The $5.4 billion policy will enable India's public doctors to prescribe free medicines to all their patients. This is an immense improvement on the current situation, where only a quarter of India's population can afford prescription drugs. The positive impact of the policy on the health of the population in a country characterised by extremes of wealth and poverty would be difficult to overstate. In India, forty percent of the population live on $1.25 per day or even less. For people in such circumstances, access to free medicine could well mean the difference between life and death.
One might reasonably have expected such a policy to be universally welcomed, but it has been criticised by Big Pharma and its supporters. The US is already threatening to take India to World Trade Organisation
(WTO) disputes panel, as a result of an earlier decision to provide a licence for the production of a generic form of the cancer drug, nexavar. The latest policy move is only likely to further antagonise the pharmaceutical industry.
KPMG partner Chris Stirling's opinion on the policy:
Without a doubt, it is a considerable blow to an already beleaguered industry, recently the subject of several disadvantageous decisions in India
The multinational pharmaceutical corporations are clearly concerned about the effect India's policy will have on their profitability. They have already seen China grant licences to domestic drug companies to produce generic versions of patented drugs. The pharmaceutical companies make substantial profits from the long patents. They justify those high profit margins
in terms of the high costs of research and development and thus argue that such failure to uphold intellectual property rights threatens the development of new drugs for the future.