By Dr. Arun Mitra
Political parties make several promises during the elections, but healthcare has always been on the back seat. This is, even though, large amount of budget of the household goes towards healthcare. Whereas poverty is a cause of poor health, healthcare expenditure itself leads to poverty. The National Health Policy document 2017 admits that nearly 6.3 crore people are pushed below poverty line every year because of out-of-pocket expenditure on health. Successive governments have failed to address this issue. Public spending on health remains hovering around 1% of the GDP. The central government spending on health is a meagre 0.26% of the GDP. This is too low in contrast to the spending by others nations. Brazil spends around 8.3 per cent, Russian Federation 7.1 per cent and South Africa around 8.8 per cent. Even the figures of SAARC countries are much better; Afghanistan spends 8.2 per cent, Maldives 13.7 per cent and Nepal 5.8 per cent.
According to BRICS countries population health profile, 2013 – per capita public health expenditure in these nations in terms of current US$ was Brazil 520.59, Russia 457.13, India 19.65, China 210.88, and S.Africa 282.81 ie an average of 298.21 in BRICS. No wonder India ranks at the 103rd position out of 118 countries in hunger index. It is unfortunate that till date there is no rational drug pricing policy even though nearly 67% of the expenditure on healthcare incurred on drugs, which include medical devices.
The government had appointed a Committee to consider high trade margin issues under Sudhansh Pant. The committee submitted its report in December 2015 after consultations with various stake holders. It also received inputs that in some cases the trade margin has been as high as 300% to 5,000%. The committee recommended that trade margin, that is the difference between the maximum retail price (MRP) which the retailer charges from the end user and price to trade (PTT) that is the price at which the manufacturer supplies to the stockiest should be reasonable. They recommended that there should be no capping on MRP of products whose value per unit is less than Rs. 2.. Those above Rs. 2 should have a cap of cap of 50%. Items priced from 20-50 rupees per unit to have a cap at 40% and capping should be at 35% for products above 50 rupees per unit price. The committee also pointed out that in case of bonus offer the benefit should go the consumer, not the retailer. For example, if there is a bonus offer of 1+1 then trade margin should be halved.
These recommendations can be of much value. But ironically the government has been sleeping over these recommendations for the reason best known to them for the last over three years.
The NITI Ayog had released a Concept Note on “Rationalization of Trade Margins in Medical Devices” on 8th June, 2018. But there is no follow-up to this after that. Till date, millions of patients in India are looted by non-transparent and exploitative business practices in the largely unregulated private healthcare sector. This profit-centred model is unabashedly anchored in the opacity in trade margins of medical drugs and devices.
A simple formula that could benefit the patients is 30% trade margin over the landed/ex – factory cost as MRP, inclusive of retail and wholesale margin, logistics, inventory cost. The ex-factory cost of the drugs should be cost based. The seller should be made to mention the cost it had to pay and the MRP it has charged in all bills which a patient receives to introduce transparency.
Taking the rationalisation of trade margins in medical devices further, rates of medical procedures should also be standardized, particularly in the private healthcare sector. The government must undertake provision of free medicines and investigations in all public hospitals. If all state governments adopt the Tamil Nadu model for drug procurement, this is feasible even within current budgets.
Clinical Establishments Act must be implemented, with focus on having standard treatment protocols in place. Compliance with standard treatment protocols is the first step to rationalize medical practice, which will aid in reducing the prevalence of malpractice, and thus unnecessary expenses thrust on people.
The Alliance of Doctors for Ethical healthcare (ADEH), an advocacy group of medical professionals across India, who promote and support patient-centred rational healthcare, which is free from commercial interests, pointed out that health is an issue on which all political parties should pledge the implementation of effective measures in their upcoming election manifestos for ensuring affordable medicines and accessible healthcare for India. (IPA Service)
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