Making Markets Work for Affordable Healthcare: Policy note by Competition Commission of India
(Topic: Issues relating to development and management of Social Sector/Services relating to Health)
The need: Over the nine years of enforcement of the Competition Act, 2002 (the Act), the Competition Commission of India (‘the Commission’) has received 52 cases pertaining to the pharmaceutical and healthcare sector. The Commission, while deciding on the cases, has observed that information asymmetry in the pharmaceutical/healthcare sector significantly restricts consumer choice. In the absence of consumer sovereignty, various industry practices flourish which have the effect of choking competition and are detrimental to consumer interest. Such practices may not always violate the provisions of the Act, but they create conditions that do not allow markets to work effectively and healthy competition to drive the market outcomes. The response to these issues can, in many instances,take the form of appropriate regulations that can pre-empt market-distorting practices and help create pro-competition conditions.
Key issues and recommendations:
Role of intermediaries in drug price build-up
One major factor that contributes to high drug prices in India is the unreasonably high trade margins. The high margins are a form of incentive and an indirect marketing tool employed by drug companies.
Further, self-regulation by trade associations also contributes towards high margins as these associations control the entire drug distribution system in a manner that reduces competition.
Efficient and wider public procurement and distribution of essential drugs can circumvent the challenges arising from the distribution chain, supplant sub-optimal regulatory instruments such as price control and allow for access to essential medicines at lower prices.
Electronic trading of drugs, with appropriate regulatory safeguards, could be another potent instrument for bringing in transparency and spurring price competition among platforms and among retailers, as has been witnessed in other product segments.
Quality perception behind proliferation of branded generics
Worldwide, generic drugs are seen as a key competitive force against the patent-expired brand name drugs marketed at monopoly prices. In India, the pharmaceutical market is dominated by ‘branded generics’ which limit generic-induced price competition.
The branded generic drugs enjoy a price premium owing to perceived quality assurance that comes with the brand name. Quality consideration may be a reason behind the prescription of branded generics by doctors. However, it is also equally possible that the brand proliferation is to introduce artificial product differentiation in the market, offering no therapeutic difference but allowing firms to extract rents.
The regulatory apparatus must address the issue of quality perception by ensuring consistent application of statutory quality control measures and better regulatory compliance. Unless the quality of drugs sold in markets can be taken to be in conformance of the statutory standards regardless of their brand names, generic competition in the true sense of the term cannot take off.
The practice of creating artificial product differentiation for exploitation of consumers may be addressed through a one-company-one drug-one brand name-one price policy.
Vertical arrangements in healthcare services
In view of the incentive-based referral system that pervades the healthcare landscape, issuing of periodic validated data by hospitals relating to mortality rate, infection rate, number of procedures etc. could help patients make informed choice.
The in-house pharmacies of super specialty hospitals are completely insulated from competition as inpatients are typically not allowed to purchase any product from outside pharmacies. This calls for regulation that mandates hospitals to allow consumers to buy standardised consumables from the open market.
All accredited diagnostic labs should meet the same quality standards in terms of infrastructure, equipment, skilled manpower etc. for getting accreditation. This will ensure the same degree of reliability and accuracy of test results across labs.
There is no regulatory framework that ensures and governs portability of patient data, treatment record, diagnostic reports between hospitals. This acts as a constraint for patients in switching from one hospital to another and creates a lock-in effect.
Portability of patient data can help ensure that a patient is no longer locked into the data silos and do not bear additional cost for switching medical services and that doctors/hospitals can have timely access to patient data.
Regulation and competition
Owing to the multiplicity of regulators governing the pharmaceutical sector at the centre and state level, implementation of regulations is not uniform across the country. This has resulted in multiple standards of same products and also different levels of regulatory compliance requirements.
A mechanism may be devised under the aegis of the CDSCO to harmonisethe criteria/processes followed by the state licensing authorities to ensure uniformity in interpretation and implementation.
It is also imperative to make the approval of new drugs time-bound along with publication of detailed guidelines governing each stage of new drug approval process.
Finally, two other major issues that affect the healthcare sector and thus warrant policy response are:
Shortage of healthcare professionals in the country owing inter alia to high cost of medical education
Inadequacy in health insurance
Cabinet approves
Signing and ratification of Extradition Treaty between India and Malawi: The Treaty would provide a legal framework for seeking extradition of terrorists, economic offenders and other criminals from and to Malawi.
Scheme for setting up of Indian Institute of Skills at different locations across the country in PPP modes:
Shall augment the global competitiveness of key sectors of Indian economy by providing high quality skill training, applied research education and a direct and meaningful connection with industry
It will provide opportunity to aspiring youth across the country to have access to highly skilled training, and enhance the scope of accountability through its linkage with industry and global competitiveness across sectors.
By leveraging advantages of private sector enterprise and public capital in terms of Government land, it would create new institutes of expertise, knowledge and competitiveness.
MoU amongst BRICS nations regarding cooperation in the social and labour sphere: The MoU provides a mechanism for cooperation, collaboration and maximum synergy amongst BRICS member countries with the common objective of inclusive growth and shared prosperity in the new industrial revolution.
Facilitate member countries to share knowledge and also implement joint programmes on .matter of Labour and Employment, Social Security and Social dialogue.
Ensure networking of international Training Centre of International Labour Organisation (ILO) with the BRICS Network of Labour Institutes which includes V.V. Giri National Labour Institute of India.
Focus on the theme of youth employment and research on new forms of employment.
Explore new learning technologies, including virtual network to deepen cooperation, exchange of information and capacity building.
The BRICS Social Security cooperation framework will deepen social security cooperation among BRICS nations and would facilitate cooperation for improvement of social security systems and social security agreements among member countries.
Memorandum of Understanding between India and Singapore on setting up of a joint working group on FinTech: Will benefit both India and Singapore to excel in the fields of Development of Application Programming Interfaces (APls), Regulatory Sandbox, Security in payment and digital cash flow, integration of RuPay-Network for Electronic Transfers (NETS), UPI-FAST payment link, AADHAR Stack and e-KYC in ASEAN region and cooperation on regulations, solutions for financial markets and insurance sector and sand box models.
Memorandum of Understanding among BRICS Nations on Environmental Cooperation: The MoU identifies the following stress of cooperation:
Air quality
Water;
Biodiversity;
Climate Change;
Waste Management;
Implementation of the 2030 Agenda for Sustainable Development and Sustainable Development Goals
National Monitoring Framework on Sustainable Development Goals:
Targets:
Measures to mainstream SDGs into on-going national policies, programmes and strategic action plans to address the developmental challenges.
Statistical indicators of NIF will be the backbone of monitoring of SDGs at the national and state level and will scientifically measure the outcomes of the policies to achieve the targets under different SDGs.
Based on statistical indicator, the MoSPI will bring out national reports on implementation of SDGs. The Report will facilitate assessment of progress, identify challenges and give recommendations for follow up at the national level.
High Level Steering Committee will review the National Indicator Framework on regular basis for its improvement.
Data source Ministries / Departments will be responsible for providing regular information to MoSPI on these indicators at required intervals and disaggregation for national and sub-national reporting of SDGs.
Advanced IT tools will be used for close and effective monitoring.
Major impact:
SDGs integrate economic, social and environmental dimensions of development. It intends eradicating poverty and promoting prosperity in a changing world with basic motto of ‘SabkaSaathSabkaVikash’.
SDGs with 17 Goals and 169 Targets intend for promotion of sustainable, inclusive and equitable economic growth, creating greater opportunities for all, reducing inequalities, raising basic standards of living, fostering equitable social development and inclusion, promoting integrated and sustainable management of natural resources and ecosystems.
NIF will help in outcome-based monitoring & reportingon progress on SDGs at National level.
GS-3
Creation of Fisheries and Aquaculture Infrastructure Development Fund (FIDF)
(Topic: Food processing and related industries in India)
Aim: To augment fish production to achieve its target of 15 million tonne by 2020 set under the Blue Revolution; and to achieve a sustainable growth of 8% -9% thereafter to reach the fish production to the level of about 20 MMT by 2022-23.
Benefits:
Creation of fisheries infrastructure facilities both in marine and Inland fisheries sectors.
Employment opportunities to over 9.40 lakh fishers/fishermen/fisherfolk and other entrepreneurs in fishing and allied activities
To attract private investment in creation and management of fisheries infrastructure facilities
Adoption of new technologies
International Conference on Status and Protection of Coral Reefs (STAPCOR – 2018)
(Topic: Conservation, environmental pollution and degradation)
Theme: Reef for Life
Where: Bangaram coral Island of Union Territory of Lakshadweep
Aim: Held every 10 years to review the status and progress of coral reefs all over the world.
Key takeaway: Evolving effective management strategies leading to restoration of coral reef, along with the practice of green good deed for behavioral change and social responsibility in day to day life was also emphasized.
Coral reefs are shallow water, tropical marine ecosystems which are characterized by a remarkably high biomass production and a rich faunal and floral diversity perhaps unequaled by any other habitat.
The structure of a reef is formed by the calcareous skeleton that houses corals, a type of soft-bodied, radially symmetrical, marine invertebrates of the phylum coelenterate.
Individuals of a colony are called polyps or hydroids.
Millions of coral skeletons cemented together over a period ranging from a few thousand to millions of years give rise to such
Reefs can vary enormously in structure and complexity and are roughly divided into three major types.
Fringing reefs’, reefs that grow close to the shore and extend out into the sea like a submerged platform.
Barrier reef: reefs separated from the land by wide expanses of water and follow the coastline.
Atolls: a roughly circular ring of reefs surrounding a lagoon, a low lying island, common in the Indian and South pacific oceans
Cold water corals
Cold-water corals extend to deeper, darker parts of the oceans than tropical corals, ranging from near the surface to the abyss, beyond 2,000 meters where water temperatures may be as cold as 4 °C. They inhabit deep water, not shallow water. Like tropical corals, they provide habitat to other species, but deep-water corals do not require zooxanthellae to survive.
United Nations Environment Programme (UNEP) reports that there are more cold-water coral reefs worldwide than tropical reefs. Their extent is much larger than their tropical counterpart. Some, as the various individual reefs stretching from Norway as far south as West Africa, are when combined far bigger than more famous tropical ones such as Australia’s Great Barrier Reef.
Cays –
Small, low-elevation, sandy islands formed on the surface of coral reefs from eroded material that piles up, forming an area above sea level
Can be stabilized by plants to become habitable
Occur in tropical environments throughout the Pacific, Atlantic and Indian Oceans (including the Caribbean and on the Great Barrier Reef and Belize Barrier Reef), where they provide habitable and agricultural land.
Belize’s Reef or Caribbean reef was in news recently for – will be removed from UNESCO’s list of threatened World Heritage Sites (Where is it located?)
What Do Coral Reefs Need to Survive?
Sunlight: Corals need to grow in shallow water where sunlight can reach them. Corals depend on the zooxanthellae (algae) that grow inside of them for oxygen and other things, and since these algae needs sunlight to survive, corals also need sunlight to survive. Corals rarely develop in water deeper than 165 feet (50 meters).
Clear water: Corals need clear water that lets sunlight through; they don’t thrive well when the water is opaque. Sediment and plankton can cloud water, which decreases the amount of sunlight that reaches the zooxanthellae.
Warm water temperature: Reef-building corals require warm water conditions to survive. Different corals living in different regions can withstand various temperature fluctuations. However, corals generally live in water temperatures of 68–90° F or 20–32°
Clean water: Corals are sensitive to pollution and sediments. Sediment can create cloudy water and be deposited on corals, blocking out the sun and harming the polyps. Wastewater discharged into the ocean near the reef can contain too many nutrients that cause seaweeds to overgrow the reef.
Saltwater: Corals need saltwater to survive and require a certain balance in the ratio of salt to water. This is why corals don’t live in areas where rivers drain fresh water into the ocean (“estuaries”).
In India
Coral reefs are restricted to narrow latitudinal, horizontal, and vertical ranges along the tropical continental shelves. Their contribution to global coastal biodiversity is disproportionate to their spatial extent: Although they cover less than 1% of the world’s oceans, they are inhabited by one-third of globally known marine species.
The mainland coast of India has two widely separated area’s containing reefs: The Gulf of Kutch in the North West, which has some of the most northerly reefs in the world and Palk Bay and the Gulf of Mannar (with numerous fringing reefs around small islands) in the south east.
There are patches of reef in the inter-tidal areas of the central west coast of the country. Coral patches have been recorded in the intertidal regions of Ratnagiri, Malvan and Redi, south of Bombay and at the Gaveshani Bank, 100 Km west of Mangalore
Important off shore island groups of India with extensive reef growth include the Andaman and Nicobar Islands in the Bay of Bengal and the Lakshadweep group of Islands in the Arabian sea. The Andaman and Nicobar islands have fringing reefs and a 320 km long barrier reef on the west coast. The Lakshadweep Islands are made up of atolls.
The absence of reef in the Bay of Bengal is attributed to
the immense quantity of freshwater and silt brought by the rivers
heavy monsoonal rains
high human presence on the coastline
Mains:
What are the principal causes of coral bleaching? Why we should be concerned about it? Discuss.
Describe where most of the world’s coral reefs are located. Give examples of islands or island groups that have coral reefs. What dangers does climate change pose for reefs? Discuss.
Prelims:
Snowflake coral poses a major threat to the coral reef colonies – can destabilize the marine ecosystem because it may crowd out other species like corals, sponges, algae, ascidians that contribute to the rich marine biodiversity of the region.
Prelims oriented News
Commonwealth Association for Public Administration and Management Award, 2018: India
2018 Seoul Peace Prize: Prime Minister Shri Narendra Modi
For his contributions to the growth of the Indian and global economies, crediting ‘Modinomics’ for reducing social and economic disparity between the rich and the poor
Contribution towards regional and global peace through a proactive foreign policy with countries around the world under the ‘Modi Doctrine’ and the ‘Act East Policy’
Seoul Peace Prize
Established in 1990 to commemorate the success of the 24th Olympic Games held in Seoul, Republic of Korea – an event in which 160 nations from across the world took part, creating harmony and friendship and a worldwide atmosphere of peace and reconciliation.
The Seoul Peace Prize was established to crystallize the Korean people’s yearning for peace on the Korean Peninsula and in the rest of the world.
“Harit Diwali-Swasth Diwali”: Merged with “Green Good Deed” movement that has been initiated as a social mobilization for conservation and protection of environment.
Air pollution is a serious health issue in the country especially in the northern parts during winter seasons. The air pollution in the northern region is attributed to
Dust
Burning of crops in certain states
Burning of garbage construction
Prevailing climatic conditions
India and Bangladesh Sign Agreements for Enhancing Inland and Coastal Waterways Connectivity: To facilitate easier movement of goods and passengers between the two countries, giving an impetus to trade and tourism.
10th Nuclear Energy Conclave on the theme: ‘Nuclear Power – Towards a Clean & Base Load Energy’
The Cabinet has given its approval for construction of 10 units of India’s indigenous Pressurized Heavy Water Reactors (PHWR). This significant decision has been taken to fast-track India’s domestic nuclear power programme, and give a push to country’s nuclear industry.
Government has amended sections of the Atomic Energy Act, 1962 through the Atomic Energy (Amendment) Bill, 2015, which would enable Nuclear Power Corporation of India (NPCIL) to form joint venture companies with other Indian PSUs to meet the additional funding requirements for further expansion of our nuclear power programme.
Previously the atomic energy programme was confined mostly in Southern India, but now an atomic plant is in the process of being set up in Gorakhpur, Haryana near Delhi, which indicates the expansion of nuclear programme in other parts of country.
“Hall of Nuclear Power”- India’s first permanent exhibition on nuclear power, has been built in the national capital. This helps the students and the younger generation to understand the basics of nuclear energy.
Benefits of nuclear energy for non-power applications:
Nuclear agriculture developed with the cooperation of agriculture universities and ICAR is one such example
Nuclear medicine
Low cost solution for water purification
Urban waste management
Food preservation programme
Note: Kaiga Atomic Power Station (KAPS) has set a new world record among pressurised heavy water reactors (PHWRs) with one of its units operating uninterrupted for 895 days as of today.
Personality in News
Lal Bahadur Shastri
Second Prime Minister of independent India – an exemplary leader, his humility, courage, determination, integrity and moral uprightness were legendary
Had great clarity of his vision and even greater conviction in the capacity of his beloved nation to beat all odds and survive – from promoting Green and White Revolution to steering India successfully during the turbulent times of the India-Pak war of 1965 (Lal Bahadur Shastri and his Pakistan counterpart Ayub Khan signed the Tashkent Declaration)
Popularized the slogan ‘Jai Jawan Jai Kisan’, recognizing the need for self-sustenance and self-reliance as the pillars to build a strong nation
After Independence, he became the Minister of police in the Ministry of Govind Vallabh Panth in Uttar Pradesh. His recommendations included the directions for using “water-jets” instead of lathis to disperse the unruly mob. Impressed with his efforts in reforming the state police department, Jawaharlal Nehru, invited Shastri to join the Union cabinet as Minister for Railways.
Quotes
Vice President of India, Shri M. Venkaiah Naidu
5As – that are important to reform governance system – Ambition, Ability, Agility, Accountability & Achievement
There is a need to develop the ability to adapt, improvise, innovate to create programmes and strategies to make them effectively address the challenges. We must be agile and pro-active
