PHM-Exch> India to give free generic drugs to hundreds of millions

[Claudio Schuftan]

From: Ravi Duggal <rduggal57 at gmail.com>


*BREAKINGVIEWS - India's pro-poor policy may be getting healthier*

2:24pm IST

By Jeff Glekin

MUMBAI (Reuters Breakingviews) - A $5.4 billion plan to provide free
generic drugs to millions could mean the government is finally beginning to
address its woeful healthcare system. Medicine has lost out to food and
fuel subsidies for too long. The drugs plan may spook Big Pharma, but long
term even foreign drugmakers could benefit.

Only seven governments in the world spend less on health than India as a
percentage of GDP, according to the Organisation for Economic Co-operation
and Development. India allocates about 1.2 percent of output annually -
lagging behind, say, China, at 2.3 percent. The number of children who die
before their fifth birthdays, mainly from preventable diseases like malaria
and diarrhea, stands at 66 per 1,000, compared with 19 in China and 21 in
Brazil.

India's left-leaning government, in power for the past eight years, has
done surprisingly little to address deficiencies in public health. Instead
too much policy emphasis has been placed on food and fuel subsides. Though
intended to help the poor, many benefits accrue to households well above
the poverty line. The total cost of these subsidies amounts to 9 percent of
GDP, the OECD reckons.

But the government does want to double the amount it spends on health. With
a fiscal deficit already touching 5.9 percent, it will need to scale back
elsewhere to finance that goal. The new plan could be a good first step
towards a healthier balance of pro-poor policies.

Indian makers of generics, like Dr Reddy's and Cipla, should benefit from
the new initiative. Big foreign drugmakers, by contrast, may feel hard done
by. Providing free generics but forbidding doctors from subscribing branded
medicines appears to cut them out of the loop. But 90 percent of India's
drug spending is already directed to generics, and it's logical that the
government should concentrate on the cheaper end of the market.

India's already a two-tier market. The growing middle class spends an
additional 3 percent of GDP on private care, and it will continue to
consume more branded drugs. And as India develops, greater public
consumption of healthcare should untimely lead to a relaxation of the rules
on generic products. That could be a long term boon for the foreign firms
too.

CONTEXT NEWS

- India has put in place a $5.4 billion plan to provide free medicine to
hundreds of millions of people, Reuters reported on July 4.

- India's public doctors will soon be able to prescribe free generic drugs
to all comers, vastly expanding access to medicine in a country where
public spending on health was just $4.50 per person last year. Under the
plan, doctors will be limited to a generics-only drug list and face
punishment for prescribing branded medicines.

- Within five years, up to half of India's 1.2 billion people are likely to
take advantage of the scheme, the government says.

- In March, India granted a license allowing a domestic drugmaker to
manufacture a copy-cat version of Nexavar, a cancer drug developed by
Germany's Bayer. The move unnerved foreign drugmakers but enabled India's
Natco Pharma to sell its generic drug at 8,800 rupees per monthly dose, a
fraction of the 280,000 rupees Bayer's branded version cost.
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