The Finance Ministry’s decision to withdraw customs duty exemptions for 76 life-saving drugs will at once make them more expensive and impact patients who are already paying a high price for such medical treatment. It is important to keep in mind that a majority of Indians meet health care costs through out-of-pocket expenditure, and any increase is bound to adversely affect them. It is true that the customs duty waiver is an interim measure, and that the list has to be revised periodically. Certain drugs now removed from the list are either no longer used by patients or are being manufactured in India at a lower cost than the imported ones, and therefore should be removed from it anyway. However, it is not clear what “public interest” is served by removing certain essential medicines that are either not manufactured in India or whose demand currently exceeds local manufacturing capacity. While the government has been enthusiastic about withdrawing the exemption for 76 drugs, it has failed to include certain life-saving or essential drugs that have been launched recently and are under patent protection. This indicates that consultations have not been broad-based; this has to be corrected as the patient’s interest should be the priority. Unlike in the case of other commodities where the consumer is the decision-maker, doctors’ prescription preferences, sometimes based on partisan considerations, dictate whether a patient ends up buying imported drugs even when locally manufactured options are available at a lower price. It is for this reason that the withdrawal of 22 per cent customs duty exemption on imported drugs could have an impact on a patient’s budget; imported active pharmaceutical ingredients (APIs) will also increase the cost of generics made locally.
Since the late 1990s, India has lost out to China in the API market. Active as well as enabling support from the government in various forms helped the Chinese industry flood the Indian market with cheap APIs. While the product patent regime that came into full force since 2005 and the flooding of the market with Chinese APIs may appear to be genuine reasons for giving the Indian industry cover to catch up, any protection cannot be long-lasting. The only way for the Indian drug industry to grow is by investing in research and development and in producing novel drugs that enjoy patent protection. India is the pharmacy of the South, but that dominance is restricted to generics. This has to change, and the government has to extend support in larger measure. As is the case in the U.S., many drugs that go on to become commercially profitable have their origins in academic and government institutions. Unfortunately, the recent decision to cut research funding will not help the industry. The earlier the government realises this and changes its priorities, the better it would be for the country.