By the end of this year, Indians who go to public clinics and hospitals will be able to get their prescription drugs for absolutely no cost under a new $5.4 billion government program, reports the Times of India. While the new policy could change the lives of hundreds of millions of people, big pharmaceutical companies are infuriated – they fear losing out in one of the world’s fastest-growing emerging markets, reports Reuters.
That’s not because they were expecting to sell a lot of drugs to the typical Indian, who makes about $1.25 a day. According to the World Health Organization, India spent $4.50 per person on healthcare in 2011. The U.S. spent over $7,150 per person on healthcare, almost 1,600 times as much as India.
India is, in one sense, just trying to help its poor. Generic drugs are cheaper than brand-name ones in every market. But what drives Western drugmakers’ fear is that India has also let one of its generic drug companies copy and sell a Western drug that is still under patent protection. China appears to be remaking its regulation to allow similar copycat drugs. This undercuts the way pharmaceuticals are developed in the Western world. And Western drugmakers were counting on huge growth as hundreds of millions of Indians (and Chinese) prospered.
A pharmacist gives free medicine provided by the government to a patient inside a government hospital in Kolkata, India in July. (Reuters)
Under India’s plan, only generic drugs on an approved list may be prescribed, the newspaper reports. Doctors will face punishment if they prescribe branded pharmaceuticals at the government’s expense. Exceptions can be made if there is no generic equivalent to a necessary brand-name medication.
There’s a huge gap between life expectancy in India, 67 years, and a place like the U.S., where it is more than 78 years. India’s move may help it bridge that gap.
New Delhi expects to provide 52 percent of India’s population with free drugs by 2017. The remaining population will likely continue to attend private hospitals and clinics, where they can choose to purchase brand-name pharmaceuticals at higher prices. As Reuters notes, a lot of people in India do this: 90 percent of spending on health care in the country currently comes through private clinics. The Indian government is betting that people who can afford brand-name drugs will continue to pay for them. Western drug companies can only watch and hope.