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IN DRAWING UP the new drug policy, the Government has had the unenviable task of striking a balance between the domestic industry's interest and consumer concerns over rising prices of medicines. The way it has chosen to do so is to retain price controls on only drugs of mass consumption or whose market is dominated by leading brands. This is welcome as governmental intervention on prices is predicated upon a set of objective and transparent criteria. This would help avoid allegations of lack of fair play in the choice of drugs to be brought under price control.Of greater significance, the use of publicly available and independently collected turnover data on drugs should lead to greater confidence among consumers too.

Itwould appear that the span of price control will cover some 36 drugs, about half the number that was controlled in the preceding price regime. Pruning the span of control is bound to raise justifiable concerns about the possibility of prices escalating once a few drugs are freed from control. But a quick look at past price trends of drugs outside control suggests that such fears are unfounded. In most cases while the leading brands certainly hiked prices significantly, lesser known ones seem to have effected small rises or none at all. The floor prices do not seem to have risen significantly, a testimony to the high level of competition in the industry. If leading brands, however, raise prices significantly, there may be a problem of accessing less expensive brands considering the low level of awareness in India. This is where transparency in selecting drugs to come under price control and, hopefully, a mechanism to consider feedback from the consumers should make a material impact on ensuring access to drugs.

Amongthe key objectives of the new drug policy are provision of incentives for domestic research and development and strengthening quality control. The increasing emphasis on R&D in official pronouncements has a lot to do with the impending change to product patents. The current process patent regime has had an overwhelming positive impact on the range and price of drugs in India. An attendant benefit has been the huge growth of the domestic pharmaceutical industry the last three decades. It is difficult to see how the drug policy can greatly affect investment in R&D. Most incentives for R&D are likely to be of a fiscal nature and would therefore form part of the Budget proposals. Fiscal incentives for R&D are almost certainly bound to be misused by a few corporates, but it is difficult to see smaller firms — that play a big role in checking prices — setting aside resources for R&D without fiscal incentives.

Leavingaside top-end domestic companies that have highly developed R&D skills, the policy may be able to make a material difference to R&D in India by transparently supporting public institutions. Collaborations between corporates and well-known public institutions are quite common now, but it may be necessary to help the latter research therapies for ailments such as tuberculosis that will make a difference to a large section of the population that does not have the purchasing power to interest corporates. Finally, to make any drug policy really effective, a lot needs be done about healthcare infrastructure and delivery. Else, we may continue to live in an anomalous society that has pharmaceutical companies offering `cutting edge' technology in healthcare at a fraction of the innovator's cost, yet making little difference to the majority.

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