Does Dr. Senaka Bibile’s drug policy promote the consumer interest?
Wednesday, 30 October 2013 00:00
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By R.M.B. Senanayake
Minister Tissa Vitarana has paid a glowing tribute to the late Dr. Bibile. Yes he was a creative mind and, in accordance with his Marxist beliefs, wanted to economise on the drug imports to the country.
His achievements were summarised by the Minister as follows: “He showed that there were innumerable brands of a particular medicine imported into Sri Lanka and that the more expensive ones dominated the market. For example there were 23 brands of tetracycline. What Senaka achieved was to ensure that only one generic tetracycline of good quality was imported to Sri Lanka at the lowest price. He did the same for all other medicines and in 1972 there was an overall saving of more than 40% in the drug import bill to the country. All the low cost essential medicines were available though out the year in the government hospitals and in the private pharmacies. By insisting on certificates of good manufacturing practice and regular sample testing, he ensured their quality. Every patient got the medicines he needed at all times. How did he do so? By restricting import of pharmaceutical drugs to the generic product only.”
Weak tender procedure
We recently saw how several Indian drug firms were blacklisted because they have imported and supplied generic drugs of inferior quality. This of course is due to the inherent weakness of the tender procedure. Tender procedure means the lowest tendered price is accepted and that from the tenderer who quoted such price. But this can mean the sacrifice of quality for price.
What patients want is to buy the product which has a curative effect and if quality is sacrificed for the price, it is nothing but fair to allow the patient to make the decision whether to buy the cheaper product or the quality product. But granting an import monopoly to a State Pharmaceutical Corporation deprives the public of exercising such a choice.
Dr. Bibile may have thought that there is no difference in quality between the branded product and the generic product but it is the doctors who treat the patient who are in the best position to judge this.
Generic vs. branded
I take a drug for hypertension called ‘Prasosin’. My doctor realised that my pressure was high despite taking this drug which he said was a very powerful drug and quite effective. He asked me to change the pharmacy from which I bought this drug and I went to another better known pharmacy called Health Guard.
They offered me the same drug which I had bought earlier and it was from Bangladesh. He told me there was the product from Malaysia which I had taken earlier. He told me that the product is imported only by the State Pharmaceuticals Corporation and that they seemed to have stopped the import from Malaysia.
My wife went to a small pharmacy in Punchi Borella which still had the Malaysian product and she bought up all the available quantity. So it appears that the SPC has stopped importing the Malaysian product. I was then advised to buy the branded product from Pfizer’s. If the latter had been banned too, I would be without an effective remedy for my high blood pressure. So while it may be economical for the Government hospitals to dispense only the generic drugs and that too the cheapest in the market, there is no reason to prevent private patients or even Government hospital patients who want to purchase the product with their own money, from buying the branded product.
Other countries too have implemented a policy of dealing directly with drug companies for negotiated prices. I don’t think these other governments have banned the purchase of branded products but have insisted that they supply the product at the same price as the generic product. This is certainly desirable. But the tender procedure is not an appropriate mechanism to do so. It is better to have direct negotiations as the US Government does.
No case for a monopoly
The cost of modern medicine has risen and continues to rise, as pointed out by the Economist Baumol. Enormous amounts of money are spent on Research and Development before a new drug is marketed. So the higher margins of the branded products are justified as the cost of research and development. Of course the period of the patent is limited and after it is over the branded product will have to compete with the generic product. Fair enough, but why interfere with the right of a company to import and sell to the private market?
So there is no case for a monopoly not even for a State monopoly for State institutions are notorious for higher costs due to inefficiency and corruption. Dr. Bible’s faith in State monopolies arose from his Marxist ideology and not from economic rationality.
