The healthcare dilemma in India
India is often known as being the pharmacy of the global South. A significantly low-cost base that supports a large talent pool of scientists and engineers, and a favourable regulatory environment, have helped the country become a hub for pharmaceutical research and development. The industry has focused on producing cheap generic drugs to improve access to medicines, both in India and across the world. Yet the chronically low share of public funds spent on healthcare as a percentage of GDP – just over 1% – is a key reason why universal access to affordable healthcare, including medicines, continues to elude the country.
Increasing levels of non-communicable diseases (NCD) such as heart disease and diabetes have led to a significant rise in the cost of healthcare in India. This has had negative impacts on the livelihoods of households as the lack of comprehensive health schemes, either public or private, means that healthcare expenses are usually incurred by people from their own pockets. Within the context of a public health system hampered by weak infrastructure, poor healthcare delivery mechanisms and serious quality issues, people have little choice but to seek healthcare in more expensive private institutions.
Out-of-pocket healthcare payments on medicines and treatments can lead to catastrophic expenditures that push patients and their families into the medical poverty trap. A study by the Public Health Foundation of India estimated that about 55 million Indians were pushed into poverty in a single year because of having to fund their own healthcare1.
Many Indian pharmaceutical companies have made great strides in adopting innovative practices to deliver costeffective and affordable medicines, in line with Sustainable Development Goal (SDG) 3 – ‘ensure healthy lives and promote well-being for all’. Cipla and Biocon, two of the companies we met, stand out. Cipla’s access to medicines strategy is not only premised on pricing, but also on high-profile awareness campaigns, patient and doctor education, and optimised distribution logistics to reach lower-tier cities and rural India. Biocon’s innovation strategy involves the development of affordable follow-on versions of biologic drugs, or biosimilars, to provide cost-effective alternatives.
We also met two growing healthcare service providers whose ethos is treatment affordability. Narayana Health and Healthcare Global Enterprises (HGE) have successfully leveraged technology, efficient delivery systems and economies of scale to make high-quality cardiology and oncology treatments, respectively, accessible and affordable. Importantly, both companies have developed pricing structures that set the cost of treatments according to patients’ income levels.
We were encouraged by companies’ efforts to help bridge the healthcare gap for India’s poorest. Going forward, we called for increased collaboration with government to expand affordable access by cutting supply chain inefficiencies, improving the sharing of drug price information among hospitals, introducing stricter drug pricing controls and furthering investments in research and innovation.
Several major Indian generics companies have been found to adjust their manufacturing standards depending on the country buying their drugs, which translates into lower-quality medicines being sold to low-income countries with lax regulatory oversight. These practices can easily wipe out the benefits of increased access to affordable medicines.
We spoke at length to Cipla and Alkem Laboratories about these issues. We were impressed by Cipla’s commitment to quality and safety – all plants meet exacting standards, i.e. those required by EU and US regulators, regardless of which market drugs are sold to. Moreover, quality indicators are part of the compensation structure/scorecard for executives.
We plan to continue engaging with major Indian pharma companies to implement similar practices, focusing on quality governance, manufacturing standards and data integrity. We will also press for improved transparency on findings from regulatory inspections as well as the nature of any letters or warnings and, importantly, on remedial actions taken by management to address the concerns raised.
1 Sakthivel Selvaraj, Habib Hasan Farooqui, Anup Karan, “Quantifying the financial burden of households’ out-of-pocket payments on medicines in India: a repeated cross-sectional analysis of National Sample Survey data, 1994–2014”, January, 2018