The canvas of health care

A media report recently highlighted how the supply of a vital, life-saving drug has dried up ever since the Indian drug pricing regulator slashed its price by a tenth. These medicines were meant for babies suffering from heart ailments.

There is no doubt that when price control is imposed on medicines and other medical technologies, it is done with the best intentions — to make them affordable. However, when framing policy, addressing a problem in its totality rather than in bits and pieces is more likely to yield dividends for the intended beneficiary. In health care, this means having to address not just affordability but also the issues of quality, safety and access.

The shortage of the drug referred to earlier illustrates this. With smaller doses now unavailable, desperate parents are being forced to administer a fraction of the adult dose to their children and not always correctly. Not only has it denied access but also promoted unsafe practices, in turn affecting patient safety.

Let us take the issue of access next. The prices of heart stents were cut steeply last year. The problem of stenting however is not just about price. It is that not all those who need it know that they do. Nor can they access it easily. According to a study, 70% of cath labs where stenting procedures are performed, are in metros and Tier-1 cities where just 15% of the population resides. There are also issues of access beyond cities, such as the lack of diagnostic facilities and skill sets among primary-care physicians to interpret medical reports. Lowering prices has had no impact on the uneven distribution of interventional cardiologists, cath labs and other infrastructure and health-care resources across urban and non-urban areas. Without equitable access, will all those who require stenting be able to receive them unless they forego their income and come to these cities for treatment? The answer is no. We must examine all such issues, answers to which will improve accessibility rather than price control.

Does the pricing policy reward investment in quality and improve choice? Not really. In the case of stents, for instance, whether a product is the result of patient-centric innovation or plain-vanilla reverse engineering, it is awarded the same price. An innovation that makes it easier to implant a stent and cuts procedure time is still priced as much as any other in its category. This discourages innovators from making such technologies available in India even to those who can afford them.

In short, price control ends up as a short-term measure to bring down costs of only specific consumables, and for the benefit of certain sections of the population who are in a position to access health care.

The government considers some of these price control measures as a stellar achievement. This is understandable in cases where the benefit has been passed on to the patient. However, this is not automatic. A reduction in the overall cost of stenting packages by hospitals does not reflect the steep drop in stent prices as there have been compensatory increases elsewhere in the package. Similarly, hospitals can even replace products that have passed stringent regulatory standards set by regulators with those that are designed to meet lower standards.

The government needs to introspect on what would best serve the interests of a patient in the long term. The answer lies in an approach that looks at all aspects of health care as threads of an interwoven fabric. From a pricing perspective this could mean controlling trade margins instead of capping retail price so that the benefit of any reduction does reach a patient. India boasts of the world’s highest intermediary cost, rather than a lean trade margin, which makes products expensive and scarce. Research by the pricing regulator has shown that profits made by hospitals and distributors on health-care consumables are beyond acceptable levels — and partly responsible for overall pharma/medical price inflation. Capping such profits will ensure affordability without the accompanying compromise on patient safety and an availability of quality products.

Bejon Misra is Founder, Patient Safety and Access Initiative of India Foundation

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