L ove them or hate them, but for drug companies and policymakers, there is no ignoring the formidable AIOCD, or All India Organisation of Chemists and Druggists. The trade body represents about 7.5 lakh chemists, and at its helm is 63-year-old Jagannath S. Shinde, thrice-voted secretary and twice president, unopposed. As the Union Government prepares the revised drug pricing policy to be unveiled this month, Shinde speaks on the policy, trade margins, recent run-ins with the Maharashtra Food and Drug Administration and pickings from there for other States.
Excerpts from Shinde’s interview with Business Line.
The AIOCD urged the Government to adopt a market-price-based formula over the cost-price method. Why?
We did ask for a market-price-based policy. The Government has been following the cost-price formula, but take the Drugs Prices Control Order 1995. Of the 74 drugs under price control, over 25 are out of the market. For any Government, the issue is availability of quality and safe medicines. And this agenda will not be successful if stakeholders are not satisfied. In the revised policy, if medicines go out of the market from the list of 348 essential drugs, who suffers? It is the common man. People will buy if there is a shortage too, but prices will go higher. Besides drugs going out of production, some others were changed into another category of medicine to avoid price control. A market-price-based formula will help Government meet its agenda, making it viable for producers.
Are you happy with the proposal to peg ceiling prices at the weighted average price of drugs in a particular category, with each having a 1 per cent market share?
It is a suggestion we made. There are thousands of manufacturers and competition will be there. From birth, which price remains constant? Inflation will be there.
Why did you not agree with pegging the ceiling price at the cost of production plus a negotiated margin?
If a stakeholder is not satisfied, then availability will be in danger. The manufacturer should get a proper margin; the trade should get a proper margin; and the consumer a proper rate, besides safe quality.
The hefty margins given to the trade are a subject of controversy, some say it is unjustified. What do you think?
Today we have a small margin — 20 per cent (to retailers) on decontrolled drugs and 16 per cent on controlled medicines. We told the Government keep the status quo on our margins as outlined in the DPCO 95. We are the only trade that asks Government to define our margin. So it’s open.
There are concerns that producers at the lower rung of the price ladder could increase their prices closer to the referential price? Is that a valid concern?
A producer increases price when present costs are not affordable or viable. I don’t think there will be an increase in prices. And I don’t see Indian companies and MNCs forming a cartel, everyone wants to survive. The market will find its own level. In Mumbai, vada pav was 5 paisa, now it is Rs 25. No one protests. Inflation increases prices. Look at dal-chawal (lentils and rice). It was 31 paisa per kg chawal , I am talking about the ’60s (laughs)!
There are also concerns on the policy using IMS data, that is both private and proprietary. Your thoughts?
IMS is an MNC. We have recently launched e-Milan, a software package to track medicine prices down to the retailer. It will capture over 80 per cent of data across the country. The registered retailer just has to punch a requirement and will get options of stockists, cost and availability. The package will be installed for members, free. Absence of data makes it difficult for the Government to plan and create infrastructure or distribute medicine. Insights from the data will be sold to industry.
Has the Government approached you for data?
The Government knows we have data. Queries are coming in from Kerala and Maharashtra. They are not customers, it’s more like a service. But to the industry, I cannot give it free of cost! We ensure secrecy of the customer. Within a year, we will have data from across the country. Some chemists do not want to co-operate and some small retailers don’t have computers. By international standards, 80 per cent coverage is as close as 100 per cent.
Isn’t it mandatory to have a computer, a refrigerator, a pharmacist in a chemist shop?
You need refrigerators, but look at the power cuts in the country. The problem is, we copy New York, Europe, Wall Street, but you don’t know the condition on your street! You don’t have qualified doctors in certain parts of the country, in rural areas. I (as a chemist) am staying in the same locality and if I don’t provide a medicine, they will burn me down. The law is for people, but it needs to be practical.
How did you get involved with AIOCD?
After a lockout in Chowgule Engineers, where I worked, I started a medical store in 1976. I wanted to be an entrepreneur. This was at 25 years of age, before marriage. Then I completed B. Pharm. Now I have a retail shop in Kalyan, stockists in Pune and Kalyan and am a C&F (carrying and forwarding) agent for nine companies and supply to Mumbai.
You are a powerful man.
I have risen from the ranks.
Have issues with the State FDA, when chemists threatened a three-day strike, been resolved? Do other States face similar problems?
I am not getting into the sale of abortion pills, or what was prescribed by the doctor. I am licensed to provide medicines on prescription. It is my job. The chemist should not have been taken as accused, but as a witness. There were raids, chemists were forced to shut down. Authorities need to understand each shop has two or three people as dependants. Don’t punish, educate.
It is the same problem across India. Ayurveda (and other alternative medicine) practitioners cannot prescribe allopathic drugs. In places with no qualified doctors, when a person comes to a chemist for medicine — kanoon ko zinda rakhoon, ya aadmi ko zinda rakhoon ? (Do I keep alive the law, or the person?)
This is the situation in India, lots of laws but no infrastructure.
So the status quo continues. But villages have survived.