The legal discourse in India loftily prescribes that all medical prescription should prescribe generic medicines while all pharmacies must stock them. Reality: cut throat competition, customer ignorance, and aggressive marketing by pharma companies, coupled with weak enforcement of rules have led to nonadherence to the law. A generic drug is a medication similar to a branded one in dosage form, safety, strength, quality, performance parameters, and route of administration. It works and affects in the same way as a branded alternative. But it costs less because it does not undergo further studies which are required of the brand name medicines to ensure safety and effectiveness. Generic drugs are also cheaper because often a single generic drug works for multiple ailments, thereby causing competition among sellers.
In India, only 15% of health expenditure by an individual is funded by public authorities, out of remaining 85% an individual spends 20% – 60% on medicines. Yet, because margin on generics is lower than on brand ones, pharmacies hardly stock or advertise the former. Also, the relatively affluent customers correlate price with quality/efficacy, thereby preferring expensive substitutes. But then this is not the case with poor patients. They may even have to go without drugs (meaning without treatment) or take less than prescribed course of treatment. Thus, there is a scope for both the strategies, low price-high volume (generic drugs) and high price low volume (branded products).
However, it is not just cost, even the availability of medicines may be an issue in India. In a study conducted in the national capital of India – Delhi – it was found that availability of essential cancer drugs was far below the WHO’s prescribed standards.
Ironically, India is a promising market for pharma players, given the demographics and economics of the nation. Enforcement of compulsory sale of generics, unlike in, say, Indonesia, can just not be ensured. Neither can the law be Implemented, nor can the consumer be empowered and made aware. Are you listening pharma companies?
Contributed by: K.K. Srivastava
KKS is an academic, author, writer, researcher, and corporate speaker. He writes regularly on Economics, Management, Technology, and others areas.