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1) Pricing of medicines in the face of rising healthcare costs, has been an persistent issue of concern for the Indian government. Critically examine. (250 words)

Topic–  Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

1) Pricing of medicines in the face of rising healthcare costs, has been an persistent issue of concern for the Indian government. Critically examine. (250 words)



Why this question

Healthcare is a critical sector for any society or economy but more so for India where the majority of population still does not have access to quality healthcare services and a prohibitive out-of-pocket expenditure on health and medicines stifles the development of millions of people. In this context it is imperative to discuss the reasons of failure of pricing of medicines.

Directive word

Critically examine- Here we have to probe deeper into the topic,  get into details, and find out the causes or implications if any. Based on our discussion we have to form a concluding opinion on the issue.

Key demand of the question.

The question wants us to discuss the reasons as to why Pricing of medicines has been an issue of concern for the Indian government. We have to bring forward the causes behind this and form a personal opinion on the overall issue accordingly.

Structure of the answer

Introduction- write a few lines about dismal public healthcare, India’s exorbitant private healthcare, high out-of-pocket expenditure and rising prices, as well as share of medicines in health care expenditure.

Body– mention that the government loosely regulates prices of all medicines in public interest. Prices of around 850 essential drugs are however capped by the government. The drug price regulator National Pharmaceutical Pricing Authority (NPPA) revises these prices annually based on the wholesale price index (WPI). For all other medicines, companies are allowed to raise prices by no more than 10% in a year. Discuss why drug pricing has been ineffective- e.g the domestic pharmaceuticals market, which is highly concentrated with the top 10 companies accounting for more than two-fifths of the total sales. In such a set-up, the market-based price ceiling mechanism proposed by the new DPCO is potentially susceptible to the phenomenon of regulatory capture. The price cap is a simple average of prices of all brands with more than 1% market share in a medicinal area. This is prone to overestimation if firms, especially the big ones, collude to raise the price of the regulated formulation in the period preceding the regulation; deficient supply chain management prevents the utilisation of low-cost generic drugs from picking up. The crumbling status of the already existing Jan Aushadhi Kendras due to procurement delays and errant supplies are rampant. Poor forecasts, archaic procurement systems, and small markets, among other things, can cause supply bottlenecks; at the same time, demand is constrained by the lack of clarity on the quality of generic drugs. With the key parts of the drug regulatory systems in the country being controlled by the states, there are no consistent standards for enforcement etc.

Conclusion– Based on your discussion, form a fair and a balanced conclusion on the given issue. Mention the Ayushman Bharat scheme and need to complement it with commensurate supply-side strategies, such as strengthening the public sector provisioning of essential healthcare etc.