BREAKINGVIEWS - India's pro-poor policy may be getting healthier

MUMBAI Thu Jul 5, 2012 5:54pm IST

Medical illustration. Pills of all kinds, shapes and colours, March 2003. REUTERS/Jacky Naegelen/Files

Medical illustration. Pills of all kinds, shapes and colours, March 2003.

Credit: Reuters/Jacky Naegelen/Files

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MUMBAI (Reuters Breakingviews) - A $5.4 billion plan to provide free generic drugs to millions could mean the government is finally beginning to address its woeful healthcare system. Medicine has lost out to food and fuel subsidies for too long. The drugs plan may spook Big Pharma, but long term even foreign drugmakers could benefit.

Only seven governments in the world spend less on health than India as a percentage of GDP, according to the Organisation for Economic Co-operation and Development. India allocates about 1.2 percent of output annually - lagging behind, say, China, at 2.3 percent. The number of children who die before their fifth birthdays, mainly from preventable diseases like malaria and diarrhea, stands at 66 per 1,000, compared with 19 in China and 21 in Brazil.

India's left-leaning government, in power for the past eight years, has done surprisingly little to address deficiencies in public health. Instead too much policy emphasis has been placed on food and fuel subsides. Though intended to help the poor, many benefits accrue to households well above the poverty line. The total cost of these subsidies amounts to 9 percent of GDP, the OECD reckons.

But the government does want to double the amount it spends on health. With a fiscal deficit already touching 5.9 percent, it will need to scale back elsewhere to finance that goal. The new plan could be a good first step towards a healthier balance of pro-poor policies.

Indian makers of generics, like Dr Reddy's and Cipla, should benefit from the new initiative. Big foreign drugmakers, by contrast, may feel hard done by. Providing free generics but forbidding doctors from subscribing branded medicines appears to cut them out of the loop. But 90 percent of India's drug spending is already directed to generics, and it's logical that the government should concentrate on the cheaper end of the market.

India's already a two-tier market. The growing middle class spends an additional 3 percent of GDP on private care, and it will continue to consume more branded drugs. And as India develops, greater public consumption of healthcare should ultimately lead to a relaxation of the rules on generic products. That could be a long term boon for the foreign firms too.


- India has put in place a $5.4 billion plan to provide free medicine to hundreds of millions of people, Reuters reported on July 4.

- India's public doctors will soon be able to prescribe free generic drugs to all comers, vastly expanding access to medicine in a country where public spending on health was just $4.50 per person last year. Under the plan, doctors will be limited to a generics-only drug list and face punishment for prescribing branded medicines.

- Within five years, up to half of India's 1.2 billion people are likely to take advantage of the scheme, the government says.

- In March, India granted a licence allowing a domestic drugmaker to manufacture a copy-cat version of Nexavar, a cancer drug developed by Germany's Bayer. The move unnerved foreign drugmakers but enabled Natco Pharma to sell its generic drug at 8,800 rupees per monthly dose, a fraction of the 280,000 rupees Bayer's branded version cost.

- GRAPHIC: Generics in India, click

(The author is a Reuters Breakingviews columnist. The opinions expressed are his own)

(Editing by Richard Beales and Katrina Hamlin)

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Comments (1)
x_wolfman wrote:
It is about time that Mr Jeff has to dive into the past to understand that the political structure of parties in India is divided into

1. Right-winged extremism a.k.a. saffronists who conveniently bring welfare to non-Hindu religions. Has a record of demolishing a Mosque in Ayodhya, India with a large scale of party workers (in thousands) apart from having a record of nuns being raped and churches being demolished in the States governed by them. Also, large-scale promoters of local FMCG. Anti-FDI (100%), anti-globalization policies; with International Foreign Policies leaning more towards Russia and China.

2. Left-winged extremism: Perfect Che guervaro styled governance with close ties to China. The major party on this side is CPI (Communist). Labour vs Management screw-ups are sponsored by Left Wing Extremists where labour strikes and protests which halt businesses are more endorsed. Anti-globalization, softly anti-FDI (100%).

3. Neutral: The group of parties with most secular credentials. Equal welfare to all religions, equal punishment to all such offenders. In the States where Congress has a long time historic rule, progress / development is seen fast with less local terrorism. Maoists, Naxals have their founding grounds situated in left & right wing party ruled states. This neutral group of parties have a larger scope for India’s foreign policies; and have well controlled the left and right wing extremists through the past few decades. It is neither leaned towards left nor the right.

Jul 05, 2012 4:20pm IST  --  Report as abuse
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