Perils of over-regulating health sector

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 A tendency has been witnessed in recent days of various arms of the Indian government attempting to over-regulate the domestic pharmaceutical and health industry by changing rules and laws in such a way that it makes it more and more difficult for business to be carried out in India by domestic players.

The recent panic in Delhi and in other parts of the country over the anti-rabies vaccines vanishing from the market and those with animal bites roaming freely without vaccination is a case in point, being a direct result of overzealous, yet unthinking, regulation.

The point is that in earlier days the anti-rabies vaccine used to be freely available in the market. Then the government brought these vaccines under the ambit of price control, reducing the price so drastically that it became a loss making venture to produce this vaccine. The result was that the supply of these essential vaccines dried up and those bitten by animals stared at a bleak future, if any. Fire fighting can be done by forcing a public sector enterprise to provide the vaccines for some time by bearing a loss. But this can not be a permanent solution.

Similar is the case of the Indian government mooting the regulation that those who market drugs will also be held liable for the quality of the drugs. One can understand that the manufacturer of the drugs are held to account if the drug in question fails the quality test. But how on earth can an entity that has only obtained a wholesale license from the government and only distributes the drugs manufactured by someone else, be held liable for the shoddy manufacturing practices of someone else? This appears to be a fit case where one is punishing Ram for the crimes of Shyam and goes against the sacrosanct principles of natural justice.

A similar approach by the government agencies could be seen in the earlier banning of a very large number of fixed dose combination drugs at one go. After the matter reached the higher judiciary, the government is still insisting on this approach of banning fixed dose combination drugs, calling them irrational on the basis of so called findings of a panel.

Data has recently been released which shows a massive increase in the import of medical devices into India with the result that the share of Indian medical devices companies in the Indian market has drastically fallen. The Indian manufacturers are attributing this to the plethora of rules and regulations that they have to follow, while the regime created for imported medical devices is that the foreign players are treated as blue eyed boys by our bureaucracy.

The Indian pharmaceutical industry is the supplier of medicines to the world. However, if over-regulation chokes this industry in India, manufacturing activity will shift to neighbouring countries at India's expense. That would be a tragedy, for, it would amount to killing the bird which lays the golden egg.

It may be noted that the manufacturers of drugs in India take permissions from the government. It is the governmental agencies that are responsible to see that the terms of the permissions are adhered to in letter and spirit. In case the drugs manufactured by these entities are found to be sub standard or not of standard quality, the first liability is that of the manufacturer. It is only thereafter that the vicarious responsibility of the state comes, in the shape and form of the drugs authorities who exercise a supervisory jurisdiction over them. However, instead of accepting this vicarious responsibility, the Indian state is attempting to do the unthinkable by attempting to pin the blame on those who merely market the drugs.

This proposed change in rules may well be the proverbial last straw on the camel's back, breaking the back of the Indian pharmaceutical industry, which is already floundering.


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