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Tanzania pioneered the concept of an essential medicine list (EML) way back in 1970. The first WHO model list of essential medicines was published in 1977; it contained 186 medicines. The scope and ambit of the WHO list widened over the years with the number of medicines on it growing.
The WHO list is just a model one. Figuring out essential medicines has remained the responsibility of nation-states. A host of factors – the disease burden of a nation, priority health concerns, affordability, etc – go into the preparation of an EML.
India’s Ministry of Health and Family Welfare released the first National List of Essential Medicines (NLEM) in 1996; it had 279 medicines. The list was revised in 2003 to include 354 medicines. It underwent revision in 2011 again and grew to 348 medicines. The list was modified to 376 medicines in 2015. The latest revision was done in 2022; it saw 26 drugs, including the common gastrointestinal medicines ranitidine and sucralfate, deleted from the list. However, as many as 384 drugs found place in the 2022 NLEM, with the addition of 34 drugs.
The medicines have been categorised into 27 therapeutic categories. The new list also includes four drugs that are still under patent – bedaquiline and delamanid, used in the treatment of multiple drug-resistant tuberculosis; dolutegravir, used to treat human immunodeficiency virus (HIV) infection; and daclatasvir, used in treating viral infections such as Hepatitis C. The 2022 list also saw the inclusion of several antibiotics, vaccines and anti-cancer drugs.
The primary purpose of the list is to promote rational use of medicines, taking into account three crucial factors – cost, safety and efficacy. The medicines listed in the NLEM are sold below a price ceiling fixed by the National Pharmaceutical Pricing Authority (NPPA).
The 2022 revision comes after a hiatus of seven years. Considering its importance to people at large – especially the poor – one expects the list to be revised at frequent intervals – say every two or three years – so as to reflect the fast-changing dynamics in the health needs of a country like India. Though the 2022 list did include four under-patent drugs, the industry lobby has been ever active to keep patented medicines out of the NLEM. It has been successful to some degree.
The 2022 NLEM did disappoint people at large as it left out some drugs that are high-priced and effective in cancer treatment. But the diabetes section was expanded to include teneligliptin and insulin glargine. It is against this backdrop of a sense of unhappiness across the consumer canvass over the latest NLEM that the Union government a few days ago approved a 12.12% hike in the prices of essential drugs, which are regulated under the Drug Price Control Order (DPCO).
Between 2018 and 2022, companies manufacturing these scheduled drugs, which are covered under the NLEM, were allowed a 0.5% to 4.2% year-on-year increase, based on the holesale price index (WPI) of the preceding calendar year. However, fiscal 2023 saw the ceiling being raised to 10.8% in line with the WPI of 2021. The Department for Pharmaceuticals raised the ceiling to 12.12% for 2023-24. This is the second consecutive double-digit hike allowed for drugs on the NLEM. The NLEM portfolio, it is gleaned, constitutes just around 17% of overall Indian pharma market sales.
Cost pressures may have been the convenient reason for the government to concede such a hefty price hike for drugs that are clearly classified as essential medicines. Inflation, it is often agreed among top monetary policy planners, is the biggest villain for the common people. Price rises hurt the poor the most. The government action in conceding a price hike for essential medicines is a double-whammy for them. In the post-pandemic phase, life and livelihood have become more uncertain for those at the bottom of the pyramid.
What is incomprehensible is the timing – nay, the very need – for letting the prices of essential medicines rise. Whose responsibility is it to rein in inflation? The government’s. Unfortunately, the poor get no respite in this instance. Often, such price rise concessions are sought to be justified on the pretext of ensuring adequate supply of essential medicines in a cost-push situation.
What economic theory preaches does not hold true in the practical world. Theory suggests that when supply (read capacity) is more, prices should come down. But it does not happen that way. A cooperative competition of a new kind has come into play across the industry. If drug makers are allowed an inflation-adjusted price, why can’t the common people be given the benefit of inflation-adjusted return on their savings deposits? Not surprisingly, the debate on freebies can go on and on – until the cows come home.
K.T. Jagannathan is a financial journalist.