Is the removal of import duty waiver on drugs ill-timed?

Rupal Panchal hopes Prime Minister Modi would do for people with haemophilia what Chief Minister Modi did in Gujarat years ago.

As Gujarat’s Chief Minister, Narendra Modi had made a state budgetary allocation for haemophilia, making medicines to treat the blood-disorder more accessible, says Panchal, with the Haemophilia Society.

The organisation is now unhappy with a recent government move that adversely affects the supply of two core haemophilia medicines.

Last week, the Centre removed customs duty waivers on 76 imported drugs, ostensibly with an eye on encouraging local producers to ‘Make in India’.

The list included cancer and HIV drugs, some of which are locally produced. But, that was not the case with antihaeomophilic factor (AHF) concentrate (VIII and IX), that has a single company importing it and two others making it locally.

“A person with haemophilia becomes progressively disabled and they need to treat their joint bleeds with AHF,” says Panchal, worried about a supply shortage.

The haemophilia fallout has, in fact, exposed chinks in the government’s Make in India campaign, as it spotlights concerns on supply constraints, quality and price increase.

Just weeks before the latest duty removal on medicines, the government had withdrawn a similar concession on some medical devices, again to encourage local production.

The removal of the concession on medicines could not have come at a worse time, says Panchal. In Maharashtra, supplies are erratic and there are little or no supplies of this medicine in the last six months. It gets worse because of the State’s squeeze on fund allocation for these programmes, he says.

Haemophilia is a genetic disorder where the blood does not clot and an adult needs about four infusions a month to stay active or go to work, he explains, and the medicine’s discounted cost to patient is about ₹6 lakh a year.

Drugs are different from medical devices. But, the removal of tax concessions on both categories have brought with it fears of a price increase that will get passed on to patients.

Representatives with domestic drug-makers, however, clarify that medicine prices may increase by 2-8 per cent. But, the short-term pain is a step towards building domestic capabilities for the long term, an industry veteran said.

Panchal further says the Government should not lose sight of the quality of local products, in its pursuit of Make in India.

Complex biological drugs are difficult to make and many are patent-protected, he says. “The DCGI (Drug Controller General of India) should look at the quality of medicines made here and certify it,” he adds. He also moots an ‘orphan disease’ policy to get local companies to make drugs for diseases that get little attention.

Speaking for local producers, Rajiv Nath with the Association of Indian Medical Device Industry (Aimed) agrees that an Indian equivalent of an internationally acceptable safety and quality certification is required on devices. Benchmarks should be outlined on clinical data requirements, for example, to inspire faith in doctors and other markets in the quality of Indian products, he says.

Nath explains that customs duty waivers were necessary because of the lop-sided duty structure on medical devices. Raw materials attracted higher duties than finished goods. This worked as a disincentive for local producers, as it was easier for traders to import products from China or Taiwan at one-tenth the capital cost, he says.

But AdvaMed (a platform for foreign medical device-makers) cautions that concession waivers would hurt the import-dependent sector and obstruct initiatives to bring foreign investment into medical devices.

The nascent domestic industry has limited capacity to make quality devices due to a lack of product know-how, it says. And the government needs to invest in training and capacity-building locally, besides giving financial support, and this will take time, AdvaMed adds.

This being the complex mix of issues around making medicines and devices locally, the government will have to tread carefully on its Make in India campaign to ensure patients do not get hurt in the process.