Working Paper: 510

The Abysmal State of Drug Cost Containment Measures In India: Evidences from Expenditure on Cancer Medicine

Sobin George
Arun Balachandran
Anushree K N

 

Abstract

Medicines constitute a significant part of out-of-pocket (OOP) medical expenditure in India. While OOP medical expenditure continues to be high for all diseases in India, cancer treatment needs special attention due to the increasing burden of cancer as compared to other diseases. This paper critically examines the drug pricing policy and drug cost containment measures in India in the light of the spending on and price variations of cancer drugs. The paper used 71st and 75th rounds of NSSO Data on health expenditure for analysing the cost of medicine for in-patient and out-patient cancer care. Data on newly approved cancer drugs and drug prices were obtained from the Central Medicines Standard Control Organisation and the National Pharmaceutical Pricing Authority respectively. Results show that medicines held the highest share in the OOP cancer medical expenditure in private and public sectors and it was more pronounced in the private sector. Further, the increase in spending on cancer medicines was the highest for elderly and children below 14 years for both in-patient and out-patient care. Another significant finding of the paper is the price variation of recently approved anti-cancer medicines across brands, both under and outside price control. These findings confirm the ineffectiveness of price control measures for cancer drugs under the market-based pricing policy in India and the inadequacy of the existing cost containment measures. This calls for the rolling back of cost-based pricing of medicines and adoption of other cost containment measures which include expanding the scope of all forms, types and severities of cancer and anti-cancer medications under health insurance and adoption of a uniform treatment protocol across both private and public sectors.

 

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