In Kerala, where people have a marked preference for branded drugs, where the most expensive brand is considered the best, and only those brands pushed by doctors sell, the new Drug (Prices Control) Order, which is expected to cut prices by 20-25 per cent, may not have much of an impact.
The prices of top brands may be reduced a little when the ceiling price fixed by the National Pharmaceutical Pricing Authority (NPPA) comes into effect, while the prices of middle-level brands are unlikely to change. In Kerala however, where people are averse to buying generic drugs, the reduction in the prices of top brands, however small, will have more people shifting to the top brand when it becomes more ‘affordable,’ in effect pushing up healthcare costs, public health activists fear.
Kerala has a population of a little over three crore, but the average consumption of drugs is said to be three times the national average.
“We are not very confident that the new DPCO will bring in a drastic reduction in drug prices because the ceiling price of 348 essential drugs and their formulations have been fixed on the basis of the average of the prices of popular brands. Kerala is facing a huge health problem because of the surge in chronic and non-communicable diseases. However, except for a few drugs like metformin or atenolol, a chunk of the class of drugs commonly used by people here for diabetes, hypertension, arthritis and asthma does not figure in the National List of Essential Medicines,” points out K.G. Ravikumar, former Professor of Clinical Pharmacy, Thiruvananthapuram Medical College.
Since 2008, the entire bulk drug procurement for the 1,400 public sector healthcare institutions in the State has been handled by the Kerala Medical Services Corporation Ltd. (KMSCL), whose annual drug purchase budget has grown from Rs. 134 crore in 2008-09 to Rs. 375 crore now.
“We are purchasing generic drugs in bulk for dispensing through the in-house pharmacies of government hospitals through an open tender process at rates which are based on actual manufacturing price. The new drug price ceiling based on market prices will not have any impact on our budget. KMSCL is today procuring 939 essential drugs, including 107 cancer drugs, given free of cost to both above and below the poverty line category patients,” says R. Kamalahar, managing director, KMSCL.
Given the apprehension that both doctors and the public seem to be having about generics, KMSCL has had to invest quite a lot to ensure that the quality of the generics is on a par with branded drugs. A slight drop in the quality of packaging alone used to invite a barrage of complaints from hospitals, with doctors giving prescriptions to be bought from ‘outside,’ says Biju Prabhakar, former managing director of KMSCL.
“Over the years, we have instituted an impeccable quality control mechanism which ensures that only bona fide companies, with GMP-certified factory facilities and an annual turnover of Rs.10 crore, supply drugs. The drugs too go through stringent lab testing — we are testing some 15,000 samples every year. Our annual budget is quite high, compared with that of our counterpart in Tamil Nadu because our procurement rates are higher and we have to pay hefty loading and unloading charges,” he says.
The State’s preference for branded drugs had KMSCL launch the Karunya Community Pharmacy (KCP) project to intervene in the market to ensure that branded drugs are available to the public at rates much lower than MRP. The project, a first-of-its kind venture by any State, is a year old and operates eight outlets. A total of 35 such outlets are planned across Kerala.
“We are procuring 7,901 brands of various classes of drugs directly from the manufacturer, cutting out all intermediaries and are able to sell these to the public at discounts varying from 20 to 40 per cent or sometimes up to 90 per cent,” Mr. Kamalahar says.
The cancer drug, Gemcitabine (1000 mg), with an MRP of Rs. 6,145, is being sold through the KCP at Rs. 885; Docetaxel (80 mg injection), with an MRP of Rs. 10,890, costs Rs. 999, while another chemotherapy drug, Zoledronic acid (Alzic injection), sold at an MRP of Rs. 2,450 costs Rs. 176.75, he points out.
The KCP is yet to emerge as a full-scale market player but the daily sales at its outlet at Thiruvananthapuram Medical College alone run to more than Rs. 10 lakhs. Once all 35 outlets are in place, KMSCL expects to generate an annual turnover of Rs. 150-250 crore.
