Competition Commission of India (CCI) in its recent report on affordable healthcare (“Making Markets Work for Affordable Care”, October 2018) has picked up four issues that it deems is important for health care industry.
Major issues mentioned in the report:
- Unregulated Price:
- It highlights the enormous trade margins in the pharmaceutical market and attributes them to intermediaries in the trade.
- However, the MRP (maximum retail price) is printed by manufacturers based on their perceptions of what they think the market can take. High MRPs, in turn, are because of a lack of price regulation.
- The current DPCO 2013 (Drugs Price Control Order) does not address the prevalence of high margins validated by the high ceiling prices due to the market-based ceiling price methodology.
- The solution provided is public procurement and more e-pharmacies. However, it may not solve the problem, especially when public health facilities in most States are privatized.
- Quality perception of branded generics:
- The root cause of brand proliferation is the trust-deficit in the regulatory apparatus for licensing and inspection, which needs to be addressed through consistent application of statutory quality control measures and better regulatory compliance.
- However effective and uniform quality control of drugs and one-company-one drug-one brand name-one price policy” — may not be a solution to brand proliferation nor can it prevent the same drug being sold by different companies at widely varying prices.
- Vertical arrangements and the lack of transparency in healthcare:
- Recommendation include strong regulatory framework ensuring transparency, data portability and standardisation of diagnostic labs.
- Mandatory declaration of vital data such as mortality rate, infection rate, etc., by the hospitals to help consumers make an informed choice.
- Regulation of the pharmaceutical sector and its competition:
- In India “there are multiple regulators governing the pharmaceutical sector” as a result of which “implementation of regulations is not uniform across the country. This has resulted in multiple standards of same products and also different levels of regulatory compliance requirements
What can be done:
- There should be a mechanism to bring price cap on all medical procedures, diagnostic tests and medical devices and consumables
- Standard treatment guidelines at least for routine diseases as well as insist on adoption of an appropriate Clinical Establishments Act.
- Right regulation and political will that takes market failure in its stride and delivers healthcare at the lowest prices, preferably free through the public sector.