5

Tab. Rantidine 150 mg BD 30 days 20.31 30

Antibacterial

Tab. Cotrimoxazole S.S (Trimethoprim 80mg + Sulphamethoxazole 400mg)

BD 5 days 5 7

Tab. Levoflexine 250 mg BD 7 days 13.98 28

Tab. Azithromycine 250mg BD 5days 26.93 56.75

Tab. Ciprofloxacin Coated 250 mg

BD 1 day 1.654 3

Tab. Ciprofloxacin Coated 500mg

OD 1day 3.081 4.2

Tab. Cefixime 200 mg BD 5 days 28.92 62.5

Anti-Allergic Tab. Levo Cetirizine 5mg OD 5 days 1.63 17.5

Tab. Cetirizine Hcl 10 mg OD 5 days 1.35 10

Pain Killer Fever Tab. Paracetamol 500 mg BD 5 days 2.8 6

Tab.Paracetamol 500 mg + Diclofenac Sodium 50 mg

BD 5 days 2.66 8.5

Antifungal Tab. Fluconazole 150 mg OD 5days 20.62 119

Antihypertensive Tab. Atenolol 50 mg OD 30 days 12.9 68.7

Anti-infective

Cap. Amoxycillin 500 mg BD 7 days 25.9 49

Tab. Amoxycillin + Clauvinic Acid -500mg +125 mg

BD 3 days 20.61 45

Tab. Ofloxacin 200 mg BD 5 days 8.56 26

Tab. Ofloxacin + Ornidazole ( 200mg + 500mg)

BD 5 days 14.13 49

Anti Helminthic Tab. Albendazole 400 mg OD 7 days 14.21 70

Laxatives Tab. Bisacodyl 10 mg OD 1day 0.384 1

Source: Sample Survey

Note: OD- once a day, BD- twice a day

Table 4.2 describes the treatment cost of commonly used drugs calculated by

multiplying the daily dose with duration of time for treatment, examined from

chemists. These treatment costs are at very low levels of cost for treatment. The cost

of treatment for given different Therapeutic classes is affordable in public sector

33

comparing the private sector. It can be affordable to those who earn enough for the

surviving the basic needs but not affordable to those who lives the life with very low

income or below poverty line. These costs are also affordable for the ordinary people

defined in WHO/HAI methodology which are lowest unskilled government workers

because they earn wages Rs. 219.20 per day and the treatment cost of these

common drugs is slightly affordable, but the wages in unorganized sector of unskilled

workers are lower than the public sector and the 5177 families which are poor having

less than Rs. 47 per day spending has never afforded the treatment costs in the

private sector, and have difficulty to pay the treatment cost in the public sector. The

conclusion of the affordability issue is the treatment of these diseases are affordable

for only the higher income or slightly for the people employed in the government

sector, drugs are not affordable for the low income and or people because these

costs are only included drug costs, other costs as doctor’s consultation fees and

diagnostic tests will likely mean that the total cost to the patient may be considerably

higher.

Drug Prices

Price of any drug is known by MRP printed on the strip of the drug. MRP is the

maximum retail price, which a retailer can charge. Mostly in all of the retail shops the

drugs are sold on this printed price, according to the general phenomena of Indian

market this is identified to charge the printed price, which includes all the costs, such

as manufacturing, distributing, taxes etc. and the consumers also give the opinion

that they purchase the drugs at printed price. Indian Drugs are sold in two categories

as ‘branded’ and ‘branded-generic’ as almost all products carry a brand (trade) name.

All drugs were generics up to the January (2005), when product patents were not

applicable in India and the branded drugs are manufactured by a multinational or an

Indian manufacturer of good status. Branded medicines are promoted by

manufacturers. They are more popular and sell better at higher prices. Almost all

drugs carry trade-names and are available in private retail drugstore outlets. The

public sector attains drugs most often as generics with the product labeled using the

chemical name.

34

In a contemporary study it is found that in case of branded drugs, there is not much

difference between wholesale and retail price and markups, but in case of branded

generic drugs, huge difference between MRP and manufacturing price exist.

Wholesalers and some retailers also give their views about the gap in drug prices.

According to some retailers generic drugs are sold at reasonable prices and charged

less than MRP, because of the very less price charged by wholesalers. In this regard

different retailers charge different prices to different consumers, according to the

patient’s affordability, but mostly they charge the printed price on the drug strip i.e.

MRP. This difference makes the inadequate situation in the market and differences in

profit margins. So this is the issue that why the MRP is printed very high instead of

according to the actual cost which is very low.

The patient’s view on prevailing drug prices by survey shows the people who have

high income they bear the less burden of high drug prices and somewhat satisfied

with the prevailing prices, but the people who live their lives with very low income

even found difficulties in fulfillment of basic necessities they found higher burden of

health care because of very costly private treatments and high prices of drugs which

makes them dissatisfied to prevailing prices. The price variations from one to another

retailer are also make diversity in prices. People expect to lower these prices or any

financial help so that they can live a healthy life.

In the present study area of Bathinda city, both public and private sectors are

included in determining the price differences. In the public sector Department of

Pharmaceuticals in association with Central Pharma Public Sector Undertakings

(2008), launched ‘Jan Aushadhi stores’ to provide quality drugs at affordable prices to

the common people. Jan Aushadhi stores have been set up to provide generic drugs,

which are available at low prices, but are equivalent in quality and efficiency as

expensive branded drugs. On the other side in private sector generic-branded or

branded drugs which are much costlier than generics are preferred by doctors to

patients. The general opinion about generic drugs is not positive. It is opined that

generic drugs are less effective than branded so the demand of branded drugs is

more than generics. This opinion affects negative to the poor people, who cannot

35

afford very costly branded drugs and they also have to purchase the brand drugs. But

it is the wrong prescription about generic drugs because the prices of generic

medicines are much cheaper than their branded equivalent. It is proved that equally

safe and having the same efficacy as that of branded medicines in terms of their

therapeutic value. Bureau of Pharma Public Sector Undertakings of India (BPPI) has

been established under the Department of Pharmaceuticals, Government of India,

with the support of all the CPSUs for co-coordinating procurement, supply and

marketing of generic drugs through the Jan Aushadhi Stores. The quality, safety and

efficacy of medicines are ensured of getting each batch of medicines procured from

CPSUs as well as private suppliers tested from National Accreditation Board for

Testing and Calibration Laboratories, (NABL) approved laboratories and conforming

to the required standards before the same are supplied to Superstockists /Jan

Aushadhi Stores from the Warehouse of (BPPI). In the private sector retail drug

stores drugs are supplied by the wholesalers by drug distribution chain, in which the

price become varied from its wholesale to retail price (Janaushadhi, 2015).

Drug Price Differences between Public and Private sector

Prices of essential drugs are collected from the printed price on the drug strips

available in public and private sector. By comparing the prices, it is found that public

sector provides drugs at very reasonable prices as compared to the private sector.

Only generic drugs are found in the public sector drug store known as Jan Aushadhi

Drug store working under the Central Government Scheme on (2008), with the

objectives to promote awareness about cost effective drug prescribing, to make

available unbranded quality generic medicines at affordable prices through public-

private partnership. So the prices of the same name of drugs in private retail shops

which provide generic branded drugs are very different with same salt. Table 4.3

shows the price differences between the public and private sector of commonly used

drugs in Bathinda city.

36

Table 4.3: Price Differences between Public and Private Sector

Therapeutic

class Drug Name

Public

Sector Price

Private

Sector Price

Difference

(Rs)

Antacid Tab. Pentaperazole 40 mg 0.772 8.35 7.578

Tab. Rantidine 150 mg 0.677 1 0.323

Antibacterial

Tab. Cotrimoxazole S.S

(Trimethoprim 80mg +

Sulphamethoxazole 400mg)

1 1.4 0.4

Tab. Levoflexine 250 mg 1.998 4 2.00

Tab. Azithromycine 250mg 5.386 11.34 5.95

Tab. Ciprofloxacin Coated 250

mg 1.654 2 0.34

Tab. Ciprofloxacin Coated

500mg 3.081 4.2 1.11

Tab. Cefixime 200 mg 5.784 12.5 6.71

Anti-allergic Tab. Levo Cetirizine 5mg 0.326 3.5 3.17

Tab. Cetirizine Hcl 10 mg 0.275 2 1.72

Pain Killer

Fever

Tab. Paracetamol 500 mg 0.56 1.2 0.64

Tab.Paracetamol 500 mg +

Diclofenac Sodium 50 mg 0.532 1.7 1.16

Antifungal Tab. Fluconazole 150 mg 2.946 17 14.05

Antihyperten

sive Tab. Atenolol 50 mg 0.43 2.29 1.86

Anti-

infective

Cap. Amoxycillin 500 mg 3.7 7 3.3

Tab. Amoxycillin + Clauvinic

Acid -500mg +125 mg 6.87 25 18.13

Tab. Ofloxacin 200 mg 1.713 5.2 3.48

Tab. Ofloxacin + Ornidazole

( 200mg + 500mg) 2.826 9.8 6.97

Anti

Helminthic Tab. Albendazole 400 mg 2.031 10 7.96

Laxatives Tab. Bisacodyl 10 mg 0.384 1 0.616

Source: Sample Survey

37

Table 4.3 shows that per unit price of common used drugs as for the treatment of

various therapeutic classes Antacid, Antibacterial, Anti-infective, and

Antihypertensive, Anti Helminthic and Laxatives in both public and private sector

calculated by dividing the printed price on the strip with the pack size. A first

comparison shows that MRP of selected drugs is very low in the public sector as

compared to private sector in facilitating the people who cannot afford high price

drugs in the private sector. Most of the difference is in the treatment for Antacid; like

tablet Pantoprazole (40 mg) is eight times costlier in the private sector as compared

to the public sector. Same as the other drugs Tab. Azithromycin (250mg), Tab.

Albendazole (400mg), Tab. Cefixime (200mg), Tab. Amoxycillin + Clauvinic Acid

(500mg + 125 mg) has many time differences in MRP price. Other selected drugs

have less difference comparatively. Figure 3 clearly shows the price differences

between of all 20 important drugs of common therapeutic classes. These price

variations make the differences in affordability for the ordinary people because prices

of the private sector are more unaffordable rather than the public sector.

Figure: 4.2 Price Differences between Public and Private Sector

0

5

10

15

20

25

30

Private Sector Price (Per unit ) Public Sector Price (Per unit)

Name of the Drugs

Prices

38

Figure 4.2 depicts the price differences of various drugs between Public and Private

Sector. In Public sector, prices are low as compared to the private sector because

the public sector drugs are directly supplied by the government with welfare motive.

On the other hand the private sector prices are high with profit maximisation motive.

Some drugs like Tab. Pantoprazole (40 mg), Tab Fluconazole (150 mg), and Tab.

Albendazole (400 mg) have ‘very high’ price difference in two sectors. Drugs including

Tab. Azithromycin (250mg), and Tab. Cefixime (200mg) Antibacterial, Tab.

Ofloxacin + Ornidazole (200mg+500mg) for infection have ‘high’ price difference, and

others have low and Tab. Rantidine (150mg) for Antacid, Tab. Cotrimoxazole S.S

(Trimethoprim 80mg + Sulphamethoxazole 400mg) Antibacterial and Laxatives Tab.

Bisacodyl (10 mg) for having ‘very low’ differences. These differences can be clearly

understood by the ratio of these differences explained in the next table.

Public and private sector drug price ratios are shown in Table 4.4. The high-low ratio

of prices compares the highest unit price charged in the private sector with the per

unit price in public sector. The ratio of Tab. Pantoprazole 40 mg is the highest (10.8)

which highlights that price of this drug is 10 times higher in private sector. As the

value of ratio is high the difference in private and public price is also high. In case of

all selected drugs, it can be said that minimum ratio is 1.2 of Antibacterial Tab.

Ciprofloxacin Coated 250 mg, indicates 1.2 times more price is charged in the private

sector . Maximum ratios are found for Antacid and Anti-Allergic while minimum ratios

are found for Antibacterial.

39

Table: 4.4 High-Low Price Ratios of Various Essential Drugs

Therapeutic

Class Drug Name

Public

Sector Price

(Rs.)

Private

Sector

Price( Rs.)

Ratio

Antacid Tab. Pentaperazole 40 mg 0.772 8.35 10.8

Tab. Rantidine 150 mg 0.677 1 1.5

Antibacterial

Tab. Cotrimoxazole S.S

(Trimethoprim 80mg +

Sulphamethoxazole 400mg)

1 1.4 1.4

Tab. Levoflexine 250 mg 1.998 4 2.0

Tab. Azithromycine 250mg 5.386 11.34 2.1

Anti-Allergic Tab. Levo Cetirizine 5mg 0.326 3.5 10.7

Tab. Cetirizine Hcl 10 mg 0.275 2 7.3

Pain Killer,

Fever

Tab. Paracetamol 500 mg 0.56 1.2 2.1

Tab.Paracetamol 500 mg +

Diclofenac Sodium 50 mg 0.532 1.7 3.2

Antifungal Tab. Fluconazole 150 mg 2.946 17 5.8

Antihypertensive Tab. Atenolol 50 mg 0.43 2.29 5.3

Antibacterial

Tab. Ciprofloxacin Coated 250 mg 1.654 2 1.2

Tab. Ciprofloxacin Coated 500mg 3.081 4.2 1.4

Tab. Cefixime 200 mg 5.784 12.5 2.2

Anti-infective

Cap. Amoxycillin 500 mg 3.7 7 1.9

Tab. Amoxycillin + Clauvinic Acid -

500mg +125 Mg 6.87 25 3.6

Tab. Ofloxacin 200 mg 1.713 5.2 3.0

Tab. Ofloxacin + Ornidazole

( 200mg + 500mg) 2.826 9.8 3.5

Anti Helminthic Tab. Albendazole 400 mg 2.031 10 4.9

Laxatives Tab. Bisacodyl 10 mg 0.384 1 2.6

Source: Sample Survey

40

Drug Price Differences within Private Sector

Differences in drug prices at different private drug stores are also the major issue of

private sector. In the case of branded drugs, there is less probability of price

differences because the difference between the wholesale price and MRP is very less

or equal to the margin of the retailers, but in case of generic and branded- generic

drugs, the printed MRP of drugs is found to be very high as compare to wholesale

price. This is the reason for high probability of price differences on private retail

shops.

Price differences are exposed in table 4.5 which shows the differences in printed

price, minimum and maximum prices charged by different retailers of selected drugs.

The results of survey of common essential branded- generic drugs related to Anti-

infective, Anti Helminthic, and Laxatives found very large differences in prices and

therapeutic classes Antacid, Antibacterial, Anti- Allergic, Pain Killer, and Fever,

Antifungal, Antihypertensive has low differences as compared to others. The highest

differences lies in Tab. Fluconazole 150 mg used as Antifungal, Tab. Pentaperazole

40 mg for Antacid, Tab. Azithromycine 250mg for Antibacterial and Cap. Amoxycillin

500 mg for Anti-infective. Other drugs have less differences in their MRP and retail

price. The difference between the MRP and the maximum price charged by the

retailer is not so far, but the difference between the minimum price and MRP is

greater.The price distinctions in this perspective indication the price difference

between MRP printed on strips, and the maximum and minimum price charged by

different retailers are very different and inadequacy in prevailaing prices in private

sector.

41

Table 4.5: Drug Price Differences within Private Sector

Therapeutic

class Drug Name

Maximum Retail

Price (MRP) (Rs)

Minimum

Price (Rs)

Maximum

Price (Rs)

Antacid Tab. Pentaperazole 40 mg 8.35 2 8

Tab. Rantidine 150 mg 1 0.5 1

Antibacterial

Tab. Cotrimoxazole S.S

(Trimethoprim 80mg +

Sulphamethoxazole 400mg)

1.4 0.8 1

Tab. Levoflexine 250 mg 4 2 4

Tab. Azithromycine 250mg 11.34 4.2 10

Tab. Ciprofloxacin Coated 250

mg 3 1 2.5

Tab. Ciprofloxacin Coated

500mg 4.2 2 4.2

Tab. Cefixime 200 Mg 12.5 4 12

Anti-Allergic Tab. Levo Cetirizine 5mg 3.5 1 3.5

Tab. Cetirizine Hcl 10 mg 2 0.6 2

Pain Killer,

Fever

Tab. Paracetamol 500 mg 1.2 0.5 1.2

Tab.Paracetamol 500 mg +

Diclofenac Sodium 50 mg 1.7 0.8 2

Antifungal Tab. Fluconazole 150 mg 17 5 17

Antihypertensive Tab. Atenolol 50 mg 2.29 0.3 2.3

Anti-infective

Cap. Amoxycillin 500 mg 7 2 7

Tab. Amoxycillin + Clauvinic

Acid -500mg +125 mg 25 10 15

Tab. Ofloxacin 200 mg 5.2 1.5 5.2

Tab. Ofloxacin + Ornidazole

( 200mg + 500mg) 9.8 4.4 9.5

Anti Helminthic Tab. Albendazole 400 mg 10 5 10

Laxatives Tab. Bisacodyl 10 mg 1 0.8 1

Source: Sample Survey

42

Figure: 4.3 Drug Price Differences within Private Sector

The figure 4.3 shows the price differences between printed prices on the strips, i.e.

MRP and prices charged by retailer minimum and maximum. The price variations in

this context show the price difference between MRP printed on strips, and the

maximum and minimum price charged by different retailers. The difference between

the MRP and the maximum price charged by the retailer is not so far, but the

difference between the minimum price and MRP is greater.

High-Low Drug Price Ratio within the Private Sector

Private sector price ratio is measured as high, low ratio which compares the highest

unit price with the lowest unit price. Table 4.6 indicates the ratio of selected drugs in

private sector. The ratio of Tab. Pantoprazole 40 mg is 4.2 means that the highest

unit price charged is more than 4 times greater than the lowest unit price, same as

the other drugs ratio shown in the table. Tab. Ranitidine 150 Mg has ratio 2 and so on

so all. The highest ratio in selected drugs is 7.6 of Tab. Atenolol 50mg means highest

price is seven times greater than lowest, and lowest ratio is 1 indicated the same

value of both highest and lowest prices. So these all ratios of drug prices similarly

0

5

10

15

20

25

30

Maximum Retail Price (MRP) Maximum price Minimum Price

Prices

Name of the Drugs

43

describe the price differences in private sector. The ratio high means the more times

price greater and vice versa.

Table: 4.6 High-Low Drug Price Ratios within Private Sector

Therapeutic

class Drug Name

Higher Price

(Rs)

Lower Price

(Rs)

Ratio

(%)

Antacid Tab. Pentaperazole 40 mg 8.35 2 4.2

Tab. Rantidine 150 mg 1 0.5 2

Antibacterial

Tab. Cotrimoxazole S.S (Trimethoprim

80mg + Sulphamethoxazole 400mg) 1.4 0.8 1.8

Tab. Levoflexine 250 mg 4 2 2

Tab. Azithromycine 250mg 11.34 4.2 2.7

Tab. Ciprofloxacin Coated 250 mg 7 2 3.5

Tab. Ciprofloxacin Coated 500mg 25 10 2.5

Tab. Cefixime 200 mg 12.5 4 3.1

Anti-Allergic Tab. Levo Cetirizine 5mg 3.5 1 3.5

Tab. Cetirizine Hcl 10 mg 2 0.6 3.3

Painkiller Fever

Tab. Paracetamol 500 mg 1.2 0.5 2.4

Tab.Paracetamol 500 mg + Diclofenac

Sodium 50 mg 1.7 0.8 2.1

Antifungal Tab. Fluconazole 150 mg 17 17 1

Antihypertensive Tab. Atenolol 50 mg 2.29 0.3 7.6

Anti-infective

Cap. Amoxycillin 500 mg 3 1 3

Tab. Amoxycillin + Clauvinic Acid -

500mg +125 mg 4.2 2 2.1

Tab. Ofloxacin 200 mg 5.2 1.5 3.5

Tab. Ofloxacin + Ornidazole

( 200mg + 500mg) 9.8 4.4 2.2

Anti Helminthic Tab. Albendazole 400 mg 10 5 2

Laxatives Tab. Bisacodyl 10 mg 1 0.8 1.3

Source: Sample Survey

44

Differences in Wholesale and Retail Drug Price

Difference between wholesale and retail price is the one of the stages where price

boost up. These differences can also be understood as the difference between the

Table: 4.7 Differences in Wholesale and Retail Drug Price

Therapeutic

class

Drug Name Max. Retail

Price MRP

(per unit)

Price to

Retailor

(per unit)

Difference

(Rs)

Antacid Tab. Pentaperazole 40 mg 8.35 1 7.35

Tab. Rantidine 150 mg 1 0.4 0.6

Antibacterial

Tab. Cotrimoxazole S.S

(Trimethoprim 80mg +

Sulphamethoxazole 400mg)

1.4 1.1 0.3

Tab. Levoflexine 250 mg 4 1.1 2.9

Tab. Azithromycine 250mg 11.34 4.2 7.14

Tab. Ciprofloxacin Coated 250

mg

3 0.8 2.2

Tab. Ciprofloxacin Coated

500mg

4.2 2.2 2

Tab. Cefixime 200 mg 12.5 3.5 9

Anti- Allergic Tab. Levo Cetirizine 5mg 3.5 0.25 3.25

Tab. Cetirizine Hcl 10 mg 2 0.25 1.75

Pain Killer,

Fever

Tab. Paracetamol 500 mg 1.2 0.4 0.8

Tab.Paracetamol 500 mg +

Diclofenac Sodium 50 mg

1.7 0.35 1.35

Antifungal Tab. Fluconazole 150 mg 17 8 9

Antihypertensive Tab. Atenolol 50 mg 2.29 0.64 1.65

Anti-infective

Cap. Amoxycillin 500 mg 7 2.2 4.8

Tab. Amoxycillin + Clauvinic

Acid -500mg +125 mg

25 7.5 17.5

Tab. Ofloxacin 200 mg 5.2 0.9 4.3

Tab. Ofloxacin + Ornidazole

( 200mg + 500mg)

9.8 1.8 8

Anti Helminthic Tab. Albendazole 400 mg 10 3 7

Laxatives Tab. Bisacodyl 10 mg 1 0.43 0.57

Source: Sample Survey

45

price to the retailer (PTR) charged by the wholesaler and price to the patient (PTP)

charged by the retailer, is set up by considering the high mark-up of retailers, which

works as a source to promote generic drugs. The manufacturing cost of these drugs

is very low, as shown from the Table 4.8 that a wholesaler provides a drug Tab.

Pantoprazole 40 mg to the retailer 1 rupee of per unit by taking his profit of minimum

10percent, that means manufacture provides less than 1 rupee but the retailers have

permission to sell it at maximum Rs. 8.35 which means the difference in per unit of

Rs. 7.35 rupees and the patient affected by these differences.

Table 4.7 shows the difference between wholesale and retail price. Some drugs i.e.

Tab. Pentaperazole (40 mg), Tab. Azithromycin 250mg, Tab Fluconazole (150 mg),

Tab. Amoxycillin + Clauvinic Acid -500mg + 125 Mg, Tab. Cefixime (200 mg), Tab.

Ofloxacin + Ornidazole (200mg+500mg), Tab. Albendazole (400 mg) have very large

difference in two prices and others Tab. Cotrimoxazole S.S (Trimethoprim 80mg +

Sulphamethoxazole 400mg), Tab. Bisacodyl (10 mg), Tab. Paracetamol (500 mg),

Tab. Ciprofloxacin Coated (500mg) containing less difference as compare to others. It

can be concluded that Antacid, Antibacterial, Anti-Fungal, Anti-infective, Anti

Helminthic therapeutic category contain more price differences than others. So,

these classes have a high profit margin for retailers.

Table 4.8 describes that price difference have another aspect, i.e. difference between

MRP and median price charged by retailers. According to some retailers, they charge

less than the MRP. The large difference means retailers charge a reasonable price

because of low wholesale price. If the difference is very less or both prices are equal,

than the retailers take high markups. In selecting drugs only 5 drugs have the

supplementary difference between MRP and median price prevailing in different drug

stores, which means that the prices charged by the retailer is mostly near the MRP or

on MRP.

46

Table: 4.8 Actual Drug Price Differences in Private Sector.

Therapeutic

class

Drug Name MRP

(Rs)

Median

Retail price

Difference

Antacid Tab. Pentaperazole 40 mg 8.35 5 3.35

Tab. Rantidine 150 mg 1 0.8 0.2

Antibacterial

Tab. Cotrimoxazole S.S (Trimethoprim

80mg + Sulphamethoxazole 400mg)

1.4 1.3 0.1

Tab. Levoflexine 250 mg 4 3.5 0.5

Tab. Azithromycine 250mg 11.34 6.7 4.67

Tab. Ciprofloxacin Coated 250 mg 3 2 1

Tab. Ciprofloxacin Coated 500mg 4.2 3 1.2

Tab. Cefixime 200 mg 12.5 10 2.5

Allergy Tab. Levo Cetirizine 5mg 3.5 2 1.5

Tab. Cetirizine Hcl 10 mg 2 1 1

Pain Killer,

Fever

Tab. Paracetamol 500 mg 1.2 1 0.2

Tab.Paracetamol 500 mg + Diclofenac

Sodium 50 mg

1.7 1 0.7

Antifungal Tab. Fluconazole 150 mg 17 10.5 6.5

Antihypertensive Tab. Atenolol 50 mg 2.29 2.1 0.14

Anti-infective

Cap. Amoxycillin 500 mg 7 6 1

Tab. Amoxycillin + Clauvinic Acid -

500mg +125 mg

15 15 0

Tab. Ofloxacin 200 mg 5.2 5 0.2

Tab. Ofloxacin + Ornidazole

( 200mg + 500mg)

9.8 7 2.8

Anti Helminthic Tab. Albendazole 400 mg 10 10 0

Laxatives Tab. Bisacodyl 10 mg 1 1 0

Source: Sample Survey

Note: Median Price- Actually charged price

Drug Pricing Components

Drug pricing components describe the various components included in the pricing of

drugs. According to Drug Price Control Order (DPCO), 2013, in pricing mechanism

the cost of drugs to the consumer it includes production cost, the costs of marketing

47

and brand promotion, the taxes, excise duty, import duty, CST, VAT etc., markups of

the dealer/retailer. Cost of production depends on the manufacturing cost, which is an

essential part of the price. Cost of marketing / brand promotion also includes a high

profit margin of the manufacturer is also depends on the manufacture. The tax,

excise duty, import duty, CST, VAT etc. depends on government. The last component

‘profit margin’ of the dealer/retailer depends upon the retailer who expands the prices

with the active collusion of the manufacturer, its manufacture’s prescription that the

retail chemist will promote the sales of only those drugs, which give him the maximum

profit, the MRP is being fixed by the manufacturer so as to provide maximum profit

margin to the dealer/ retailer. Each component is equally relevant for the cost of

drugs, but the components production and marketing cost cannot be controlled up to

a high level, these are significant factors in the cost of inflation. Different types of

taxes, which is decided by the government is also relevant because fixed and

transparent, but the component profit margin of retailer is responsible for fluctuations

in price. The present study has tried to analyse these components explained below:

Profit Margin of the Dealer/Retailer Component

The main outcomes are observed from the primary survey of public and private sector

drug stores. In public sector drug store taken “Jan Aushadhi” generic drugs are

directly supplied by the government, so no issue of profit margins in the public sector.

This is related to private sector. In private sector evaluated by interviewing the

retailers of private drug stores it is found that drugs are supplied to them by the local

drug wholesalers and the wholesalers are directly supplied through superstockist of

Central Warehouse in Zirakpur near (Mohali). So the drugs are distributed to patients

by retailers who supplied by the wholesalers. The profit margin of retailer prevailing

actually is analyzed from the drug distribution system in Bathinda city shown in figure

48

Figure: 4.4 Drug Distribution System in Bathinda

Source: Primary Survey

Figure 4.4 shows the drug distribution system in Bathinda city. Firstly manufactured

drugs are supplied to the Central Warehouse in ‘Zirakpur’ by manufacturer.

Wholesalers receive the drugs from this warehouse and distribute to the local retailers

belong to the private sector. Retailers are the last resort to buy drugs by the patients.

The analysis of the drug distribution chain is an appropriate method to find out the

prices at different stages.

Outcome Measures of Profit Margins

The outcomes of the survey to measure the profit margins are concerned with the two

elements, Price-to-Patient (PTP) and Price-to-Retailer (PTR) i.e. wholesale and retail

price. Price-to-patient is generally considered as Maximum Retail Price (MRP), which

is always printed on the package in India. Drugs are available to a patient at the MRP

mentioned on the package of medicine. Details of the all selected drugs sold under

different trade names with their MRP are checked actually with the private retail drug

Public sector Private Sector

Stockiest or Wholesalers (Local)

Retail Shops (Local)

Patient

Drug Distribution Channels

‘Jan Aushadhi’

49

stores (Chemist shop). On the other side ‘Price-to-Retailer’ (PTR) is the price at which

wholesaler (distributor) sells the product to the retailer this PTR this is asked from

wholesalers. The difference between these two is helpful for the calculation of retailer

mark-up of different drugs. These margins are calculated individually for all selected

drugs shown in the table:

In the public sector, just price to the patient is concerned because of at ‘Jan

Aushadhi’ drugs are directly supplied by government at the printed price, which is

very low as compared to branded-generic drugs of same name. There is no issue of

retail mark-up. The price to the patient is relevant at “Jan Aushadhi”. The issue

related to these two measures lies in private sector retail drug stores.

Table 4.9: Retailer Mark-Ups

Therapeutic class

Drug Name Brand Name

Manufacture Name

Price to

Ratiler MRP(Rs)

Mark-up

(Retail) (%)

Antacid

Tab. Pentaperazole 40 mg

Pantocip Cipla 1.16 8.35 619.83

Tab. Rantidine 150 mg

Rantax Cipla 0.4 1 150

Antibacterial

Tab. Cotrimoxazole S.S (Trimethoprim 80mg + Sulphamethoxazole 400mg)

Ciplin Ds Cipla 1.17 1.4 19.66

Tab. Levoflexine 250 mg

Lovolkem Alkem 1.45 4 175.86

Tab. Azithromycine 250mg

Azx 250 Ranbaxy 4.14 11.3 173.91

Tab. Ciprofloxacin Coated 250 mg

Floxip Abbott 0.9 3 233.33

Tab. Ciprofloxacin Coated 500mg

Ciprotas Intas 1.53 3.1 174.51

Tab. Cefixime 200 mg

Fexim-O Zydus 3.68 12.5 239.67

Contd…

50

Therapeutic class

Drug Name Brand Name

Manufacture Name

Price to

Ratiler MRP(Rs)

Mark-up

(Retail) (%)

Anti- Allergic

Tab. Levo Cetirizine 5mg

Cetipen Lv Morpen 0.4 3.5 775

Tab. Cetirizine Hcl 10 mg

Okacet Cipla 0.24 2 733.33

Pain Killer, Fever

Tab. Paracetamol 500 mg

Pacipr Cipla 0.4 1.2 200

Tab.Paracetamol 500 mg + Diclofenac Sodium 50 mg

Fenak Ranbaxy 0.45 1.7 277.78

Antifungal Tab. Fluconazole 150 mg

FCN Intas 5.45 17 211.93

Antihypertensive Tab. Atenolol 50 mg

Hipras Cipla 0.53 2.3 332.08

Anti-infective

Cap. Amoxycillin 500 mg

Cipmox Cipla 2.36 7 196.61

Tab. Amoxycillin + Clauvinic Acid -500mg +125 mg

Amoxyclav Abbot 7.7 25 224.67

Tab. Ofloxacin 200 mg

Okaflox Cipla 1.16 5.2 348.28

Tab. Ofloxacin + Ornidazole *

Oflotas Intas 1.92 9.8 410.42

( 200mg + 500mg)

Anti Helminthic Tab. Albendazole 400 mg

Gentre Glexo 1.91 10 423.56

Laxatives Tab. Bisacodyl 10 mg

Delkoflex Boenginer 0.55 1 81.82

Source: Sample Survey

51

Table 4.9 shows the profit margin for retailers of selected essential drugs. Retail

margins are calculated from the price to the retailer and the maximum retail price. The

results describe that minimum price margin level is found for Antibacterial Tab.

Cotrimoxazole S.S (Trimethoprim 80mg + Sulphamethoxazole 400mg) i.e. 19.66

percent and the maximum is 775 percent of Antiallergic Tab. Levo Cetirizine 5 mg.

The other level of margins for different classes ranged as Antihypertensive, Tab.

Atenolol 50 mg, 332.08 percent Anti Helminthic Tab. Albendazole , 423.56 percent,

.Antacid has 150- 619.83 percent, Pain Killer, Fever Tab. Paracetamol 500 mg, 200

percent, and Laxatives, Tab. Bisacodyl 10 mg 81.82 percent. The maximum level of

margin is in the anti-allergic therapeutic class. These calculated margin levels are

maximum levels, which retailers can attain up to 775 percent. But in the survey,

retailers have given their views about profit margins attained by them are not so high,

the detail of margins achieved by them is shown in the next table. According to

retailers of drug stores in the survey, the overall profit margin level actually they

accomplish in two different types of drugs prevailing in the market.

Table 4.10: Minimum and Maximum level of Retail and Wholesaler Margins

(Percent)

Druggist Type of Drugs Minimum Margin Maximum Margin

Retailers Branded 10 20

Branded – Generic 16 50

Wholesalers Branded 4 10

Branded - Generic 10 15

Source: Sample Survey

Table 4.10 describes the surveyed profit margins (maximum and minimum) received

by the retailers and wholesalers in the city. In case of Branded drugs, the range of

retailer’ profit margin is 10-20 percent and wholesalers gets 4-10 percent. In case of

branded generics, minimum and maximum levels of profit for retailers are 16 percent

and 50 percent, and wholesalers attain 10-15 percent. But from the Table 4.8

calculated margin levels of branded generic drugs are up to 800 per cent in some

drugs. This is the sign of instability of prices in the market. There is a conflict between

52

the views of consumers and retailers that according to retailers, they sell the generic-

branded on less than MRP means by attaining a minimum level of profit margins and

consumers viewed that they always purchase the drugs on the printed price i.e. MRP.

This conflict can be resolved only by eliminating the variations in prices.

Comparison of Indian Drug Prices with International Reference Prices

Comparison of Indian drug prices with international drug prices can be measured with

the comparison of local per unit median price with the international median price

provided by the WHO/HAI methodology with the Management Sciences for Health

(MSH) International Drug Price Indicator Guide 2014 as the reference source. And

the comparison that prices, how many times more or less from international level is

calculated with MPR median price ratio which is the ratio of median local unit price by

reference unit price (MSH) i.e.

MPR= Median local unit price / Reference unit price (MSH).

Table 4.11: Comparison of Indian Drug Prices with International Reference

Prices (Price in Per Unit)

Therapeutic class

Drug Name Strength

Public Private Median Int. Buyer Price

Sector Median Price

Sector Median Price

Int. Buyer Price (US$)

(RS)

Antacid Tab. Pentaperazole 40 mg 0.772 5 NA NA

Tab. Rantidine 150 mg 0.677 0.72 0.0364 2.4769

Antibacterial

Tab. Cotrimoxazole S.S (Trimethoprim Sulphamethoxazole

80mg +400mg)

1 1.3 NA NA

Tab. Levoflexine 250 mg 1.998 3.5 0.0841 5.72

Tab. Azithromycine 250mg 5.386 7.08 0.1619 11.01 Tab. Ciprofloxacin Coated

250 mg 1.654 2 0.0213 1.44

Tab. Ciprofloxacin Coated

500mg 1.754 2.6 0.43 2.92

Tab. Cefixime 200 mg 5.784 10 0.0801 5.45

Allergy Tab. Levo Cetirizine 5mg 0.326 2 NA NA

Tab. Cetirizine Hcl 10 mg 0.275 1 0.0126 0.85

53

Contd…

Therapeutic class

Drug Name Strength

Public Private Median Int. Buyer Price

Sector Median Price

Sector Median Price

Int. Buyer Price (US$)

(RS)

Pain Killer, Fever

Tab. Paracetamol 500 mg 0.56 1 0.0045 0.3062

Tab.Paracetamol + Diclofenac Sodium

500 mg+50 mg

0.532 1 NA NA

Antifungal Tab. Fluconazole 150 mg 2.946 10.5 0.0729 4.96

Antihyperten-sive

Tab. Atenolol 50 mg 0.43 2.14 0.0103 0.7

Anti-infective

Cap. Amoxycillin 500 mg 3.7 6 0.0311 2.12

Tab. Amoxycillin + Clauvinic Acid -

500mg +125 mg

6.9 25 0.2 13.61

Tab. Ofloxacin 200 mg 1.713 5 0.58 3.94

Tab. Ofloxacin + Ornidazole

( 200mg + 500mg)

2.826 6.75 NA NA

Anti Helminthic Tab. Albendazole 400 mg 2.031 10 0.0411 2.79

Laxatives Tab. Bisacodyl 10 mg 0.384 1 0.0114 0.77

Source: Sample Survey and International Drug Price Indicator Guide, 2014.

*NA- Not Available

The results of international comparison of prices of the present study are shown in

tables. Table 4.13 indicates the unit prices of local and international level of both

sector of home country public or private. Table 4.11 shows the median prices for the

comparison.

Table 4.11 explains the median prices of public sector, private sector and

international reference of selected drugs. An International reference price for

comparison is not available for five drugs such as Tab. Cotrimoxazole S.S

(Trimethoprim + Sulphamethoxazole), Tab. Ofloxacin + Ornidazole, Tab. Levo

Cetirizine, Tab. Pentaperazole, Tab. Paracetamol+ Diclofenac Sodium. So the

comparison for remaining 15 drugs is calculated. Prices in the public sector are low

as compare to international prices; on the other hand all selected drug prices in the

54

private sector are higher except Tab. Levoflexine (250mg), Tab. Azithromycin (250),

Tab. Ciprofloxacin Coated (500mg). It can be said that drugs are less costly in the

public sector, but in case of some drugs in private sector are costlier than

international prices.

Table: 4.12 Differences in Drug Prices Public and Private Sector with

International Reference Price

Therapeutic class Drug Name Strength

MPR of

Public Price

Sector

MPR of

Private

Sector Price

Antacid Tab. Pentaperazole 40 mg - -

Tab. Rantidine 150 mg 0.27 0.29

Antibacterial

Tab. Cotrimoxazole S.S

(Trimethoprim Sulphamethoxazole 80mg+400mg) - -

Tab. Levoflexine 250 mg 0.35 0.61

Tab. Azithromycine 250mg 0.49 0.64

Tab. Ciprofloxacin Coated 250 mg 1.14 1.38

Tab. Ciprofloxacin Coated 500mg 0.60 0.89

Tab. Cefixime 200 mg 1.06 1.83

Allergy

Tab. Levo Cetirizine 5mg

Tab. Cetirizine Hcl 10 mg 0.32 1.17

Pain Killer, Fever

Tab. Paracetamol 500 mg 1.83 3.27

Tab.Paracetamol + Diclofenac

Sodium 500 mg+50 mg - -

Antifungal Tab. Fluconazole 150 mg 0.59 2.12

Antihypertensive Tab. Atenolol 50 mg 0.61 3.06

Anti-infective

Cap. Amoxycillin 500 mg 1.75 2.84

Tab. Amoxycillin + Clauvinic Acid -. 500mg +125

mg 0.51 1.84

Tab. Ofloxacin 200 mg 0.43 1.27

Tab. Ofloxacin + Ornidazole

( 200mg +

500mg) - -

Anti Helminthic Tab. Albendazole 400 mg 0.73 3.58

Laxatives Tab. Bisacodyl 10 mg 0.50 1.29

Source: Sample Survey

55

Table 4.12 shows the median price ratio of both public and private sectors of drugs

included in the international comparison core list. The ratio compares the local unit

price with the international unit price. In public sector, all the ratios of 11 drugs are

low (less <1), excepting the Tab. Paracetamol (500 mg), Tab. Cefixime, (200 mg)

Tab. Ciprofloxacin Coated (250 mg) and Amoxycillin 500 mg have MPR > 1 shows

ratio is less than 1, it means prices are less in the domestic market and vice versa.

On the other hand, in private sector minimum MPR is Rs. 0.29 of Tab. Rantidine and

maximum Rs. 3.58 is of Tab. Albendazole (400 mg). Out of (15) only 4 drugs have

less MPRs, means only these drugs are less costlier, others are more costly at

private domestic level, the reason of higher cost of drugs in private sector is the most

sold brands of generic are selected and it can be said that in private sector majority

drug prices are high than international price of generics, but in public sector, prices

are comparatively low which is good sign for the public welfare for people because

the people of low income are able to purchase from the public sector.

The overall study intends that in the Bathinda city, both public and private sector

health facilities are available, but the majority of the people prefer private health care

facilities because of better and easy availability of drugs and health treatment. The

results also show that availability in the public sector is very poor and private sector is

dominating. But, the people living with very low income or in poverty are unable to

take the burden of health care means an affordability level of those people for

common drugs is also low. The branded drugs contain very high prices and their

substitute the generic drugs have very many variations in prevailing prices and also

not used trustfully according to their quality. There are also variations in the profit

margins gained by the retailers. The high mark ups are in case of generic and

branded generic prices. In case of international comparison then it is found that public

sector prices are low and affordable compared to the private sector where prices are

higher than international reference prices. So it can be concluded that for the poor

people the burden of health care is high because of self-medication and existing

health care public system is insufficient and need to improve it immediately.

56

CHAPTER - 5

EVALUATION OF INDIAN DRUG PRICING POLICIES AND TRIPS

The chapter’s main attempt is to examine the role of government through Indian drug

pricing policies and TRIPS in regulating the drug prices, providing availability and to

make essential drugs affordable.

Indian Drug Policies

India pharmaceutical drug pricing policy falls under the ‘Ministry of Chemicals and

Fertilizers’ which is the nodal administrative of ‘Ministry of Pharmaceutical

companies’. India has adopted various drug policies to manage the challenge of

making equilibrium between varying requirements of enabling industrial growth and

ensuring affordable and reasonably priced drugs to the consumers at the similar time.

From the beginning of drug policies, different principles through various orders of

price control rules were reported in the country in which the period and nature of

prices control vary from order to order as per the features of the corresponding drug

policies (Arthapedia, 2015).

Table: 5.1 Drug Price Policies of Government

Government Drug Policies

Drug Price Control Order

(DPCO)

Drug Pricing

Policy

National Pharmaceutical

Pricing Authority (NPPA)

Number of Drugs

under Price Control

DPCO-1979 1979 - 370

DPCO-1987 1986 - 142

DPCO-1995 1994 - 76

DPCO-1995 2002 - 76

DPCO-1995 2003 - 76

DPCO-2013 2012 2012 652

Source: Compiled by Author based on DPCO, 2015.

Given table 5.1 shows that the government has made contributions in essential drug

pricing through the three main names given to the pricing control system. These are

‘Drug Price Control Order’, ‘Drug Pricing Policies’ and ‘National Pharmaceutical

57

Pricing Policy’. With the objective of controlling prices of important drugs and making

them available at reasonable rates to the consumer, the government introduced the

Drug Price Control Order (DCPO) amended with four revisions in 1979, 1987, 1995

and 2013. The 1979 DPCO set 370 drugs under price control. In DPCO (1987) the

total number of bulk drugs was reduced from 370 to 142 under price control. Under

DPCO (1995) the number of drugs for price control has been reduced from 142 drugs

to just 76. In current DPCO (2013) with the origin of NPPA (2012), total number of

drugs under price control have increased from 76 to 652 essential drugs.

All the previous DPCOs of 1970, 1979, 1987 and 1995 were based on cost to

manufacturers with allowance for post manufacturing expenses. But as per the

requirements of DPCO-2013 ceiling prices are now being fixed at the average retail

price of the medicine, manufactured by all those companies involved in its production

with a market share of ≥ 1percent of the entire market turnover, and adding 16percent

margin to the retailer thereto. Usually all the policies were recognized on the principle

of ‘effecting control prices of essential drugs’ and far along ‘bulk drugs’, in addition to

the availability of drugs while at the same time attending to the requirements of the

indigenous industry for growth, cost effective production, and innovation and

strengthening of capacity. The ‘Drugs Prices Control Order’ of 1970 ‐ allotted under

the “Essential Commodities Act’ (1955) by announcing drugs to be essential

commodities under the EC Act, after that the ‘Drugs Prices Control Order’ 1979 and

1987 was fixed by view the announcement of the ‘Drug Policy’, 1979 and ‘Drug

Policy’ 1986.

The ‘Drug Price Policy’ of 1994, as useful through the ‘Drugs Prices Control Order’

(1995), was announced in the liberalization perspective of economy and the industrial

licensing abolishment, as well as permitting of foreign investment including in the drug

industry of the country.

In the year 2002 a ‘New Pharmaceutical Pricing Policy’ was announced which further

liberalized the determination of control over drug pricing. In 2003 the National List of

Essential (NLEM), Medicines was notified as revised list, by ‘Ministry of Health’.

Therefore the government is imprisoned with the goal of allowing industrial growth

58

with connected socio‐economic benefits along with balancing the declared objective

of making available essential medicines including providing better health care at

reasonable prices to all.

Consequently, the Government pronounced the National Pharmaceuticals Pricing

Policy, (NPPP 2012) by replacing the drug policy enunciated in September, 1994. To

come across the challenges about the country’s requirements for safe and quality

drugs at affordable prices. by the competitive international pharmaceutical industry in

a globalized economic environment. The ‘National Pharmaceuticals Pricing Policy’

(2012) has a new process for determining the ceiling price, termed as market-based

pricing mechanism as applied through the Drugs Prices Control Order 2013, its result

would be a reduction in prices of certain top brands.

National Pharmaceutical Pricing Authority (NPPA) – 2012

A very high ‘Out of Pocket Expenditure’ for drugs in India, measured at 85.88 in

2013 by the World Bank. The Government has to regulate the prices of at least the

essential medicines to ensure satisfactory access to affordable essential medicines

for the general public.Through the ‘National Pharmaceutical Pricing Authority’ (NPPA)

the Government tries to make insure the following objectives:

1) Adequate Availability of all essential drugs,

2) Reasonably Affordability for common man,

Therefore, while framing any drug pricing policy an equilibrium between ‘affordability’

and ‘availability’ of drugs is of critical importance,

Implemented provisions of ‘Drug Price Control Order’ (DPCO) 2013

Latest DPCO 2013 authorizes the National Pharmaceutical Pricing Authority (NPPA)

to control prices of essential drugs. According to new DPCO 2013, entirely dosages

and strengths identified in the National List of Essential Medicines (NLEM) will be

under price control.

Para 2(i) of the DPCO 2013 explains the term "Formulation as a drug processed out

of or containing one or more drugs with or without the use of any pharmaceutical aids,

for internal or external use for or in the diagnosis, treatment, mitigation or prevention

of disease".

59

"Scheduled formulation has been defined as any formulation, included in the First

Schedule whether referred to by generic versions or brand name".

"Nonscheduled formulation means a formulation, the strengths and dosage of which

are not specified in the First Schedule".

Pricing of scheduled formulation:

Para 4 of the DPCO 2013 provides a formula for the calculation of ceiling price of a

scheduled formulation as follows –

Step1. Calculation of Average Price to Retailer of the scheduled formulation i.e. P(s)

shall be calculated as below:

Average Price to retailer, P(S) = Sum*/ Total**

* “Sum of prices to retailer of all the brands and generic versions of the medicine

having market share more than or equal to one percent of the total market turnover

on the basis of moving annual turnover of that medicine” /

** “Total number of such brands and generic versions of the medicine having market

share more than or equal to one percent of total market turnover on the basis of

moving annual turnover for that medicine”.

Step2. Calculation of the ceiling price of the scheduled formulation, i.e. P(c) as below:

P(c) = P(s)* (1+M/100),

Where P(s) = Average Price to Retailer for the same strength and dosage of the

medicine as calculated in step1 above**.

M = percent Margin to retailers and its value =16.

Calculation of actual prices, according to DPCO, pricing of surveyed drugs:

MRP= Average Price to retailers, P(S) + 16 percent margin of retailer.

Table: 5.2 Actual Prices according to (DPCO 2013) ( Rs.)

60

Therapeutic

class Drug Name

MRP

(Per unit)

Price to

Retailer

Retailer

Margin

Price

Actual

Price

Antacid Tab. Pentaperazole 40 mg 8.35 1.16 1.336 2.496

Tab. Rantidine 150 mg 1 0.40 0.16 0.56

Antibacterial

Tab. Cotrimoxazole S.S

(Trimethoprim 80mg +

Sulphamethoxazole 400mg)

1.4 1.17 0.224 1.394

Tab. Levoflexine 250 mg 4 1.45 0.64 2.09

Tab. Azithromycine 250mg 11.3 4.14 1.808 5.948

Tab. Ciprofloxacin Coated

250 Mg 3 0.90 0.48 1.38

Tab. Ciprofloxacin Coated

500mg 3.1 1.53 0.496 2.026

Tab. Cefixime 200 mg 12.5 3.68 2 5.68

Anti- Allergic Tab. Levo Cetirizine 5mg 3.5 0.40 0.56 0.96

Tab. Cetirizine Hcl 10 mg 2 0.24 0.32 0.56

Pain Killer Fever

Tab. Paracetamol 500 mg 1.2 0.40 0.192 0.592

Tab.Paracetamol 500 mg +

Diclofenac Sodium 50 mg 1.7 0.45 0.272 0.722

Antifungal Tab. Fluconazole 150 mg 17 5.45 2.72 8.17

Antihypertensive Tab. Atenolol 50 mg 2.3 0.53 0.368 0.898

Anti-infective

Cap. Amoxycillin 500 mg 7 2.36 1.12 3.48

Tab. Amoxycillin + Clauvinic

Acid -500mg +125 mg 25 7.70 4 11.7

Tab. Ofloxacin 200 mg 5.2 1.16 0.832 1.992

Tab. Ofloxacin + Ornidazole

( 200mg + 500mg) 9.8 1.92 1.568 3.488

Anti Helminthic Tab. Albendazole 400 mg 10 1.91 1.6 3.51

Laxatives Tab. Bisacodyl 10 mg 1 0.55 0.16 0.71

Source: Compiled and Calculated by Author Based on DPCO 2013.

61

Above table 5.2 explains the actual prices calculated according to the 16% margin for

retailer mentioned in DPCO, (2013). The actual prices are very less as compare to

MRP.

Pricing of non-scheduled formulations:

The NPPA is also authorized to monitor the maximum retail prices (MRP) of all the

drugs, including the non-scheduled formulations apart from the fixation of the

scheduled formulations price. It is ensuring that no producer can increase the

maximum retail price of a drug more than ten percent of preceding twelve months.

The manufacturer shall be responsible to deposit the overpriced amount along with

interest thereon from the date of the increase in price in addition to the penalty.

Margin to retailer and maximum retail price:

Para 7 lays down that while fixing a ceiling price of scheduled formulations and retail

prices of new drugs, sixteen percent of price to the retailer as a margin to the retailer

shall be allowed. Para 8 requires that the maximum retail price of scheduled

formulations shall be fixed by the manufacturers on the basis of ceiling price reported

by the Government plus local taxes wherever applicable.

Figure: 5.1 Measures to Control Drug Prices (DPCO-13)

1. Controlling the selling price of Manufacturer to Retailer

The first measure to control drug prices can be, by controlling the selling price to

retailers that is reducing the cost to retailers. This measure can have great impact in

Drug Price Control Measures

(DPCO-2013)

Controlling the selling price of Manufacture to Retailor

Fixing the Ceiling on the Retailer’s Profit Margin

62

case of earlier cost based pricing. Now the drug price control policy is following the

Marke Based Pricing (MBP) by the government, which works out on the basis of

average of prices set by manufactures with 1percent or more of the market share.

That may turn out to be the average of the highest selling and costly brands rather

than the cheaper brands. In any case it does not force the manufacturer to reduce the

cost of production, overheads or his profits. This measure may not yield any

substantial benefits to consumers.

2. Fixing the Ceiling on the Retailer’s Profit Margin

Second price control measure, i.e. ceiling on retailer’s profit margin would be fixed.

Retail selling price is prospective to have a key impact. For excessive drug prices this

factor has been considered the single most significant factor responsible. Up to

nowadays the MRP was being fixed by the manufactures who were inflating the MRP

grossly up to 400-500percent in some cases. Capping on the MRP has the potential

to reduce the costs drastically.

TRIPS, Pharmaceuticals and India: An Overview

Generally, innovations can be protected through privacy, or through patents. In the

pharmaceutical sector, it is patent that are specifically crucial in appropriating the

returns to R & D. (Levin et al, 1987). The reason for the patent requirement is, once

the inventor, discovered a new drug produced through overlong and relatively

exclusive afford, R & D processes, capital, and the time involved is often negligible.

But, patents do not prevent competition from other substitutes of different therapeutic

that treat the same disease condition. Certainly, rare patented drugs have no

operative substitutes and this affects innovator firm’s strategies on initial prices. (Lu

and Comanor, 1998). Market size is well thought-out a significant factor of generic

entry that the patent system has been considered as a risk- device for risk smoothing,

the more effective a product is in terms of generating revenue to the original firm, the

more prospective it is to attract generic competition on expiry of the patent; equator,

the less successful products see profits sustained for a longer time (Hudson, 2000).

Patent system act as a social policy tool which provides the ‘legal patent owner to

prevent’ others from production, using or selling, importing or offering for sale the

63

new, patented drugs for a restricted period of time. Generally Trade Related

Intellectual Property Rights (TRIPS), constitutes 20-year period of a patent starts from

the time when application for patent has been filed, but in the case of pharmaceutical

products, which are exposed to lengthy procedures that verify safety and efficacy, the

effective patent lifetime might be only an average of 11 or 12 years.

According to the United Nations, a patent is a legally enforceable right, granted by a

country’s government to an inventor. A patent prevents others from producing, selling

or using a patented product or from utilizing a patented method or procedure. TRIPS

cover mainly seven different types of intellectual property rights as Trademarks,

Industrial designs, Geographical indications, Copyright, Integrated circuits, Trade

secrets, and Patents.

As of currently, India has a product patent regime regarding pharmaceutical products.

The first patent system was introduced in 1856, which gave special opportunity

entirely for the inventor was established which conferred the sole use and selling of

invention for 14 years. This act was substituted by Invention and Design Act, 1911. In

1930 and 1948 there were some major amendments in the similar act, a patents

enquiry committee appointed by the Government of India under Dr. Tek Chand, the

report submitted by the committee in 1953. In India patent system was governed by

the Patents Act 1970. The Indian Act 1970 has not shown efficacy for

pharmaceuticals as there are obligation of an artificially low royalty ceiling on

compulsory license and unavailability of product patent for pharmaceuticals. This act

recognizes only process patent in pharmaceutical and agro-chemicals, although in all

fields by the WTO agreement requires both process and product patents. (Agarwal,

2001).

64

Table5.1: Various Patent Acts in India

Sr. No Name of the Act Year Details

1 The Patent Act 1856 The act 1856 for the protection of inventions. Certain exclusive privileges granted to inventors of new manufacturers for a period of 14 years.

2 The Patent Act 1859 Patent monopolies on selling and using inventions in India and authorizing others to do so for 14 years from the date of filing specification.

3 The Patents and Designs Protection Act

1872 Provision to protect novelty of the invention.

4 The Protection of Inventions Act

1883 For the security of innovations.

5 Consolidated as the Inventions and Designs Act

1888 For the protection of inventions and designs.

6 Patents and Designs Act

1911 Inventions, Compulsory licensing, revocation of patents for ‘Product and Process’.

7 The Patent Act 1970 Compulsory license for food and medicines came into force in 1972. Mainly focus on process patent regime.

8 The Patents Amendment Act

1995 Amended by ordinance to include ‘Exclusive Marketing Rights’

9 The Patents Amendment Act

2002 The second amendment of 1970 Act.

10 The Patent Amendment Act

2005 Product patent for Drugs, Pharma, Food, Cosmetics etc. and to enhance domestic development.

Source: Compiled by Author Based on Patent ACT, 2013.

The final act came into force on January 1, 1995 which representing the results of the

urgency round of Multilateral Trade Negotiations were authenticated by 117 nations

including India.

One of the key benefits of the universal system is that, it would assist access to new

medical products. India amended its Patent Law on March 22, 2005, to meet their

TRIPs obligations by abolishing its “process” patent laws and introduce 'product

65

patent’ for pharmaceuticals, food and chemicals (Agarwal and Saibaba, 2001). The

followers of TRIPS debated that the 2005 amendments will encourage foreign

investment, transfer of technology and increase investment in research and

development of neglected diseases.

The main subject concerns with the effect of patenting drugs would increase cost and

which may result that drugs will become out of one of the immediate consequences of

TRIPs agreement will be a sharp increase in the prices of invented drugs (Ramani,

and Maria, 2005). The positive impacts will be increasing the size of Indian

pharmaceutical industry and the growth rates. The product patenting will inspire the

introduction of new drugs, can be encouraging discovery directly or through newly

invented imports that are protected, or through foreign investment in production and

possibly in research (Chandran et al., 2004).

TRIPS implementation in India will effectively change the lifeline of affordable drugs

unless protection measures are implemented to prevent this. For compulsory

licensing one danger is that it will disappoint further the commercial R and D

necessary to new drugs to fight global epidemics. IPRs as monopoly power are a

critical fact which would affect the progress and enlargement of the health sector.

However, in the short run the monopoly power would inspire more innovation and

greater fervor in research and development which would be beneficial in the long run

but in the long run it would not be as beneficial. The patent is one of the IPRs which

gives the inventor sole right to produce his property or license it to other producers.

However misapplication of this right is not required and it is not expected that patent

holders would get into anti-competitive ways, such as ever-greening of patents,

patent pooling etc.

Unlike the other consumer items, in the case of drugs, the consumer goes with what

has been prescribed by the doctor. Hence, in the post WTO regime, the doctors will

play a central role in selecting between a patented drug and a generic drug, in cases

where alternatives are available and help the consumers from being exploited by the

market forces. The drug prices in India were brought under control based on the

recommendations of the Hathi committee (1975), which observed that since the drug

industry has a social responsibility it should operate much above the principles of

66

trade for profit. However, due to the repeated plea of the industry that the drug

production was becoming unprofitable, in 1986, the government reduced the number

of drugs under control from 347 to 166. Yet in spite of the price reductions in India,

over a period of 15 years from 1980, there has been a general rising trend in prices

especially of essential life-saving drugs (Rane, 1995). Whereas the finance ministry

under which the Drug Price Control Order (DPCO) is monitored has announced the

decision to reduce the number of drugs under the price control, the report on

pharmaceutical pricing set up by the government, after studying the scenario in

different countries where some form or the other of price control exists, has

recommended that drugs should be under the price control. The Pharmaceutical

Policy 2002 indicated a drastic reduction in the number of drugs under price control.

According to the industry sources, the new DPCO would cover about 34 bulk drugs

and their formulations under control (Lalitha, 2002).

Prior to the 2005 amendment, only processes were patentable and not the end

product itself. Therefore, if a company chose to manufacture the same product, but

used a different process, it could do so without violating Indian patent laws. This

regime naturally caused concerns to various companies, especially branded

manufacturers, as it did not protect their inventions fully and allowed others to

manufacture the same drug, which would have otherwise enjoyed patent protection in

other jurisdictions. With the 2005 amendment being enacted, product patents and

process patents have been permitted for a period of 20 years and special provisions

have been introduced to prevent ever-greening of patents.

Generic or off-patent drugs, manufactured by the Indian firms, are meeting the most

of the domestic demand. At that time, it is wrong to say that their therapeutic value

will be less than the new, on-patent drugs. Indian generic export prospects are very

high with the increasing concentration of Indian firms on generic drugs. Indian firms

are facing strong competition from even some developed and other developing

countries.Therefore, even under the new patent regime compatible with the TRIPs

agreement, the availability and prices of generic drugs will largely be unaffected.

From the above analysis of impacts of TRIPS shows that it have affected the prices,

availability and affordability of drugs. The TRIPS agreement has directed its member

67

states to implement the requirements of the agreement in order to encourage and

protect IPRs. India, being a member state of the TRIPs agreement has taken

changes in its IPRs laws (Malik 2013). The main reason for permitting patents is the

advantage to society as a whole by boosting innovation in exchange for a limited

monopoly. However, the situation is different with respect to new on-patent drugs.

There is no doubt that these drugs will be available in the Indian market either

through production or under license. From the survey, it is examined that strong

patent system under TRIPs has established a sort of monopoly. In condition of

monopoly, a high price can be charged, as these prices have no considerations with

the buying capacity of the consumers. With high prices prevailing in the market

makes drugs unaffordable to the poor people. Availability has been increased only in

the private sector with higher prices on the other hand problem of low availability in

the public sector is still there. The positive impact can be seen that growth in the

R & D expenditure and innovation of new drugs.

68

CHAPTER - 6

CONCLUSIONS

India is known to produce drugs at a cheaper cost, but we can’t deny this fact also

that Indian consumers suffer from the affordability of very cheap drugs. To overcome

this economic burden of drugs the use of generic drugs is a good substitute but

consumer’s awareness of the generic drugs is very limited. So the present study is an

attempt to examine the various issues related to health care, i.e. availability,

affordability and price differences of common essential drugs in two sectors, public

and private through the primary survey with the help of a standardized methodology

published by WHO/HAI in Bathinda city. The study covers various aspects like the

general prescription about the use of different type of drugs generic and generic

branded from different respondents of different fields. The study also evaluates the

government policies related to drug prices and the various impacts of TRIPS.

In order to achieve the envisaged objectives of the present study the study

comprehensively relies on primary survey along with secondary sources. The primary

data is mainly collected from various stakeholders, including patients, drug retailers,

drug wholesalers and few doctors on the basis of random sampling technique. By

considering the existing issues of health care and economic impact on the people,

both public and private sectors are selected for the survey. The secondary sources,

namely Report of ‘Labour department Punjab’ (Statistical Section, 2013) & poverty

estimates by (Tendulkar Method, 2011-12) are used to examine the affordability and

International Drug Price Indicator Guide, (2014 Edition) for international price

comparison. In the public sector availability of drugs is the major issue, but in the

private sector, there is no issue of availability because of various sources available in

the city. The major issues of private sector are the high prices of branded drugs and

the differences in price differences in generic-branded drugs.

69

Main Findings

The present study evaluates that both public and private sectors are equally important

in health care. The public sector provides generic drugs at reasonable prices to the

patients at ‘Jan Aushadhi Drug Store’ situated in the city civil hospital Bathinda. In

private pharmacies almost both branded and branded generic drugs are available at a

higher price as compared to the public sector. It is perceived that the private sector is

dominated for providing the health care facilities more effectively than public sector

with a higher cost of treatment even for a minor disease. The role of government is

appeared to be immoral. Public sector facilities are not providing satisfactory results

to the patients. The main reason of ineffectiveness of public health care facilities is

the lack of healthcare facilities. This is one of the reasons for the high rate of ‘Out of

Pocket’ expenditure on health care especially for branded drugs.

Firstly, the general prescription of different respondents about the use of drugs and

health care facilities, and drug prices are examined. According to doctor respondents

preference of drugs to patients indicates that almost 40 percent doctors in private

sector favor only branded drugs as they consider that generic drugs are less effective

and not good in quality. Remaining 60 percent doctors have viewed that generics are

good substitutes for branded drugs to make drugs more affordable so they prefer both

types of drugs according to the treatment for diseases.

According to patient respondents, nearly 68 percent of respondents of the study

prefer to the private sector health care facilities because of better facilities due to

sufficient availability, less time consuming and satisfactory treatment. The private

sector hospitals and drug stores are in a large number. The remaining respondents

which prefer public sector facilities they are not much contented with the prevailing

facilities because of low availability of drugs in the public sector and also they have to

purchase the drugs and health treatment ‘Out of Pocket’ with higher cost. About drug

prices nearly 30 percent of the respondents are fully dissatisfied from prevailing

prices of drugs while only 7 percent are fully satisfied. It is observed that the fully

satisfied respondents belong to higher income and dissatisfied belongs to lower

income groups which bear the health care burden due to higher prices of drugs at

private drug stores. Patients do not have knowledge about the generic drugs which

70

are the good substitute of branded drugs to reduce the financial burden of health.

About 70 percent of the respondents do not familiar with the term generic, only the

fact is generally known by them is that, less cost of drugs in provided in the public

sector.

Unavailability of essential drugs is issue in the public sector, so availability of 235

essential drugs mentioned in the Punjab essential drug list, containing different types

of drugs such as injections, I.V Fluids, Eye/Ear/Nasal Drops, Tablets and Capsules,

Solution, Creams, Applications and Syrup/ Suspension is evaluated by following the

availability criteria provided in WHO/HAI methodology. Availability of injections

(19.72) percent and Syrup/ Suspension (12.90) percent is very low, I.V Fluids

Eye/Ear/Nasal Drops (33.3) percent, Tablets and Capsules (36.2) percent, I.V Fluids

(45.45) percent are under low availability, no items on the essential list have fairly

high availability. So it can be concluded that the overall availability of all forms of

drugs is very low, i.e. 28.51 percent of i.e. less than 50 percent.

Drugs affordability to the ordinary and poor people is also measured by comparing

the treatment cost with the wages they earn. ‘Ordinary people’ are the lowest paid

unskilled government worker described in WHO/HAI methodology. The cost of

treatment for different therapeutic classes is affordable in the public sector as

compared to the private sector. The highest differences in treatment cost for Antacid

found in the public sector (Rs. 23.16) and in the private sector is (Rs. 250.5) similarly

Antifungal requires (Rs 20.62) in the public sector while (Rs. 119) in the private

sector. Antihypertensive require treatment cost in the private sector (Rs.12.9) and

(Rs. 68.7) in the private sector. The other therapeutic classes as Antibacterial,

requires (Rs. 28.92 to Rs. 62.5), Anti-Allergic (Rs 1.63 to Rs 17.5), Painkiller (Rs 2.66

to Rs 8.5) and Antihypertensive (Rs.12.9 to Rs. 68.7), Anti-infective Rs. (25.9 to Rs.

49) Anti Helminthic (Rs. 14.21- Rs.70) and Laxatives requires (Rs. 0.384 to Rs.1).

The result shows that affordable drugs in the public sector, but in private sector prices

are not affordable for poor families and affordable for ‘ordinary people’.

Differences in drug prices at different level in different sectors are also measured. The

differences are evaluated of commonly used drugs as for the treatment of Antacid,

Antibacterial, Anti-infective, Antihypertensive, Anthelminthic, Laxatives therapeutic

71

classes in public and private sector. Most of the difference in prices between two

sectors is for Tab. Pantoprazole has highest ratio (10.8) which highlights that price of

this drug is 10 times higher in the private sector and minimum ratio is (1.2) of Tab.

Ciprofloxacin Coated which indicates nearly two times more price is charged in the

private sector. As the value of the ratio is high the difference in private and public

price is also high. In case of other drugs, it can be said that ratios of other drugs as

Tab. Cefixime (6) Fluconazole which (5), Tab. Levo Cetirizine, Anti Helminthic Tab.

Albendazole have ratio (4), and Tab. Azithromycin, Tab Levoflexine, Tab.

Azithromycine, Tab. Ciprofloxacin, have ratio (2). These results show that in the

public sector drugs are very less as compare to the private sector.

Price differences within the private sector are also examined by calculating the high-

low ratio of drug prices, which compares the highest unit price with the lowest unit

price. A highest ratio is found 7.6 of Tab. Atenolol which indicates that the highest unit

price is more than 7 times greater than the lowest unit price, and the lowest ratio is 1

of Tab. Fluconazole means the same value of both highest and lowest prices. The

ratio of other drugs lies between these minimum and maximum ratios.

Differences in the wholesale price and retail prices are also collected to evaluate the

level of retail margins. The results describes that minimum price margin level is found

for Antibacterial Tab. Cotrimoxazole S.S (Trimethoprim 80mg + Sulphamethoxazole

400mg) i.e. 19.66 percent and the maximum is 775 percent for Antiallergic Tab. Levo

Cetirizine 5 mg. The other level of margins for different classes ranged as Laxatives,

Tab. Bisacodyl 10 mg 81.82 percent, Pain Killer, Fever Tab. Paracetamol 500 mg,

200 percent, Antihypertensive, Tab. Atenolol 50 mg, 332.08 percent Anti Helminthic

Tab. Albendazole , 423.56 percent, .Antacid has 619.83 percent, and The maximum

level of margin is in anti-allergic therapeutic class. These margin levels are very high

as near up to 800 percent. According to retailers, the actual level of margins attained

by them is minimum 16 percent and maximum 50 percent. These differences in level

of margins are also a reason of price differences in private retailers.

After determining the differences of local prices in public and private sector,

international comparison is also measured with the comparison of local per unit

72

median price with the international reference price provided by the WHO/HAI

methodology. The comparison indicates that how many times domestic prices are

more or less from international price level calculated by ‘Median Price Ratio’ (MPR)

which is the ratio of the median local unit price to reference unit price. In the public

sector the Median Price Ratio of selected drugs is low as (less <1) excepting the Tab.

Paracetamol Tab. Cefixime, Tab. Ciprofloxacin Coated and Amoxycillin which has

(MPR > 1). Low ratio value means prices are low in the domestic market and high

value means more prices. On the other hand, in private sector minimum MPR is Rs.

0.29 of Tab. Rantidine and Maximum Rs. 3.58 of Tab. Albendazole. Out of 15

selected drugs for international comparison only 4 drugs have less MPR, means only

these drugs are less costly others are more costly at private domestic level. The

reason of higher cost of drugs in this sector is more demand of generic popular

brands. The Indian pharmaceutical industry is very efficient in all over the world to

provide the drugs at very cheap prices as compared to other countries, but it is not as

much effective for the Indian population to make them affordable and available at

reasonable prices according to their financial conditions. It can be said that in the

private sector majority of drug prices are higher than the international price, but in

public sector case is reverse. So the private sector is unaffordable for the poor

people.

Evaluation of the existing Indian Drug Price Policy is required for understanding the

role of government in price control. India has adopted various drug policies from time

to time fall under the ‘Ministry of Chemicals and Fertilizers’. The main objective of the

drug price polices is to manage the challenge of making a balance between industrial

growth and ‘ensuring affordable and reasonably priced medicines to the consumers’

particularly the poorer masses at the times at the same time. The government has

made contributions in essential drug pricing through the three main names given to

the pricing control system. These are ‘Drug Price Control Order’, ‘Drug Pricing

Policies’ and ‘National Pharmaceutical Pricing Policy’ with the objective of controlling

prices of important drugs and making them available at reasonable rates to the

consumer. The Indian has introduced government introduced the Drug Price Control

Order (DPCO) amended with some revisions in DPCO as 1979, 1987, 1995 and

73

2013. The DPCO (1979) set 370 drugs under price control. In DPCO (1987) the total

number of bulk drugs was reduced from 370 to 142 under price control. Under DPCO

(1995) the number of drugs for price control has been reduced from 142 drugs to just

76. In current DPCO, (2013) with the origin of NPPA, (2012) total number of drugs in

control is increased from 76 to 652 essential drugs.

All the previous DPCOs of 1970, 1979, 1987 and 1995 were based on cost to

manufacturers cost. But as per the requirements of DPCO (2013) ceiling prices are

now being fixed at the average retail price of the medicine which is manufactured by

all those companies involved in its production with a market share of ≥ 1percent of the

entire market turnover, and adding 16 percent margin to the retailer. All the policies

were generally established on the principle of effecting control prices of essential

drugs, and far along bulk drugs, in addition to the availability of drugs while at the

same time attending to the requirements of the indigenous industry for growth, cost

effective production, and innovation and strengthening of capacity. The price control

principle adopted in this policy for broadly signified an important departure from the

previous policies. This imagined control over prices on the drugs basis related

economic criteria exemplified in the market share of different companies in the

context of total market sales turnover of various drugs.

Consequently, the Government pronounced the National Pharmaceuticals Pricing

Policy, (2012) by replacing the drug policy pronounced in September, 1994. To meet

the challenges brought about by the competitive international pharmaceutical industry

in a globalized economic environment and the country’s requirements for safe and

quality medicines at reasonable prices. The National Pharmaceuticals Pricing Policy

(2012) has a new process for determining the ceiling price, termed as market-based

pricing mechanism as applied through the Drugs Prices Control Order (2013), Its

result would be a reduction in prices of certain top brands, but not close potential

escape routes for good. It will also leave a lot of useful life-saving drugs used in

tertiary care outside the price control basket.

But the policy has not produced the satisfactory results. Currently NLEM (2011) does

not cover a wide range of ‘essential drugs’ as many combinations of TB drugs, a large

74

number of important drugs for diabetes and hypertension which are so important for

patients. Many other critical lifesaving medicines, such as, anti-cancer drugs,

expensive antibiotics and products needed for organ transplantation have been left

out of price control. The prices of a large number of drugs have reportedly gone up

after the notification of DPCO (2013) though NPPA.

The change in the criteria shows the changes in prices by changing the base and

price control methodology. When the comparison is made between the new drug

policies (2013) with previous (1995) the ‘Drug Price Control Order’ (DPCO 2013)

noticeably enunciates it is conveyed that after the implementation of the DPCO

(2013), apparently there has been a decrease in the stock of the medicines in the

market. In most of the states, hospitals and doctors are facing scarcity of the essential

medicines for the consumption of their patients. The results of the present study also

are also showing the same effect on the public sector.

After the independence ‘Patent Act’ has allowed for Indian manufacturers to produce

legally generic versions of medicines patented in other countries since (1970), An

important intense modification in ‘access to medicines’ in developing nations occurs

due to mark (2005). One side positive impacts of TRIPS are R & D intensities of the

firms have improved significantly and its expenditure has dramatically increased for a

segment of the Indian pharmaceutical industry. R & D expenditure has increased

along with a drastic shift in the structure of R & D activities of the Indian companies.

Before this Patent Indian drug manufacturers were mainly involved in the

enlargement of innovative procedures for manufacturing drugs.

On the other side TRIPS agreement has an opposing effect on prices and availability

of drugs which creates difficulty for nations to fulfill with their obligations to respect,

protect and fulfill the ‘right to health’ under the stronger patent system, TRIPS has

established a sort of monopoly. On condition of monopoly, high prices are charged by

innovator companies, as these prices have no considerations with the buying capacity

of the consumers. With high prices of branded drugs prevailing in the market makes

drugs affordable to the poor people. Availability has been increased only in the private

75

sector with higher prices of branded drugs. On the other hand problem of low

availability in the public sector is still there.

In view of the high drug prices, huge differences in price & markups in the private

sector and its poor availability in public sector suggest some policy implications for

effective drug distribution channel in India.

First, steps should be taken to improve the availability of medicines in the public

sector aiming to fulfill the target of hundred percent availability of the essential drugs.

For this, distribution of drugs should be maintained by ensuring adequate and timely

distribution of essential drugs.

Second, the demand for generic drugs in the market is required to be increased,

which would have a positive impact on prices. Although generic and generic branded

drugs are alternatives to originator brands, they are also mostly two to four times

more expensive in the private sector than international reference prices. So, the

prices of alternatives should be lowered as their manufacturing cost starts to diminish.

Therefore, overall evaluation of drug prices should be a key priority which would help

to increase the level of affordability of poor people.

Thirdly, it is necessary to expand the popular awareness programs about use and

information about generic drugs. The need of the hour is to increase the number of

facilities with the quantity and quality of drugs. Public sector facilities along with drug

stores at reasonable prices should be done in different rural areas on a priority basis.

Fourth, some commonly used drugs Antifungal Tab. Fluconazole (150 mg), Anti-

infective Tab. Amoxycillin + Clauvinic Acid (500mg +125 mg), Antacid Tablet

Pantoprazole and Anti-Allergic Anti Helminthic Tab. Albendazole (400 mg),

Antibacterial Tab. Cefixime (200mg), Azithromycin (250 mg) , Tab, Levoflexine (250

mg), Tab. Ofloxacin + Ornidazole (200mg + 500mg), are more expensive in the

private sector, with a high mark up to 775 percent so measures should be taken by

the pricing authority to decrease the prices of these drugs by the intervention of

regulatory authorities will likely be needed to regulate these markups.

76

Fifth, regulations in the supply chain of drugs can be maintained like fixation of the

markup level of retailers. The retail markup level given in the Drug Price Control

Order (2013), which is 16 percent, should be properly implemented. The survey

found variations in the margin attained by retailers for generic and generic branded.

More variations have found from retailer to consumer i.e. from 19 per cent to 775 per

cent. To reduce this gap between wholesale and retail prices, printed MRP on the

drug strips should be fixed rationally.

Sixth, in the prevailing drug pricing system, there is a lack of transparency of drug

prices. So these should be transparency in all types of drugs available in both public

and private sectors.

77

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i

Appendix –A (a)

Schedule for Doctors

Central University of Punjab

Title: Analysis of Drugs and Diseases in Bathinda

Sr. No: Date:

Investigator:

Respondent Profile

Doctor’s Name: Contact No:

Qualification: Workplace:

Years of experience: Specialization:

1) The main health problems faced by Bathinda residents: Sr.no Name of Diseases

observed by you

Medicines for Diseases

prescribe by you

Company Name/

Brand Name

1.

2.

3.

2) Reasons for preferring specially these drugs manufacture? 3) Which type of medicines do you prefer to patients?

1) Branded 2) Generic- Branded 3) Both

4) Reason for most Preference of Branded Medicines?

5) Consumers are paying huge prices of medicines. Give your views.

6) What are your views about increasing diseases and their control in Bathinda? What measures should be taken by the Government?

Signature:

ii

Appendix – A (b)

Schedule for Consumers

Central University of Punjab

Title: Analysis of Drugs and Diseases in Bathinda

Sr. No: Date:

Investigator:

Respondent Profile

Name: Age:

Sex: Income: Address: 1) Name the Health Problem you are suffering from :

T- Temporary, R- Regular, E- Earlier, P- Present 2) Whenever you suffer from any health problem which hospital do you prefer for treatment?

1) Private 2) Civil 3) Both 4) Other 3) Health care facilities provided by the Government are sufficient,

4) Opinion about pricing of medicines:

5) The use of government medical store (Jan Asuhudhi) by you:

Name of the Disease:

Medicine name

Company Name And Medical store Name

Period of using Paid Price

(T) (R) From (E) (P)

Monthly Expenditure of medicines:

Strongly Agree Agree Not Decided Agree Strongly Agree 1 2 3 4 5

Satisfied Somewhat Satisfied Strongly Satisfied Neutral Dissatisfied 1 2 3 4 5

Extreme Rare Never

iii

6) At what prices you purchase the medicines?

Price From private medical store

From Jan Aushudhi medical Store

From wholesale medical store

Less than MRP Equal to MRP More than MRP

6) What is the difference you found between Public and Private Health facilities?

7) Give your views about burden of medicine pricing and what are your expectations from government regarding health care?

iv

Appendix – A (c)

Schedule for Retailer

Central University of Punjab

Title: - Analysis of Drugs Prices

Sr. No: Date:

Investigator: Name of the Area:

1) Respondent Profile

Respondent’s Name: Year of started Drug store: Age: Contact No: Qualification: E-Mail:

2) General Information

2.1 Identification of Drug Store:

2.2 Medicines Information

Type of Medicines (A) Branded (B) Branded-Generic (C) Both

Sold in Drug Store Most Demanded

3) Drugs Detail:

Mention the detail of commonly used essential drugs:

Sr.no Therapeutic

Class

Generic

Drug Name

Brand

Name

Company

Name

Unit MRP Retail

Price

4) Prices margins information

4.1 Specify the margins in (%) Percentage on different type of medicines:

1) Government 1) Private

2.1) Individual 2.2) Within Hospital 2) Society owned

3) Any Special Monopoly 4) Other:

Address of Drug Store:

Type of Drugs Level of Margins Branded Branded- Generic

v

4.2 Your opinion about Prices margins of medicines at which you sold:

Type of the medicines

1 Highly Satisfied

2 Somewhat Satisfied

3 Neutral

4 Less satisfied

5 Dissatisfied

Branded Branded- Generic

4.3 Views about increasing Prices on Branded and Branded-Generic:

5) Detail of Wholesalers:

Name and address the detail of wholesalers who provide medicines:

Sr.no Name of the Wholesaler Address

6) Availability Information

Tick the medicines name of Essential Generic Medicines available in the Drug Store:

*List is mentioned in (Appendix-B)

Signature

vi

Appendix – A (d)

Schedules for Wholesalers Central University of Punjab (Bathinda)

Title: - Drug Prices: A Case Study of Bathinda District

Sr. No: Date: Investigator: Name of the Area: 1 Respondent Profile

Respondent’s Name: Year Of Started Drug Store: Age: Contact No: Qualification: EMail:

2 General Information Medicines Information

Type of Medicines (A) Branded (B) Branded-Generic (C) Both

Sold In Drug Store Most Demanded

3) Drugs Prices Detail

3.1 Mention the Prices of the commonly used Essential Generic- Branded Drugs:

Sr.no Generic Drug Name Brand

Name

Company

Name

Wholesale

Price

MRP Company

Price

1 Tab. Pentaperazole 40 mg Pantocip Cipla

2 Tab. Rantidine 150 mg Rantax Cipla

3 Tab. Cotrimoxazole S.S

(Trimethoprim 80mg +

Sulphamethoxazole

400mg)

Ciplin Ds Cipla

4 Tab. Levoflexine 250 mg Lovolkem Alkem

5 Tab. Azithromycine 250mg Azx Ranbaxy

6 Tab. Levo Cetirizine 5mg Cetipen

Lv

Morpen

7 Tab. Cetirizine Hcl 10 mg Okacet Cipla

8 Tab. Paracetamol 500 mg Pacipr Cipla

9 Tab. Fluconazole 150 mg FCN Intas

10 Tab. Atenolol 50 mg Hipras Cipla

11 Tab. Ciprofloxacin Coated

250 Mg

Floxip Abbott

12 Tab. Ciprofloxacin Coated

500mg

Ciprotas Intas

13 Cap. Amoxycillin 500 Mg Cipmox Cipla

14 Tab. Amoxycillin + Amoxycla Abbot

vii

Clauvinic Acid -500mg

+125 Mg

v

15 Tab. Cefixime 200 mg Fexim-O Zydus

16 Tab. Ofloxacin 200 mg Okaflox Cipla

17 Tab. Ofloxacin +

Ornidazole ( 200mg +

500mg)

Oflotas Intas

18 Tab.Paracetamol 500 mg +

Diclofenac Sodium 50 mg

Fenak Ranbaxy

19 Tab. Albendazole 400 mg Gentre Glexo

20 Tab. Bisacodyl 10 mg Delkoflex Boenginer

3.2 Which type of drugs prices fluctuate more?

Generic Branded 3.3 Specify the Margins in (%) Percentage on different type of drugs:

4) Supply Detail:

1) Source of drugs availability:

Sr. no

Name of the source Detail

5) Views about the prices of Generic and Branded Drugs:

Type Of Drugs Level Of Margins Branded Branded- Generic

viii

Appendix- B

Essential Drug List of Punjab (2011)

Sr. No Name of Item

Injections

1 Inj. Lignocaine HCL 2% w/v 2 Inj. Diclofenac Sodium 25mg/ml 3 Inj. Pentazocine Lactate 30mg/ml 4 Inj. Atropine Sulphate 0.6 mg/ml 5 Inj. Dexamethasone Sodium Phosphate 4mg/ ml 6 Inj. Hydrocortisone Sodium Succinate 100mg 7 Inj. Pheniramine Maleate 22.75 mg/ml 8 Inj. Promethazine Hcl 25 mg/ml 9 Inj. Dicyclomine Hcl 10mg/ml 10 Inj. Theophylline and Etofylline (50.6mg + 169.4 mg) 11 Inj. Methyl Ergometrine 0.2mg/ml 12 Inj. Oxytocin 5 IU/ml 13 Inj. Tetanus Toxoid (Adsorbed) 14 Inj. Metaclopramide 5mg/ml 15 Inj. Diazepam 5 mg/ml 16 Inj. Anti-Rabies Vaccine (Cell Culture) 2.5 IU/Dose 17 Inj. Snake Venom Anti Serum IP (Freezed dried 10 ml Polyvalent) 18 Inj. Ceftriaxone 1gm 19 Inj. Ceftriaxone 250 mg 20 Inj. Amoxycillin + Clauvinic Acid (1gm + 200 mg) 21 Inj. Amikacin Sulphate 100 mg, 22 Inj. Amikacin Sulphate 500 mg 23 Inj. Ceftriaxone 1gm + Sulbactum 500mg 24 Inj. Ceftazadime 250mg 25 Inj. Ceftazadime 500mg 26 Inj. Cefoparazone 1gm 27 Inj.Ranitidine IP 25mg/ml 28 Inj Frusemide IP 10mg/ml 29 Inj. Hyocine Butyl Bromide 20mg/ml 30 Inj. Paracetamol 150mg/ml 31 Inj. Dopamine 200mg/5ml 32 Inj. Pralidoxime 500 mg 33 Inj. Adrenaline 1mg/ml 34 Inj. Sodium bicarbonate 7.5% 35 Inj. Aqueous solution of haemocoagulose isolated from bothrops atrex-ICU

sodium chloride IP-0.9% w/v, phenol IP (as preservative) -0.3% w/v, water for injection I.P- Q.S

ix

36 Inj. Carboprost Tromethamine 250mcg / ml 37 Inj. Tramadol 50mg / ml 38 Inj. Neostigmine 0.5mg/ml 39 Inj Bupivacaine Hydrochloride in dextrose monohydrate USP 40 Inj Betamethasone Sod. Phosphate,I.P - 4 mg per 1 ml 41 Inj. Ondensetron USP 2 mg/ml 42 Inj. Phenytoin Sodium 50mg/ml 43 Inj Ketamine Hydrochloride 10 mg/ml; 44 Inj Potassium Chloride 150 mg/ml 45 Injection-Ampicillin Anhydrous 500 mg/vial 46 Inj. Magnesium Sulphate- Magnesium Sulphate IP 50% w/v; 47 Inj Calcium Gluconate, 1 gm, I.V. 10 ml amp containing 10% Calcium

Gluconate 48 Inj. Haloperidol 5mg /ml 49 Inj. Human Insulin Plain 40 IU/ml 50 Inj. Ethamsylate 250 mg/2 ml 51 Injection Menaphthone (Vitamin K3) 10mg/ml 52 Sterile Water for Injection, IP 53 Plasma Volume Expander 3.5% Polygeline infusion (Hemaccel) 500 ml 54 Inj. Metronidazole I.V. 5 mg/ml 55 Inj. Streptokinase 7,50,000 IU 56 Inj. Nitroglycerine 5mg/ml 57 Inj. Midazolam 1mg/ml 58 Inj. Lorazepam 2 ml/ml. 59 Inj. Morphine10mg/ml 60 Inj. Isoxsuprine Hcl 5mg/ml 61 Inj. Chlorpromazine HCL 25mg/ml) 62 Inj. Vecuronium 4mg/2 ml vial 63 Inj. Atracurium Besylate 10mg/ml 64 Halothane 65 Inj. Bhupivacaine IP 50 mg/ml 66 Inj. Succinyl Choline Chloride IP 50 mg/ml 67 Inj.Tinidazole 2mg / ml 68 Isofluarane USP 100 ml 69 Inj. Propofal 10 mg/ml 70 Heparin Sodium Inj. IP 5000 IU/ml (IM/IV USE) 71 Inj. Trenexamine Acid100mg/ml I.V Fluids

72 I.V Ciprofloxacin 200mg /100 ml 73 I.V Normal Saline (Sodium Chloride 0.9%) 74 Multiple Electrolyte P 75 Multiple Electrolyte G

x

76 Multiple Electrolyte M 77 I.V Manitol 20% 78 I.V. Dextrose 5% 79 I.V. Dextrose 10% 80 Dextrose (25%) 100 ml 81 I.V. Dextrose Saline 5% w/v to 0.9% w/v 82 I.V. Ringer Lactate - Lactic acid (Na lactate) 0.32%, NaCl: 0.06%, KCL:

0.04%, CaCl 2: 0.027% Eye/Ear/Nasal Drops

83 Cipro 0.3% + Dexa 0.1% Eye Drops 84 Gentamycin 0.3% Eye/Ear Drops 85 Xylometazolino 0.1% & Saline Nasal drops 10ml. Tablets and Capsuels

86 Tab. Paracetamol 500Mg 87 Tab. Levo Cetrizine 5 mg 88 Tab.Cetrizine Hcl 10 mg 89 Tab. Ibuprofen coated 400 mg 90 Tab Cefpodoxime 200 mg 91 Tab. Albendazole 400 mg 92 Tab. Tinidazole 500 mg 93 Tab. Ranitidine 150 mg 94 Tab. Atenolol 50mg 95 Tab. Amylodipine 5 mg 96 Tab. Dicyclomine Hcl 10mg 97 Tab. Salbutamol 4 mg 98 Tab. Metformin 500mg 99 Tab. Glimipride 2 mg 100 Tab.Glibenclamide 5 mg 101 Tab. Ferrous Sulphate with Folic Acid Ferrous Iron 100 mg and Folic Acid

0.5 mg 102 Tab. Phenytoin Sodium 100 mg 103 Tab. Metaclopramide 10mg 104 Tab. Ciprofloxacin coated 250 mg 105 Tab. Ciprofloxacin coated 500mg 106 Cap. Amoxycillin 500 mg 107 Cap. Nifedipine 10mg 108 Cap. Nifedipine 20mg 109 Tab. Cephalexin Dispersible 250 mg 110 Tab. Cotrimoxazole S.S (Trimethoprim 80mg + Sulphamethoxazole

400mg) 111 Tab. Amoxycillin + Clauvinic Acid -500mg + 125 mg 112 Tab. Cefixime 200 mg 113 Tab. Ofloxacin 200 mg

xi

114 Tab.Amoxycillin Dispersible 125mg 115 Tab. Amoxycillin Dispersible 250mg 116 Tab. Fluconazole coated 150 mg 117 Tab.Prednisolone 10mg 118 Tab.Etophyline & Theophyline 77 mg + 23 mg 119 Tab.Bisacodyl 10 mg 120 Cap Amoxycillin 250 mg 121 Cap. Venlafaxine HCL 75 mg 122 Cap. Flouxetine 20 mg 123 Tab. Furazolidone IP 100 mg 124 Tab. Frusemide 40 mg 125 Tab. Multivitamin NFI formula 126 Tab. Enalpril 2.5 mg 127 Tab.Isosorbide Dinitrate 5mg 128 Tab.Isosorbide Dinitrate 10 mg 129 Tab.Doxylamine succinate 10 mg + Pyridoxione Hcl 10 mg 130 Tab.Diazepam 5 mg 131 Tab.Diclofenac Sodium 50 mg 132 Tab.Domperidone 10 mg 133 Tab.Erythromycin Stearate 250mg, 134 Tab.Chloroquine Phosphate 250 mg 135 Tab. Norfloxacin 400 mg 136 Tab. Ofloxacin + Ornidazole ( 200mg + 500mg) 137 Tab.Ornidazole 500 mg 138 Tab.Azithromycin 250 mg 139 Tab.Azithromycin 500 mg, 140 Tab.Paracetamol 500 mg + Diclofenac Sodium 50 mg 141 Tab.Levofloxacin 250 mg 142 Tab.Cefuroxime Axetil 250 mg 143 Tab.Cefuroxime Axetil 500 mg 144 Tab.Ascorbic Acid 500 mg 145 Tab. Diclofenac Sodium 50mg + Serratiopeptidase 10 mg 146 Tab Serratiopeptidase 10 mg 147 Tab. Calcium (Calcium carbonate 1.25 gm equivalent to 500 mgs of

elemental calcium,cholecalciferol (vit D-3 staboosed) 250 IU 148 Tab. Methyl Ergometrine 0.125mg 149 Tab.Losartan 25 mg 150 Tab.Losartan 50mg 151 Tab.Losartan 50 mg + Hydrochlorthiazide 12.5mg 152 Tab.Folic Acid 5mg 153 Tab.Acctyl Salicyclic Acid 75 mg 154 Tab.Pentaperazole 40 mg 155 Tab. Dexamethasone 4 mg

xii

156 Tab Zinc Sulphate Dispersible 20mg 157 Tab. Premaquine 2.5 mg 158 Tab. Premaquine 7.5 mg 159 Tab. Methyldopa IP eq. to Methyldopa anhydrous 250 mg 160 Tab. Mesoprostol –IP 200 mcg oral 161 Tab. Hyoscine Butyl Bromide 10 mg 162 Tab. Clonidine 0.1 mg 163 Tab. Tramadol 50mg 164 Tab. Chlordiazepoxide 10mg 165 Tab. Lorazepam 1mg 166 Tab. Lorazepam 2 mg 167 Tab. Nitrazepam 5mg 168 Tab. Nitrazepam 10 mg 169 Tab. Ketorolac 10 mg 170 Tab. Chlorpromazine 50 mg 171 Tab. Phenobarbitone 30mg 172 Tab. Phenobarbitone 60 mg 173 Tab. Carbamezapine 200 mg 174 Tab. Risperidone 2 mg 175 Tab. Risperidone 3 mg 176 Tab. Olanzapine 10 mg 177 Tab. Olanzapine 5 mg 178 Tab. Clonazepam 0.5 mg 179 Tab. Clonazepam 1 mg 180 Tab. Trihexiphenidyl 2 mg 181 Tab. Escitalopram 10 mg 182 Tab. Sertaline 50 mg 183 Tab. Sertaline 100 mg 184 Tab. Lithium Carbonate IP 300 mg 185 Tab. Acyclovir IP 200 mg 186 Povidone Idodine Vaginal Pessaries 200 with applicator 187 Clotrimazole Vaginal Pessaries 100 mg with Applicator Solutions, Creams, Applications

188 Soln. Chlorhexidine with Cetrimide 7.5% v/v + 15% w/v, Isopropyl alchohal 7% v/v

189 Soln. Povidine Iodine 5% w/v 190 Soln. Chlorhexidine Gluconate 0.2% 191 Soln. Hydrogen Peroxide IP 20 Vol 192 Vitamin A Solution 100 ml 193 Silver Sulphadiazene 1% w/v cream 194 Gama Benzene Hexachloride 1% lotion 195 Miconazole Cream 2% 196 Oint. Betamethasone with Salisylic Acid (Each gram to contain

xiii

Betamethasone Dipropionate 0.64 mg, Salisylic acid 30 mg) 197 Clotrimazole + Betamethasone cream IP (1% + 0.5%) w/w 198 Lignocaine HCL Gel 2% w/v 199 Povidone Ointment 5% 200 Clobetasol 0.05 % + Salicysalic Acid 3% v/v Cream/Ointment 201 Clotrimazole Cream 1% 202 Povidone Iodine Scrub 7.5% 203 Gention Violet Paint 1% BP/USP 204 Inj. Gentamycin 80 mg Syrups/Suspension 205 Syrup Salbutamol 2mg / 5ml 206 Syrup Cetrizine 5mg/5ml 207 Syrup Paracetamol 125 mg/5ml 208 Syrup Promethazine Hydrochloride 5mg/5ml 209 Syrup Cotrimoxazole (Paediatrics)Trimethoprim 40mg +

Sulphamethoxazole 200mg / 5ml 210 Dicycolmine Oral Sol. IP 10 mg 211 Cough Syrup Containing Codeine Phosphate 10 mg/5 ml, CPM 4mg/5 ml 212 Salbutamol Respirator solution 5 mg/ml 213 ORS Powder WHO Formula with Citrate salt 20.5 gm pouch 214 Syp Amoxycillin 125 mg/5 ml (60 ml Bottle) 215 Susp Albendazole 200mg / 5ml 216 Susp Furazolidone 25 mg/5ml 217 Glycerin 218 Syp Domperidone 5 mg / 5 ml 219 Ampicillin Oral Suspension 125 mg/5 ml 220 Azithromycin Syp 100mg/5 ml 221 Syp. Norfloxcin 100mg + Metronidazole 100mg / 5ml

222 Liquid Iron : Each 5ml contains Ferrous Sulphate I.P 100mg equivalent to elemental iron 20mg, Folic acid I.P. 0.5mg, Flavoured syrup base q.s, 100 ml bottle

223 Cap. Nifedipine IP 5mg

224 Inj.Amiodarone Hcl 150mg/3ml 225 Budesonide Respirator Solution (Budesonide 0.5mg/2ml)

226 Inj. Benzathene Pencilin 12Lac units-vial 227 Tab.Cotrimoxazole (Paed) i.e

Trimethoprim IP 20mg+ Sulphamethoxazole IP 100mg 228 Neosporin-h Ear Drop content : Polymyxin b Sulphate USP 10000 units

Neomycin Sulphate IP 3400 units Hydrocortisone IP 10 mg 229 Inj. Glycopysolate USP 0.2 mg/ml

230 Iron Folic Acid Small (45 mg elemental Iron and 400 Microgram Folic Acid) 231 Inj.Aminophylline I.P 25 mg/ml

xiv

232 Inj.Phenobarbitone Sodium I.P 130 mg/ml 233 Sol.Gluteraldehyde I.P 2% 234 Xylometazolin HCL Nasal Sol. USP 0.1% w/v

235 Ointment Povidone 5% w/w,

xv

Appendix - C.

Basic Definitions

The following definitions are given by latest “Drug Price Control Order” (2013):

1) “Pharmacoeconomics means a scientific discipline that compares the therapeutic

value of one pharmaceutical drug or drug therapy to another.”

2) “Brand means a name, term, design, symbol, trademark or any other feature that

identifies one seller’s drug as distinct from those of other sellers.”

3) "Ceiling price means a price fixed by the Government for Scheduled formulations

in accordance with the provisions of this Order."

4) "Dealer means a person carrying on the business of purchase or sale of drugs,

whether as a wholesaler or retailer and includes his agent."

5) "Distributor means a person engaged in the work of distribution of drugs and

includes an agent or a stockiest for stocking drugs for sale to a dealer."

6) “Generic version of a medicine means a formulation sold in pharmacopeial name

or the name of the active pharmaceutical ingredient contained in the formulation,

without any brand name.”

7) "Government means the Central Government."

8) “Market share means the ratio of domestic sales value (on the basis of moving

annual turnover) of a brand or a generic version of a medicine and the sum of total

domestic sales value of the all brands and generic versions of that medicine sold in

the domestic market having same strength and dosage form. ”

9) “Margin to retailer for the purposes of this Order shall mean a percentage of

prices to retailer.”

xvi

10) “Market based data means the data of sales related to a drug collected or

obtained by the Government as deemed fit, from time to time.”

11) “Maximum retail price means the ceiling price or the retail price plus local taxes

and duties as applicable, at which the drug shall be sold to the ultimate consumer and

where such price is mentioned on the pack.”

12) "Non-scheduled formulation means a formulation, the dosage and strengths of

which are not specified in the First Schedule."

13) “Price to retailer means the price of a drug at which it is sold to a retailer which

includes duties and does not include local taxes”

14) "Retail price means the price fixed by the Government for a new drug."

15) "Retailer means a dealer carrying on the retail business of sale of drugs to

customers."

16) "Wholesaler means a dealer or his agent or a stockist engaged in the sale of

drugs to a retailer, hospital, dispensary, medical, educational or research institution or

any other agency.