The Great Indian Price Con

[Much like the Flipkart Pricing Con, only with medicines.]

Over the years, as the noonday demon sank its subtle claws deeper into me, I began to gradually go off the current events grid. I began letting my parents have the whole of the newspaper without dispute, and within months all the news or opinion portals I once visited every day had gone off my browsers auto-complete (this was around 2004/2005, before browsers had iron-vault memories). Still, given a depressive’s tendency to spend massive amounts of time online, I can’t avoid a general sense of stuff that’s going on. More’s the pity.

Because social media is how I came across this old piece in the Bengali daily Ei Samay (These Times, The Current Times – take your pick). It’s about the remarkably unsubtle sleight of hand that dupes patients into thinking they’re availing tax-subsidised discounts on 142 specific medications at public hospitals, when in fact they’re paying the current market price – and sometimes even a little more than that – for almost half of those drugs. These shops are called Fair Price Shops, and in exchange for heavily-subsidised rent and utilities within public hospital premises, they are supposed to sell the stipulated medicines at a 66% discount. This is how the writers describe the phenomenon:

Have you ever bought medicines from a government hospital’s Fair Price Shop? A formulation that is available, under several different brand names, for as little as Rs. 100 in the open market is marked at Rs. 300 in these shops. Of course, under the government’s public-private partnership model, patrons of these shops get a discount of 66% on the marked price, so that Rs. 300 eventually comes down to Rs. 100.

A section of doctors working in the public health system have admitted that the “enormous discount” the government advertises is deliberately misleading. Not only is there no real discount, they allege, but patients end up paying more than market rates for almost half the medicines on the Fair Price Shops’ mandated 142-item list. Officials from the health department, on the other hand, said that there was an actual verifiable discount between the prices charged and the prices printed, and that fact should be our chief talking point.


Now, my own experiences with this sort of number-jiggling has been limited to private hospitals, which do not, to the best of my knowledge, avail direct state¬†subsidies to provide cheaper care and medicines, especially to those that cannot afford them. It certainly doesn’t exempt their business model from criticism, but at least they don’t claim to be charitable endeavours. The proprietor of these privately-run drug dispensaries inside public hospitals do. One of them, when questioned by article-authors Anirban and Maitreyi, claimed that he ran his business on a loss, because he “wants to help” his the less well-off amongst his fellow citizens.

The Department of Health disagrees. They say that these units make quite a decent profit. How is this profit made, though, if – at least on paper – these shops do indeed provide the discount they’re supposed to?

Ashishkusum Ghosh, Secretary of AWBSRU (All West Bengal Sales Representatives Union) called the Fair Price Shops “a blatant con”. According to him, the people charged with stocking the Fair Price shops do their business with specific brands, which print a greatly inflated MRP on their boxes and foils. The actual cost of the same generic formulation on the market is much, much less. However, taking advantage of the jacked-up printed MRPs, the Fair Price Shops – and in turn the government – can claim they are allowing the poor health care seekers of the state an enormous discount.

What is the official response to this alleged scam? According to the article, Special Secretary to the Department of Health, Prabir Kumar Lahiri, says he is unaware of such goings-on, but shall certainly “look into the matter”. When asked how he thinks the Department’s private partners manage to keep themselves well in the black despite the discounts they claim to be offering, Prabirbabu confessed that he had no idea. “We know nothing about their business model”, he told Anirban and Maitreyi. “This model was placed before a board of experts for analysis, and all we needed for clearing the project was their approval”.

Very well. Let us look at the response of this expert committee then.

Joint Secretary of the Health Department, Subir Chattopadhyay, part of the [expert] committee, told us: “We were more concerned about the quality of the medicines than their cost. But no, I cannot specifically say how the [private providers] are giving us such a big discount.”

Honestly, for a man in charge of policy, that ivory-tower snootiness about not being concerned with the cost is such an admittance of incompetence that I’m surprised he said it on record. What does a glorified analyst on the Government’s payroll do if not analyse a proposed subsidy programme for the veracity of said subsidy?

Anyway, the article is pretty comprehensive about the pricing con, with quotes from protesting doctors, medical sales representatives and health officials, but there’s a¬†crucial aspect of the existing system of buying and selling pharmaceuticals in Bengal that it fails to mention. It is this: the practice of selling medicines without proper receipts (or “pucca/paka bill”, as we used to call them in Calcutta) is a decades’ old practice. Neighbourhood shops traditionally offer between six to thirteen percent discount on MRP to customers provided they buy their medicines without recording the sale. This particular practice has become so deeply ingrained into our pharmaceutical transactional culture that several shops have gradually begun cutting down discounts without offering a “bill”, and customers have seldom noticed or objected. People in fact tend to avoid shops that bill every purchase, because

  1. The discount, however puny, is no longer on offer, taking away the small solaces of medicine-shopping during these times of exorbitant pricing.
  2. Such establishments usually ask for a doctor’s prescription, and producing an up-to-date prescription means an additional shelling out of around Rs. 500, plus the waste of at least half a work day waiting for the doctor in his clinic.
  3. This above also means that medicines cannot be had on demand, and people prefer to push self-chosen antibiotics or pain-alleviating medications by themselves, based on previous experiences with superficially similar experiences, than waste time and money on a doctor’s appointment, which often tends, in this country, to be incredibly short, perfunctory and for prescribing purposes only.

I should mention here that the article above was published in 2012. In the three intervening years, however, the retail culture around prescribed drugs is still pretty much the same – at least in Calcutta, which I’ve seen first-hand. Dr. Punyabrata Goon, whose work I came across when I was a researcher at Pratichi, had even started an awareness plus protest campaign on social media called Oshuder Janye Manush na Manusher Janya Oshudh? [Do People Exist to Serve the Pharamaceuticals Industry, or do Pharmaceuticals Exist to Help People?]

He updates the page regularly with his field experiences, analysis and links to related pieces on the interest, and for people interested in keeping an eye on the progress of the pricing-dupe in the public-private partnership model in India, it’s an excellent resource. I shall, in the future, try to translate some of his original writings in Bangla on the subject.

Even if we cannot win an abstract fight about “fairness” in medical pricing, we should at least maintain a space for discussion and critique of the practices of the pharma market, and keep an observatory eye on their developments.

'Your teacher called and said the school concert tickets you sold me for $20 were free.'
‘Your teacher called and said the school concert tickets you sold me for $20 were free.’

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