The FDA will import two life-saving cancer drugs to make up for critical U.S. shortages. reuters

The Indian government has taken a major step toward its ambitious vision of achieving Universal Health Coverage (UHC) by initiating a $5.4-billion plan that would allow the government sector doctors to prescribe generic drugs to patients free of cost.

The policy decision, taken last year, was not announced to the public but the initial funding for the scheme was allocated in recent weeks, a Reuters report said quoting the health department officials.

The policy of the government is to promote greater and rational use of generic medicines that are of standard quality. They are much, much cheaper than the branded ones, said LC Goyal, additional secretary at the Ministry of Health and Family Welfare.

A Move In The Right Direction To Benefit Millions of Poor

The move, aimed at making healthcare affordable to hundreds of millions of Indians, is a major policy initiative by the government toward strengthening its public health system, which is in a pathetic condition due to lack of funds and infrastructure.

India, the third-largest economy in Asia, has a dismal performance record where its public health sector is concerned. The Indian government spends just 1.2 percent of the GDP on the health sector, which is among the lowest in the world. Other countries in the region such as Sri Lanka, China and Thailand spend 1.8 percent, 2.3 percent and 3.3 percent of the GDP, respectively, in the health sector. In developed nations like the U.S. and European countries, the public health spend is between 6 to 8 percent of the GDP.

Even in per capita terms, India has the worst figures in the health sector spending. India spends $43 per person on average, while the expenditure per person in Sri Lanka, China and Thailand is $87, $155 and $261, respectively.

India adopted the policy of UHC decades ago, but never attained the set goals, thanks to the apathy of successive governments. Inefficient and faulty management of the healthcare system has rendered it practically defunct.

More than 70 percent of India's population lives in rural areas and nearly 40 percent of the population is either below the poverty line or hovering close to it. Public healthcare is the only option for millions of the rural poor who cannot afford the costly private healthcare in the country.

Primary Health Centers (PHC) in rural areas are in a bad shape and are functioning in crammed and debilitated buildings with no basic facilities. Most of them don't have doctors as pathetic conditions and lack of facilities discourages even doctors from practicing in these PHCs, said Dr. Ramnath Ballala, a doctor who works with Medecins Sans Frontieres (MSF) in the rural villages of Chattisgarh.

Most of the people in rural areas don't have medical insurance. And as they cannot afford private medical practitioners, they end up going to rural quacks or don't take treatment at all. The infant mortality and life expectancy are much less in Indian states that lack proper public health centers, he added.

At present, doctors even in the rural areas prescribe medicines (mostly non-generic) to the patients, who have no choice but to buy them from the medical shops, as most of the dispensaries in PHCs won't have the stock of medicines. Since these medicines are expensive, they will be forced to spend a considerable portion of their income on medical expenses, and those who cannot afford them will be forced to discontinue the medication.

The new policy mandates the doctors to prescribe only generic drugs that are much cheaper when compared to the branded drugs. If the government decides to go ahead with its only generic drugs policy, then it will be able to buy more stocks for its public health centers with the allocated amount. If utilized rationally, the $5.4-billion allocation for the new policy can solve the problem of lack of medicines in public healthcare centers.

According to the government, 52 percent of the population will come under the cover of the free drug policy by April 2017, at a cumulative cost of 300 billion rupees.

The Big Pharmas Lose out

The new health plan has left the pharmaceutical giants fuming as the doctors are allowed to prescribe only generic drugs and not the branded ones. That would mean the bigger corporate drug makers will not be able to benefit from the $5.4 billion plan.

Without a doubt, it is a considerable blow to an already beleaguered industry, recently the subject of several disadvantageous decisions in India, said Chris Stirling, European Head of Chemicals & Pharmaceuticals at KPMG, as reported by Reuters.

The big corporations have been targeting the emerging economies like India and Brazil for expansion activities in the branded drug sector. Companies like GlaxoSmithKline and Pfizer, which make branded drugs, fear emulation of the generic-only drug policy by other emerging economies.

Emerging economies like India and China, each with the population of over a billion, have encouraged generic drug makers in an attempt to control the unaffordable essential drug prices.

Both these countries have allowed generic drug makers to sell cheap versions of costly patented drugs, much to the worry of the big manufacturers. India issued the first ever compulsory license to a domestic company to manufacture a much cheaper version of Nexavar- a cancer drug patented by Bayer and Onyx Pharmaceuticals.

The Indian version of Nexavar, manufactured by Hyderabad-based Natco Pharma, is 30 times cheaper than Bayer's drug. The decision has raised a huge debate over the intellectual property rights of the companies and the common man's right to have access to life-saving drugs.

Bayer has appealed to the Intellectual Property Appellate Board against the order of the Patent Controller of India.

The U.S. House of Representatives and the U.S. Patent and Trademark Office have also threatened to drag India to the World Trade Organization over the issue. However, Indian authorities have maintained that it hasn't violated any international regulations and the issue of compulsory licensing comes under the Trade Related Intellectual Property law (TRIPS).

Though India's new policy has disappointed the drug makers globally, the decision has come as a welcome respite to those patients who cannot afford expensive medicines as well as the generic drug industry in the country.