‘The new Government has an opportunity for creating a system of universal healthcare that can set a global benchmark’

As India counts down to the start of the 2014 general elections, there is hope all around that these elections will usher in a stable majority government at the Centre. In keeping with the winds of change, the new Government that comes to power will be expected to articulate innovative solutions to tackle age-old challenges, especially in a critical area like healthcare.

In attempting to fulfil the needs of ‘affordability’, availability’ and ‘access’ for its citizens, the new government has an opportunity for creating a system of universal healthcare that can set a global benchmark.

The next Prime Minister needs to urgently address these following issues as part of his healthcare agenda:

FDI in pharma: The FDI policy on pharma needs to revert to the previous regime that allowed automatic infusion of foreign equity of up to 100 per cent in both greenfield and brownfield projects, so that it’s not left to the government’s discretion to introduce riders for clearing investment proposals.

IPR: India must clearly enunciate the rules governing patentability for pharmaceutical products. We should stick to our stand on IP laws that discourage ever-greening of patents. Moreover, patent laws should establish the importance of practicing patents in India for seeking protection and not ‘squatting’ on patents e.g. Bayer’s Nexavar case.

Also, India should grant data exclusivity on all patented drugs for four years from the date of launch or until expiry of molecule patent, whichever is earlier. The government should not restrict drug substance or drug product development during the period a product is under active patent protection. Instead it should ensure that no marketing approvals are granted to copies until patent expiry.

Pricing policy: The government can’t expect the industry to bear the full burden of making medicines affordable, and should thus remove generic drugs from price control. In light of the healthcare challenges faced by developing countries with a large patient pool, innovator companies need to re-look at their business models for India. For imported patented drugs, MNCs need to evolve a pricing mechanism that is linked to purchasing parity and price their products at par with the lowest discounted price offered in global markets. The Indian Government, on its part, should raise its healthcare spending to three per cent of GDP so that it can fund schemes aimed at lowering the healthcare burden of the poor.

Clinical trials: The government should lift the prevailing moratorium on clinical trials. Moreover, it should re-look at some of the recent changes brought in to strengthen the monitoring of clinical trials as they could end up deterring drug innovation in India.

Mandatory video recording of free consent of patients to be part of a trial is one such requirement. Videography is doable for small clinical trials but impractical when there are thousands of patients involved like in vaccines trials. Similarly, guidelines should be rationalised to ensure that patients become eligible for compensation from the sponsor only when a direct link is established between an adverse event and the trial.

Irrational clinical trial guidelines will scare away innovators from India and irretrievably hurt India’s ability to partake in new drug development.

Incentives to spur R&D and SEZ benefits: To spur investment in research and development, the government should extend the current benefit of per cent weighted tax deduction on all in-house R&D spends to international patenting and overseas R&D expenditure. The government should grant a 100 per cent tax free status to biotech SEZs with an aim of incubating biotech companies and propagating R&D. In fact, in addition to the five-year tax-free status normally granted to SEZs, biotech SEZs deserve tax exemptions for two additional years to ensure that the time taken for obtaining regulatory approvals for products developed at the units is also accounted for.

International trade-related issues: As India is already one of the world’s leading manufacturers of generic drugs and vaccines at the lowest cost, all Government tenders should give preference to indigenously manufactured pharma products, like in the case of vaccines. In fact, the Government must exclude imported drugs from tenders except in cases of drug shortage. This will improve the manufacturing efficiency through economies of scale as well as save the exchequer import dollars.

Import duty on pharma machinery: To provide a boost to local biotech and pharma companies, the Government should exempt all manufacturing and R&D equipment from import duty. The Government should also provide incentives to create large-scale pharma and bio-pharma manufacturing facilities, which in turn can attract large foreign investments.

Year 2014 can be a year of positive change if the new government can show the political will and provide effective administration to make healthcare accessible and affordable for millions of needy Indians.

– Kiran Mazumdar-Shaw, Chairman & Managing Director, Biocon