The Telegraph
Wednesday , August 6 , 2014
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Rip-off alert on medicines

New Delhi, Aug. 5: The country’s apex consumer commission has asked the Centre to take steps to prevent pharmaceutical firms from making “excessive profits”, citing a case that revealed a wide gap when a multinational company offered a discount to a patient.

The National Consumer Disputes Redressal Commission has said allowing drug companies to earn excessive profits is against the principles of ethics and morality. The order also directed the Centre to reduce the maximum retail price (MRP) of a drug sold by Novartis, the multinational company.

The commission noted that the maximum retail price of the drug named octreotide, sold by Novartis India, for the treatment of non-cancerous tumours was Rs 58,000 per injection. But the company had eventually provided it to the patient for Rs 29,000 after selling it earlier for Rs 58,000.

“The party (Novartis) earned more than 100 per cent of the profit,” the commission said, ruling on a revision petition filed by the company against the Kerala State Consumer Commission that had asked it to pay over Rs 1 lakh to the family of the 17-year-old patient who had taken the drug after a brain tumour operation.

“Steps should be taken to re-fix the MRP so that the consumers do not suffer,” the commission said.

The bench, presided over by Justice J.M. Malik with S.M. Kanitkar as a member, said that giving so much “profit to the companies who make such medicines is against the principles of ethics and morality”.

The ruling comes amid concerns among sections of public health professionals that drug price cap regulations adopted by the government last year impose price caps on only 348 drugs and also allow companies routes to evade the price ceilings.

“The ruling by the consumer commission highlights the need for better ways to find the correct cost of making a medicine — 100 per cent profit is not surprising,” said Sourirajan Srinivasan, managing trustee of Locost Pharmaceuticals, a Vadodara-based company that makes drugs mainly for government organisations for use among the poor.

“Many drugs have 1,000 per cent to 2,000 per cent profits,” Srinivasan said.

The Drug Price Control Order (DPCO) in 2013, which set price caps relying on the market prices of drugs instead of calculating the actual cost of manufacturing drugs, has “legitimised such high margins”, Srinivasan said.

While the DPCO had set price caps only on 348 drugs, sections of patient-interest groups and public health experts have been arguing that the prices of more drugs should be regulated.

In July this year, the government imposed ceiling prices on a set of drugs used to treat diabetes and cardiovascular diseases.

“We’re happy to hear what the national consumer commission has said,” Malini Aisola, a research associate and health policy analyst at the Public Health Foundation of India, New Delhi, said. “The prices of many cancer medicines are exorbitant and are unrelated to the health benefits they provide.”

Octreotide, the drug on which the consumer commission has ruled, is not under price control, and thus may be sold by a manufacturer at any cost.

However, under paragraph 9 of the DPCO, the government may in case of “extraordinary circumstances, if it considers necessary so to do in public interest, fix the ceiling price or retail price of any drug for such period as it may deem fit...”

The case involved a complaint by Kerala resident J. Anto whose 17-year-old son Tomes Anto had undergone surgery for a brain tumour.

He remained sick for some time and started growing taller because of excess production of the growth hormone. A doctor prescribed him octreotide injection which was to be given monthly and would cost them Rs 58,000 per injection.

The company initially sold the drug at Rs 58,000 but later gave the patient a discount of 50 per cent, bringing down the price to Rs 29,000 per injection. The complainant had purchased eight injections amounting to over Rs 3.5 lakh.

He submitted that had he been offered the discount earlier, he could have saved over Rs 1 lakh and asked the company to refund the amount.

The state consumer commission had allowed his plea, giving a similar finding.

But the national bench allowed the company’s plea that while no one can charge an amount higher than the MRP, a drug can be sold at a lower rate than the MRP.

The bench observed that by no stretch of imagination can this be described as an unfair trade practice and there is no impediment in giving a medicine below the MRP.