IIMB Management Review (2013) 25, 49e62

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ROUND TABLE

Ethical issues in health care sector in India

Chirantan Chatterjee, Vasanthi Srinivasan*

HR/OB, Indian Institute of Management, Bannerghatta Road, Bangalore, India

KEYWORDSHealth care;Ethics;Efficiency;Emerging economy;India

* Corresponding author. Tel.: þ91 80E-mail address: vasanthi@iimb.ernet.

Peer-review under responsibility of IndBangalore

0970-3896 ª 2012 Indian Institute of Mhttp://dx.doi.org/10.1016/j.iimb.201

Abstract The issue of ethics and economic efficiency in the provisioning and delivery ofservices becomes complex in the Indian context where health indicators are poor. In anattempt to explore this issue, this round table article first provides an overview of the fieldof ethics in health care, the health care sector in India and its facilities, the key institutionalactors and finally, the key ethical issues concerning the different players in health care e thephysician, the bio-pharmaceutical industry, and the chemist. In its second part, the articlereports on a discussion of the issues with a panel of experts across geographic and organisa-tional settings.ª 2012 Indian Institute of Management Bangalore. Production and hosting by Elsevier Ltd. Allrights reserved.

Academic perspective

Health care institutions across the world are facing chal-lenges in the delivery and provisioning of services withfinancial solvency. Patient care now competes withthe financial solvency of the health care institutions(Silverman, 2000), and the issue of ethics has become morerelevant than at any other point in time. Health careservices have a special moral quality. The purposes of healthcare services include saving lives, preventing or relievingsuffering, preventing and curing disease and disability, andameliorating the consequences of disease when it cannot beprevented or cured. Few people can be morally comfortable

26993046.in (V. Srinivasan).

ian Institute of Management

anagement Bangalore. Productio2.11.004

with the idea that some people should be denied access tohealth care that might relieve their suffering or save theirlives because they cannot pay for it (Enthoven, 1993). In theIndian context, where health indicators of the country arepoor, the discourse on ethics assumes greater complexityand requires a more nuanced understanding and apprecia-tion of the contextual elements. This note attempts toprovide a brief overview of the field of ethics in health care,the status of the health care sector in India, the key insti-tutional actors and finally, the key ethical issues arising outof the interactions across the various actors.

Ethics and health care

The field of medical ethics has long existed, arising fromthe Hippocrates oath, and tenets of the early religioushealing traditions of the West. Several Asian traditions havealso had ethical tenets governing the physicianepatientrelationship (Tsai, 1999; Desai, 1988). In the field ofcontemporary medical ethics, the doctors in the USA werethe first to develop a modern code of ethics. At the firstmeeting of the American Medical Association (AMA) in 1846,

n and hosting by Elsevier Ltd. All rights reserved.

Table 1 Average cost (in rupees) of a typical illnessepisode in public and private sector.

Publicfacilities

Privatefacilities

Cost of an out-patient episode 242 310Cost of an in-patient episode 859 9352

Source: Selvaraj & Karan, 2009

50 C. Chatterjee, V. Srinivasan

a committee was appointed to report on a code of ethicsfor the organisation. Modern medical codes of ethics arebased on the works of Thomas Percival, a British Physiciancredited with giving much thought to the future of theprofession. The International Code of the World MedicalAssociation, an organisation representing physicians foun-ded in 1947, ensures that physicians strive for the highestpossible standards of ethical behaviour and care at all times(Backof & Martin, 1991).

In the 1970s, traditional medical ethics changed into aninterdisciplinary field involving theologians, lawyers,philosophers, social scientists, and historians, as well asphysicians and other health professionals (Veatch, 2006).The reason for this was the increasing impact of science andtechnology, the growth of specialisation in the field ofmedicine, public expectations from new medicines andsurgical techniques, changes in the financing and delivery ofhealth care, and the transformation of medical schools intolargemedical centres in theWest. The field ofmedical ethicswhich focused on the moral responsibility of a physician toa patient was not adequate to address the ethical aspectsemerging out of the changed context. With more stake-holders, such asmedical devices companies, pharmaceuticalcompanies, diagnostic clinics, insurance companies, clinicaltrial organisations, and other service providers entering thefield, there was a need to expand the scope of the definitionof ethics within the field of medicine. In recent years, theterms “bio-medical ethics”, “bio-pharmaceutical ethics”,and “health care ethics” are gaining importance. The termbio-medical ethics includes the issues related to reproduc-tive biology, such as stem cell research and human cloningand the ethical dimensions arising out of these changes. Theterm bio-pharmaceutical ethics refers to the ethics associ-ated with the discovery and development of the products.The term health care ethics is increasingly being used as anumbrella term to encompass ethical aspects previouslyincluded in medical-, bio medical-, bio-pharmaceutical- andalso organisational- and business ethics of different stake-holders involved in the provisioning and delivery of healthcare services. It is this broad definition of health care ethicsthat is being used in this note and the round table discussionthat follows the note.

Indian health care sector

The health indicators of India have consistently laggedbehind the economic development that has been witnessedover the last decade and the need for increased investmentin health care has been acknowledged. The public expen-diture on health in India remained at about 1.1% of GDP in2010 (Ministry of Health and Family Welfare, GOI). Publichealth care delivery is done through a network of over146,036 health sub-centres, 23,458 Primary Health Centres(PHCs) and 4276 Community Health Centres (CHCs). There isa 150-bed civil hospital at the district level to providetertiary care. Only 23.5% of urban population and 30.6% ofthe rural people choose government facilities, thus reflect-ing the widespread lack of confidence in the public healthcare system (Central Bureau of Health Intelligence, 2010).

Studies have acknowledged that India ranks among thetop 20 countries in the world in its private health carefunding and that 82% of the total medical expense in India is

paid for through personal funds (Sengupta & Nandy, 2005).According to the Central Bureau of Health Intelligence,majority of Indians trust and visit private health caredespite the fact that cost of treatment in private treatmentis significantly higher than public facilities (Table 1).

Private sector health care is highly fragmented with over90% of private health care being serviced by the unorgan-ised sector. Eighty percent of the private hospitals are smallclinics and nursing homes (less than 30 beds). Six to sevenpercent are 100e200 bed size hospitals and only 2e3% ofhospitals are 200- plus bed (Table 2). Most of the largehospitals are located in the urban areas.

The sector however has attracted considerable privateinvestments and it appears that the participation of theprivate sector in this field is likely to continue in the nearfuture. The conflict between the financial solvency of theprivate sector players to the need for affordable qualityhealth care services in ways that enhance the health andwell-being of citizens is an immediate and visible area ofethical conflict in the sector.

Disease burden and adequacy of facilities

In the course of development, countries undergo an“epidemiologic transition”. Initially the developing nationshave high morbidity and mortality due to communicablediseases and maternal and child mortality. As economicdevelopment occurs, these morbidities decline significantlyand there is an upsurge of diseases of the affluent class,that is, non-communicable diseases, injuries and geriatricproblems. India, however, faces a dual burden of highincidence of infectious diseases (Tables 3 and 4) and a risingepidemic of non-communicable diseases. The trend of dualburden is consistent across urban and rural areas witha slightly higher proportion of non-communicable diseasesin urban areas (Table 5). With the changing trends in thecommunicable diseases, changing demographics, increasingurbanisation, and increased lifespan, the burden of diseaseis likely to increase further, putting a burden on an alreadyinsufficient health care system.

Given the cost of treatment, disease burden, and the poorpublic health care facilities, the moral and ethical discussionon the “right to live” assumes a greater significance in India.In the next section, we introduce the typical experiences ofan imaginary patient in the health care system in India.

An imaginary patient

This section outlines the trajectory for an imaginary patient(Patient X) traversing through the value chain in Indian healthcare. Patient X might be a poor farmer, an entrepreneur, or

Table 2 Classification of hospitals in India.

Types of hospitals in India

Government Private

Nursing homes Mid tier Top tier

Health care centres,district hospitalsand general hospitals

Primarily nursinghomes and recoveryrooms with adequateinfrastructure

Corporate hospitalswith in house staffand consulting physicians

Major corporate hospitalchains and specialty hospitals

Variable: based on types <30 beds 30e100 beds >100 beds

Source: Ministry of Health and Family Welfare, 2010, http://mohfw.nic.in/index.php

Ethical issues in health care sector in India 51

a settled professional. Patient X visits a general physician,who advises diagnostic tests, and cautionary medicines andcould also refer X to a specialist. Patient X has bills to pay andthe following options of payment: if Patient X has beentreated at a public hospital she may have the option of notpaying any of the bills; Patient X could approach her insuranceprovider if she is employed in a big company and hasemployer-provided insurance; Patient X could approach herinsurance provider from the state if she comes from below-the-poverty-line and has state provided insurance. Despitethe options, it is an arduous journey, and one hopes, withoutserious implications.

The above anecdote is educative of how as a patient ora consumer, one is dependant on so many stakeholdersacross the value chain in the Indian health care industry.There are the doctors e the generalists and the specialists,the medicine-makers, local firms and multinational corpo-rations (MNCs), and the diagnostic device producers edomestic and multinational e supplying their equipment tothe hospitals who can afford them. Finally there is theconcerned insurance provider to turn to for settling thebills, provided one is among the privileged few in society tohave insurance support.

A brief overview of the key stakeholders in the valuechain is provided in Fig. 1. It must be noted that severalprivate and public actors are present in different parts ofthe value chain. Therefore, the inter-relationships acrossthe actors are complex and raise several issues pertainingto conflicts of interest.

Table 3 Pattern of communicable diseases.

Trends of communicable diseases in India

Diseases showingincreasing trends

Diseases showingdecreasing trends

Dengue, chikungunya PoliomyelitisHIV-TB co-infection TuberculosisCholera O139 Neonatal tetanusJapanese encephalitis MeaslesLeptospirosis HIV/AIDSNovel H1N1 infectionsEradicated: smallpox, guinea wormEliminated: yaws, leprosy

Source: Ministry of Health and Family Welfare, 2010, (http://mohfw.nic.in/index.php)

Health care is a key aspect of any developing nation andthe need for quality, accessible and affordable health careis a necessity. A particularly central role in health caredelivery in modern societies is that of the physician. FrancisMoore the respected American physician noted, that “thesurgical investigator must be a bridge tender, channellingknowledge from biological science to the patient’s bedsideand back again”, adding also that the surgical investigatorwas open to the charge of not being a very good scientistfrom one end of the bridge and of not spending enough timein the operating room, from the other (Murray & Moore,2002). In contexts like India, the role of the physician ismore nuanced and tricky, especially since physicians havebeen historically revered in the society and their decision-making powers are further enhanced. But such a role alsobrings along with it responsibility. It is arguable if the twokey nodal organisations of physicians in the country, theMedical Council of India (MCI) and the Indian MedicalAssociation (IMA) have been able to live up to thatresponsibility in recent times.

Institutional structures and ethics

The IMA, organised in 1928, was the result of efforts in Cal-cutta to form an association of doctors in pre-independenceIndia. It currently has over 178,000members with about 1700local branches. With antecedents that can be traced to theBengal Medical Association, IMA has historically seenrespected doctors as its president. A key name in this regard isDr. B C Roy in 1929e1930 who later on became the ChiefMinister of West Bengal. (However, in recent times, thereputation of the presiding doctors has been in question.) It isalso important to note that the IMA has played a global role

Table 4 Burden of communicable diseases.

Communicablediseases

Magnitude of the burden

TB 283 cases per lakh populationin 2007

HIV 2.27 million HIV-positivepersons in 2008

Malaria 2 million deaths per yearLeprosy 130,000 affected people

Source: Ministry of Health and Family Welfare, 2010, (http://mohfw.nic.in/index.php)

Table 5 The causes of death.

Causes of death Overall Ruralareas

Communicablediseases, maternal,peri-natal andnutritional

38% 41%

Non-communicablediseases

42% 40%

Injuries 10% 10%Ill-defined causes 10% 9%

Source: Ministry of Health and Family Welfare, 2010, (http://mohfw.nic.in/index.php)

52 C. Chatterjee, V. Srinivasan

too; some of its members were earlier members of the BritishMedical Association and IMAmembers were also influential inthe setting up of the World Medical Association in 1962. Ataround the time of IMA’s formation, the Medical Council ofIndia (MCI) was established in 1934 under the Indian MedicalCouncil Act, 1933. The Council was later reconstituted underthe IndianMedical Council Act, 1956 that replaced the earlierAct. The main functions of the MCI are the following: estab-lishment and maintenance of uniform standards for under-graduate medical education; regulation of postgraduatemedical education in medical colleges accredited by it (TheNational Board of Examinations is another statutory body forpostgraduate medical education in India); recognition ofmedical qualifications granted by medical institutions inIndia; recognition of foreign medical qualifications in India;accreditation of medical colleges; registration of doctorswith recognised medical qualifications; and maintaininga directory of all registered doctors (called the IndianMedicalRegister). Finally, registration of doctors and their qualifica-tions is usually done by state medical councils.

Figure 1 Health care value chain in India. Sou

On 25th June 2012, the nation witnessed an unprece-dented one-day strike by the IMA1which contested theproposed promulgation of the Clinical Establishments Act andthe formation of the National Council for Human Resources inHealth (NCHRH) by the Government of India. Physiciansacross the country affiliated to IMA could foresee throughthese developments, a diminishing role of IMA in Indiansociety. This event followed Bollywood actor Aamir Khan’sshow on national television channels highlighting thecontroversial roles of doctors around the country.2 Theseevents were not in isolation e coming after the arrest of theMCI president Dr. Ketan Desai by the Central Bureau ofInvestigation for allegedly accepting a bribe to permitPatiala-based Gyan Sagar Medical College to recruit a freshbatch of students without having adequate infrastructure.3

Subsequent to this, MCI was superseded by the President ofIndia and its functions entrusted to a Board of Governors. Thepresent Board of Governors was notified on 13 May 2011.

It is clear that while doctors have a bridging role to playas alluded to by Francis Moore e their position is particu-larly under the radar today in India. A recent articleeffectively points to this, highlighting the role of “doctorsin entrepreneurial gowns”, and pointing to how variousprivate-sector physicians are also holding a conflictingposition with the IMA and are breeding industries such as inthe “treatment of obesity” (Nagral, 2012).

At various points in this round table discussion, we comeback to the key role of physicians and doctors in our lives.While we certainly try to outline the role of firm-levelinstruments and address issues for pharmaceutical firms,domestic and multinational, and further discuss issuesabout harmonisation of various regulatory bodies, physi-cians e being central to the act of health care delivery ehave a key role to play in the context of ethical behaviourin health care markets. They form a key component of ourdiscussion.

rce: (Chandwani, Devare & Srinivasan, 2011)

Box 1. Key issues covered in the roundtable.

The bio-pharmaceutical industry

a. Pricing of drugs (brand vs. generic)b. Investments of MNCs in tropical disease drug

discovery to life stylec. Advertising e information disclosure in ads;

doctor-pharmaceutical firm nexus to promotecertain drugs over others through samples, spon-sorship and other practices, with little attentionto quality

d. Availability of banned drugs and counterfeits.e. Disregard of regulations in sponsoring clinical trialsf. Private health care providers and the issue of

“inappropriate care”.

Physician

a. Irrational prescription of drugsb. Prescription by brand names instead of equivalent

genericsc. Commission received for referrals to diagnostic

centresd. Prescription of non-essential drugse. Monitoring of the Medical Council of India and its

code-of-conduct.

Pharmacy/chemist

a. Use of the MRP as the priceb. Collusion by pharmacists on price

Ethical issues in health care sector in India 53

Dr. Richard Manning begins the round table discussion byunderlining the issue of ethics and efficiency as they relateto health care markets. This is a particularly salient guidingframework since it is important to note that what might beethical might not necessarily be efficient and with theparticular case of health care markets this problem mightbe aggravated. Andrew Shleifer (2004) discusses this trade-off, pointing out that: “When unethical behavior cuts costs,competition drives down prices and entrepreneurs’incomes, and thereby reduces their willingness to pay forethical conduct. However competition might be good forethical behavior in the long run, because it promotesgrowth and raises incomes. Higher incomes raise the will-ingness to pay for ethical behavior, but may also changewhat people believe to be ethical for the better.” Withregard to child labour, Shleifer points out that in many partsof the developing world, without good access to capitalmarkets and educational opportunities, the alternative tochild labour could well be malnutrition and disease.

Thus the overlying issue of ethics and efficiency isimportant and among other elements can be guided by twokey firm-level instruments that Dr. Manning outlines. Bothof these instruments could enhance or destroy socialwelfare depending on how they are used and relate topricing and marketing methods used by pharmaceuticalfirms. In the context of India this is particularly pertinentwith a large section of the population having inadequateaccess to medicines, more so patented ones sold bymultinationals at prices far beyond their reach. Dr. Manningraises the possibility of an important policy lever ofdifferential pricing and wonders whether it might have thepotential to address this problem. Theoretically speaking,marketing and promotional activities might have an infor-mational contribution about products such as medicines.Dr. Manning alludes to them, but in the context of India thisis again salient since it might not be used by firms as a socialgood. The Indian Medical Association is currently consid-ering this particular area in careful detail and contem-plating regulations to be put in place for implementingchecks on marketing and promotion activities of firms; it isbut pertinent that Dr. Manning’s thoughts would ring a bellin that policy discussion.

The next speaker at the round table, Mr. Rijit Senguptaextends Dr. Manning’s thoughts. An overarching theme ofMr. Sengupta’s views is the role of non-market mechanismsin ensuring ethical behaviour within the context of Indianhealth care markets. He terms these as the twin roles of co-regulation and self-regulation, his thoughts falling broadlyunder three key aspects that economists have earlierpointed to in their efforts to raise the willingness to pay forethical conduct: those of long run market pressures, moralsuasion, and governmental regulation.

Carrying forward Mr. Sengupta’s thoughts, Mr. DeepakSapra from Dr. Reddy’s Laboratories points out to issuesaround “wellness” for an emerging economy like India.Several of Mr. Sapra’s thoughts ring a bell with issueshighlighted earlier by Dr. Manning or Mr. Sengupta; inparticular with the role of pricing, drug discovery, andresearch in neglected diseases. As an alumnus of IIM Ban-galore it is also heartening to notice Mr. Sapra pointing tothe game-changing role that digitisation and informationtechnology can play in reducing uncertainty of the nature

that Arrow (1963) has highlighted as historically prevailingin health care markets around the world, more so in India.

Mr. Sapra’s thoughts are given logical completion by Dr.Ravikumar Banda, Founder and Managing Director of XcytonDiagnostics. Dr. Banda an erstwhile physician and now anentrepreneur starts off by highlighting the “physician-centricity” of health care markets, more so in contexts likeIndia. Dr. Banda’s thoughts particularly are contextual inrelation to the role of the MCI and the IMA, the two keynodal bodies of physicians in the country. Dr. Banda touchesupon various aspects where society and these institutionsneed to buckle up and raise their voices when it comes tohow physician behaviour affects the ordinary Indian citi-zen’s life. Dr. Banda also brings out in his discussion thepivotal role of the Central Drug Controller General of Indiain installing formal regulatory systems to promote ethicalbehaviour in Indian health care markets.

We highlight in Box 1, the key issues that get covered inthe round table. The area is vast and there are several

54 C. Chatterjee, V. Srinivasan

issues around ethical behaviour in the context of healthcare markets in India that merit attention. With the pres-ence of international and domestic participants, expertsfrom consulting and not-for-profit institutions, the phar-maceutical industry and a physician e we have attemptedin the discussion, to make a fair representation of all issuesunder the overarching theme.

Ethical issues in health care sector in India:discussion

AnchorsChirantan Chatterjee and Vasanthi Srinivasan, IIMBPanellistsRavikumar Banda: Founder and MD, Xycton Diagnostics.Email: ravikumar@xycton.com

Richard Manning: Partner, Bates White, an economicsconsulting firm based in Washington DC, USA.richard.manning@bateswhite.com

Deepak Sapra: Senior Director (Business Developmentand Portfolio), Dr. Reddy’s Laboratories.Deepaksapra@drreddys.com

Rijit Sengupta: Director, Consumer Unity and Trust Society(CUTS) International. rgs@cuts.org

Chirantan Chatterjee

The theme of this round table is ethical issues in the Indianhealth care sector and we have speakers from differentparts of the value chain to get practitioner inputs on ethicalbehaviour in health care. I will start by alluding to NobelPrize winning economist Kenneth Arrow’s seminal paperfrom1963,4 where he first talks about the curious nature of‘uncertainty’ in health care markets that engendersparticular problems of adverse selection and moral hazard.Arrow also focused on the physician-centricity of healthcare markets, where the final consumer and the providerare almost always intermediated by an agent in-between,the physician concerned in most cases. Since the area isvast what we will try today is to cover various issues withProfessor Arrow’s thoughts in the background. It is alsoa pleasure to bring in Richard, Ravi, Deepak, and Rijit in theambit of this discussion. They come from various parts ofthe value chain in the industry and their thoughts poten-tially will cover the entire gamut of issues relevant tohealth care markets and ethical behaviour. Over to youRichard.

Richard Manning

Ethics in health care

Given my background, it is natural for me to think aboutthings in terms of efficiency and markets. My view is thata discussion of ethics needs to be grounded in a recognition

that people will tend to act in ways that they perceive to bein their own best interest. When society has in placeappropriate structures and protections, individuals actingin their own interest often lead to outcomes that leaveothers better off as well. Not to be trite, but my view is thatAdam Smith was keenfully insightful when he describedthe power of the “invisible hand.” Economic growth anddevelopment have done a great deal to lift individuals outof poverty and to foster prosperity in societies. There isa great deal of overlap between the search for economicefficiency and the betterment of mankind, which is to mea key standard by which ethical behaviour ought to bemeasured. As economies, particularly the emerging econ-omies, continue to grow, individuals will desire more andbetter quality of life. Health care can be a major compo-nent of that improved quality of life and can be an impor-tant factor in enabling continued economic growth anddevelopment.

In short, the ethical responsibilities held by bothgovernments and biopharmaceutical companies have to dowith allowing/helping individuals achieve their goals withrespect to quality of life. As economies grow, individualswill naturally desire better quality of health care forthemselves and those they care about. The rules govern-ments put in place can either foster or retard that progress.

Two key issues in ethics: pricing and marketing

Pricing

Relative to the pharmaceutical industry, no issue raisesmore ethical considerations in the emerging markets (or inthe developed ones) than pricing.

Ethical issues in pricing cluster around two poles: 1)providing access to existing medicines for those that cannotpay and 2) maintaining the incentive to continue to developmedicines that address unmet needs. Essentially theseproblems come down to caring for the needs of presentpatients as opposed to caring for the needs of futurepatients. Critics of the pharmaceutical industry sometimesappear to give too little attention to the latter; the industrysometimes appears to give too little attention to theformer. In fact, a wholly ethical approach to the problem ofpricing must consider both current and future needs.

Some argue that the developed world is a sufficientlylarge and wealthy market to bring forth innovation inmedicines and that ignoring the property rights of compa-nies in lower income countries through compulsorylicensing, voiding of patents, strict price controls, orwhatever mechanism can do no meaningful harm to thefuture flow of medicines. For medicines that treat condi-tions prevalent in both developed and emerging markets, itis almost certainly true that the lost sales from “freeriding” in low income countries are not a large deterrent toinnovation at least in the near term. However, such staticeffects are not the only ethical consideration.

Companies that might start selling at very low prices inlower income markets have a natural interest in moving intohigher incomemarkets, and products sold at lowprices in lowincome countries will naturally tend to flow into higherincome markets whether through legitimate channels or

Ethical issues in health care sector in India 55

otherwise. Additionally, generics manufacturers seeingopportunities to challenge patents in developed countrieshave an incentive to turn their attention to those markets aswell. Both these forces threaten to leave those with lowincomes without the supply they need.

Additionally, as the emerging markets countries to grow,they become meaningful markets and larger and largersegments of their populations will have the capacity to payfor innovative medicines. Should they not? Is there noethical responsibility for people who can afford to pay forinnovative products to do so regardless of where they live?

A key example of this tension, and the need to solve it, isHIV. Thanks to innovation in medicines, access to appro-priate medications can turn this disease into a manageablehealth challenge. Without access, it remains a nearlycertain death sentence. The gains to treatment areexceptionally large as it allows people to remain productivein the most productive years of their lives. Although moreremains to be done, great progress has been made to fosteraccess to HIV therapies and to bring down their cost tothose that cannot pay.

Philipson and Jena5 demonstrated that despite the rela-tively high perceived prices for the medicines, the compa-nies that developed HIV therapies captured only about 5% ofthe value of their innovation. In short, prices could easilyhave been much higher and patients would still havecaptured the bulk of the gains from the new therapies.

To current beneficiaries this is obviously good. However,trouble looms due to dynamic factors. The HIV virusmutates over time and the medicines that currently keep itat bay will probably not always do so. Short of eradicatingthe virus, which is most likely impossible, there will bea continuing need for new HIV therapies over time. Who willdevelop those? As prices are driven down naturally bypatent expiration and perhaps less naturally throughpolitical pressure, the potential reward to the innovatorthat brings new HIV therapies to market become small.Today there are relatively few HIV research programmesunder way. Without an incentive to continue the search forcures, the gains of the present are coming at the expense ofthe gains in the future.

The challenge in HIV and other therapeutic areas is tomake products available for people that are unable to paywhile not destroying the markets for those that are able.That is no simple task as it pits the interest of the presentagainst the interests of the future.

One potential solution to the dynamic efficiencyproblem is fostering differential pricing through partner-ships among private companies, NGOs and governments. Ina functioning differential pricing system, individuals orpopulation segments that can afford to pay only nominalprices (or perhaps no price at all) would have drug suppliessegregated to allow them access while not threateningexisting commercial markets. While simple in concept, theapplication is extremely difficult. Efforts have been madeto develop differential pricing schemes, but the alignmentof interests is very challenging. Making real progress willrequire the commitment of various parties to ignore strongimmediate interests. Exactly how to obtain that commit-ment is unclear.

Finally, although private companies have demonstrateda willingness to invest in treatments for neglected diseases,

those efforts have not and cannot be central to theirmission. While economic growth and development will goa long way towards lessening the burden of those diseases,many scholars agree that some non-market mechanismswill be necessary to address those issues. While these ideashave resulted in some successes, meaningful progress hasnot yet been achieved.

An interesting question in this realm is who has theethical responsibility to bear the burden for research intotreatments for neglected diseases? No doubt, because theinfrastructure of discovery and development that alreadyresides in the private biopharmaceutical companiesconveys on them a cost advantage in the search for newcures, they will play a role. Exactly what the dimensions ofthat role should be seems less obvious. Certainly thosecompanies have financial resources, but that alone shouldnot lead them to bear the burden alone.

On the one hand, recent market developments haveknocked the innovative industry down the ranks of mostprofitable companies in the world. Both in the US and ona global scale, companies with the largest market value andincome reside largely in the oil and finance industries or ininformation technology. If ethical responsibility is appor-tioned according to ability to pay, certainly a wider set ofcontributors than the biopharmaceutical companies wouldbe identified. Additionally, why is it that shareholders ofprivate companies should support this cause? Are they thedisproportionate beneficiaries? The answer to the questionis not obvious. Who should pay for the benefit of others isnot something about which economics typically has a lot tooffer. It only seems clear that the answer is unclear.

Ethics and marketing

A second key issue involving ethics in health care is themarketing of prescription drugs. As in any industry, thereare legitimate concerns about the incentives the seller ofa good might have to distort information conveyed abouttheir product. In health care, this concern is heightened bythe fact that the ultimate consumer, the patient, is typi-cally somewhat disconnected from the choice of medicalapproach to use. When the physician acts in the patient’sbest interest, the ethical concern about marketing is lessserious. So a first step in thinking about the ethical chal-lenge in marketing pharmaceuticals might be to considerthe incentives facing the care-giving physician. Whenpatients have the ability and freedom to compare andselect a physician based on how well he or she representsthe patient’s interest, the concern that the physician mightbe unduly swayed by marketing efforts of the pharmaceu-tical company is diminished.

It is also important to recognise that marketing activitiesare a means of providing information to people as theymake economic choices. Information is costly to acquireand process. Brands and trademarks exist because theyconvey information to consumers about characteristics ofa good or service at a relatively low cost. Advertisersremind people of their goods and service offerings becausepeople have many things to pay attention to and reminderscan help sort through information to help people decidewhat to do with scarce time and resources.

56 C. Chatterjee, V. Srinivasan

Likewise, physicians are more able to make appropriatetherapeutic recommendations to patients when they knowmore about the products they prescribe. Although ina perfect world, it might seem desirable for physicians andpatients to learn all they need to know from completelydisinterested parties, the reality is that pharmaceuticalcompanies know more about their products than anyoneelse, and absolutely independent sources of informationare costly to acquire. In modern health care systems,a physician’s time is scarce. Although academic publica-tions provide an important source of new information, thecost of staying on top of the latest advances is not small.

Hence, allowing companies to provide information topatients and physicians can be an important component ofimproved quality of care. It is common among economiststo argue that the best solution to concerns about biases inthe provision of information is the provision of moreinformation. When competitors each convey information tophysicians, they are able to determine credibility of varioussources and filter out better from worse.

Of course, inappropriate inducements to prescribespecific products should not be allowed, but it is easy to gotoo far and forget that the provision of information isa complicated, costly, and valuable exercise. Sometimescombining lunch or dinner with information about medicaltreatment may be a problem, but sometimes it may be thebest way to lower the cost of the physician obtaining thatinformation. Limiting contact between physicians andmarketing professionals can have unintended consequences.

A recently publishedarticle6 examined the impact of accessto sales representatives in the US on prescribing patterns ofphysicians treating cardiovascular and diabetes patients.

Perhaps not surprisingly, the study found that physiciansworking in settings with greater access to pharmaceuticalcompany representatives had more rapid adoption of newmedicines than those working in settings with restrictedaccess to sales representatives. One can argue about themerits of rapid response to the launch of a new medicine.Certainly, however, delaying treatment in cases wherea new medicine would provide a substantial benefit topatients presents an ethical problem.

A more obvious ethical problem would be continuing toexpose patients to a newly discovered risk. Importantly,Chressanthis and his colleagues found evidence that thiswas an unintended consequence of restricting interactionsbetween physicians and sales professionals. Physicians intheir sample that had low access to sales reps took signifi-cantly longer to reduce prescribing in response to a newlydiscovered risk than those with high access to salesprofessionals.

Of course, the applicability of these specific findings toIndia or other emerging markets with different informationstructures, different regulatory environments and differenteducation levels is not obvious, but the reality that infor-mation is costly and that providing more information allowspeople to make better decisions is universal. Allowingmanufacturers to provide information to professionals andperhaps to patients as well is a fundamental step along theethical course. Any structure that dictates the conditionson which information can flow should account for thepotential gains from having more and better information inthe hands of prescribers and patients.

Rijit Sengupta

Regulation in the health sector and the realities ofimplementation

Ethics and health careI have segregated my presentation on regulation in thehealth sector into six sub-points. The first point isa comment on the topic itself. There are two leading wordsin the topic: one is “ethics” and the other is “health care”.As far as ethics is concerned, we now have the NationalVoluntary Guidelines (NVG) on Social, Environmental,Economic Responsibilities of Business, which was adoptedby the Government of India, Ministry of Corporate Affairs.The NVG tries to define responsible business conduct and itpresents a framework consisting of nine principles withcertain core elements to actualise each of the principles.We can use principle one of the NVG to lay out broadly whatwe mean by ethics in business and apply that specifically inthe health care sector. Principle one, which states thatbusinesses should conduct and govern themselves withethics, transparency and accountability, emphasises thatethical conduct in all its functions and processes is thecornerstone of responsible business. There is an emphasison the accepted or written and non-written codes, andprinciples and values which define ethical behaviour. Itemphasises transparent communication and a culture ofintegrity. It asserts that businesses should refrain fromindulging in corrupt practices and honestly discharge theirresponsibility on financial and other areas pertaining tomandatory disclosures.

Health care marketWhat do we understand by the term “health care market”and what are its salient features in the context of thisdiscussion? First, the health care market is an extremelydiverse market as far as the states are concerned, given thathealth care is a state subject. Second, it is characterised byconsiderable information asymmetry. Third, it is driven bya weak market regulatory framework which does not havea very satisfactory implementation record. As far as the topicis concerned, when you talk about health care from a holisticperspective, it is difficult to separate practices in the phar-maceutical sub-sector from the health care sub-sector. Thepharmaceutical sector is extremely heterogeneous and hasbeen undergoing considerable consolidation throughmergers and acquisitions recently. This is going to change thetopography of the pharmaceutical sector as far as the natureand kind of players are concerned. The health care sector isequally heterogeneous, an extremely dispersed and unreg-ulated market. It is often difficult to identify the scope/borders of this market.

Regulation of the health care/pharma sectorMy next point is about regulation in the health care sectorand I will enumerate certain issues related to the experi-ence of regulatory enforcement in this sector. The first isabout pharmaceutical pricing. The National PharmaceuticalPricing Authority (NPPA) which is the regulator for prices inthe pharmaceutical market is located under the Depart-ment of Pharmaceuticals which is situated under the

Ethical issues in health care sector in India 57

Ministry of Chemicals and Fertilizers. We are talking abouthealth care here and the Ministry of Health and FamilyWelfare should have been the ministry or the custodian ofthe drug regulator in this case. The NPPA’s motto is to servethe consumers while encouraging the pharmaceuticalmanufacturers to produce adequate quantity of qualityproducts to meet the rising demand. However, we knowfrom experience that often protecting the interests of theindustry becomes a priority over protecting the interests ofthe consumers. For instance, if you look at the list ofessential medicines, there has been a considerable reduc-tion in the number of medicines which are covered in theNational List of Essential Medicines (NLEM) over time. Whileat the same time more and more private companies havebeen given licenses to produce drugs in our country.

The second point about regulatory enforcement is aboutthe quality of the drugswhich are available in themarket andwhat the regulator has done in order to ensure that quality ismaintained. The Central Drug Standard Control Organisation(CDSCO) which controls the in-flow of drugs into the countryand oversees clinical trials, is placed under the Ministry ofHealth and Family welfare. However, if you discuss issueswith them, they say that their sole responsibility is to ensurethat they provide licenses to international firms entering themarket. The license for domestic drug firms is provided bythe state drug controllers, who are also responsible formonitoring the performance of these firms in the marketwith regard to availability and quality of the drugs theyproduce. Having worked in this sector for the last few years,CUTS feels that if the enforcement of such regulatoryresponsibility (of availability and quality of drugs in themarket) is left with the state, it might be counter-productive. There is a large variation in the capacity of thestate drug controller and also in factors that determine themarket at state-level. In one of our recent projects7 forexample, we met with the drug controller of one state whoused modern technology and was able to locate or monitorthe activities of the drug inspectors across various locationsof the state on his fingertips. This state drug controller wasfairly well endowedwith resources.Whenwe visited anotherstate and met with the drug controller there, we realisedthat hehadweak resource base (both physical and in terms ofhuman resources), which had implications on the perfor-mance of this drug controller (ability tomonitor and regulatethe sector). So, there is a need to re-visit the approach(driven by the present policy framework/administrativearrangement) where the state drug controller monitors theperformance of the drug firms in the state. One cannotexpect a weak (state level) regulator to effectively regulatesuch an extremely strong sector at the state level.

The third issue concerns marketing. Under the IndianMedical Council (Professional Conduct, Etiquette and Ethics)Regulations, 2002, pharmaceutical companies are notsupposed to influence the behaviour of doctors by offeringgifts/commissions. But evidence suggests otherwise, goingby the large number of complaints which have been receivedby the MCI about such practices. Recently there has been anattempt by the Health Ministry to come up with a UniformCode of Pharmaceutical Marketing Practices (UCPMP). It isa voluntary guideline but theministry is very keen to enforceit given the prevailing concerns related tomarketing of drugsin the country.

The fourth and the last point pertaining to experiencesin regulation is registration of health care institutions. TheClinical Establishment Act, 2010, which was notified earlierin May 2012, still remains a model law and is yet to beadopted and adapted across most of the states. Only sevenstates have adopted this Act to date, namely, ArunachalPradesh, Himachal Pradesh, Uttar Pradesh, Rajasthan,Jharkhand, Mizoram, and Sikkim, and the Union Territories.There is still a lot of resistance from the states in adoptingthe Clinical Establishment Act. Related to this, in terms ofthe performance of the health care institutions, accordingto the National Antibiotic Policy of 2010, the governmenthas been toying with the idea of prescription audit to assessadherence to “rational use of drugs” (RuD) by the doctorsand health care institutions. But there has been resistanceto this suggestion, especially from the Drug Traders Asso-ciations in the country.

Recently, there were reports in the media aboutcontinuing friction between the Planning Commission(Government of India) and the Ministry of Health and FamilyWelfare regarding recommendations made by the HighLevel Expert Group on Universal Health Care headed by Dr.Srinivas Reddy. If one looks at the chapter on Health in theFive Year Plan (2012e17), it talks more about managed carewhich has not gone down well with the Ministry of Healthand Family Welfare for obvious reasons. The Health Ministryhad hoped to receive greater financial support forenhancing the capacity of the sector to provide betterhealth services, especially to the poor.

It is appalling that our country still doesn’t havea National Health Policy. A draft has been lingering fora long time. There is a lack of political will in supportingand streamlining the health care sector as far as regulationsare concerned, which has had major implications fora majority of our fellow citizens. The first is the high cost ofhealth care, and according to a World Bank estimate basedon 2004 data, several million households fall into poverty inour country due to high health care expenses in India.

Private health careThe next concern is about private health care expendituresin our country and implications for the economically disad-vantaged. According to a report,8 private expenses in healthcare constitute 80% of the total health care expenses inIndia, which is very high as compared to other developingcountries. The issue which is of even more concern is thatexpenditure on drugs comprises 72% of the total out-of-pocket expenses in our country. A third issue on which wehave done some work9 is the nexus between various healthcare providers in the country. In our report prepared onthe basis of primary information gathered from the twostatese Assam and Chhattisgarhewhat we sawwas that thepharmaceutical companies were continuing to influencedoctors through promises of foreign visits and continuedmedical education. The job of the medical representativestoo has become part of this loop.

Another thing that we need to think about is the size ofthe pharmaceutical industry in the country e do we need somany pharmaceutical companies/drugs in the market? Thenexus between the doctor and the diagnostic clinic isconsidered as “usual practice” and operationalised through“cuts and commissions” even though this is prevented

58 C. Chatterjee, V. Srinivasan

under the MCI Regulations. It is not private health carealone that is affected by these kinds of practices. Even inpublic health care, we have evidence to suggest deliberatesuppression of medicine supply in public hospitals, ofconsumers being forced to go outside public hospitals formedicines which were otherwise available at low cost (orno cost) from the medical store within the public hospitals.We need to deliberate on the kind of regulations that weare looking at and looking for.

Co-regulation and self-regulationThere has been a considerable amount of stress on publicregulation and we have ignored the two other extremelyimportant types of regulation: the first being co-regulation,and the other, voluntary self-regulation. Co-regulation seesthe government regulating through the sectoral association(i.e., the pharmaceutical association in the pharmaceuticalsector and hospital association in the health care sector).We have seen that sectoral associations have remainedextremely meek in monitoring the behaviour of theirmembers. We need to find ways in which the governmentcan work hand in hand with sectoral associations andempower them. The sectoral associations must becomemore active and penalise members who are indulging inmalpractices and/or not complying with applicable rulesthat have implications on their behaviour.

The most appropriate analogy that I was able to drawwas of a school where you have a teacher who disciplinesthe class; she can be equated with the public regulator/government. Yet you also have a monitor who is electedfrom within the class but is accountable to the teacher. Thisis the role that sectoral association should carry out, andremain accountable to the government. This is probably thekind of model we need to explore for the pharmaceuticaland health care sectors. It is time to see how that can bedone. It is also necessary to assess the catalytic forces forself-regulation, and promote them in the sector.

Role of CUTS

Finally, I would like to inform you about our organisationand what we are doing to deal with this situation asa consumer protection organisation. Firstly, we are tryingto gather some of the evidence that is otherwise difficult toget and use that to raise a debate on the need for reviewingthe regulatory framework for the sector. Secondly, we aretrying to push the agenda that the main objective of thepharmaceutical or the health care sector is to promoteconsumer interest. Unlike in any other purely economicsector such as steel, retail, apparel or automobile econsumer/public interest issues are of prime interest in thepharmaceutical and health care sectors. Therefore, thegeography and the framework for regulation are differentand have to be resolved by the government, both at thecentral and the state level.

We have to see how we can promote the NVG to effecta more responsible pharmaceutical, medical or health caresector in India e such discussions/processes should not berestricted to the national level but should take place acrossthe states.

There has to be a consistent process or forum to ensuretransparency across implementation of public regulation at

the level of the state. Even with co-regulatory activities,for e.g. the sectoral regulation, much depends on thenature of the market and that requires some thought. Wehave also been lobbying for the adoption of the nationalcompetition policy in India, looking into the policy imped-iments that have hindered a level playing field in thepharmaceutical sector, and affected entry and operationsof pharma firms in the country. We try to balance both: asa consumer organisation we try to enforce the agenda ofconsumer protection on the one hand, while on the otherwe try to assess what is good for the industry.

Deepak Sapra

Ethics in health care

My starting point for any discussion on health care ethics isthe fact that it is imperative for a society to have healthycitizens and therefore provision of universal, affordablehealth care should be a core objective.

The other fundamental premise is that health care is animportant aspect of our life and part of the society we livein. So any discussion on ethics in health care cannot be inisolation of ethics in society.

I want to list out some of themajor issues that I see aroundhealth care and especially pharmaceuticals where thequestion of ethics comes in and there are several grey areas.

We use terms like health “care”, and pharmaceutical“industry”, and pharmaceutical “market”. While these areseemingly just definitions, the words used in these termsappear to be at odds with each othere “care” and “industry”,“care” and “market”. The question is whether we can recon-cile these intended outcomes in a manner that is winewin.

Some of the issues I wish to point out are

� Drug pricinge Are drugs priced in amanner that they canserve the needs of people who need them? Can pricingimprove access? To what extent do market forces help inshaping pricing and impacting accessibility.

How does pricing link to who the payer is, i.e. whether itis out of pocket, insurance company, or the state?

� Drug discovery e are the efforts towards research tar-getted to those segments where there are glaringhealth care gaps?

� Influencing doctors and other health care serviceproviders in order to generate prescriptions.What kind ofinfluence is acceptable e scientific, medical, academic,commercial.

Where do the lines get blurred?

� Pharmaceutical research and clinical trials (CTs) e Howmuch of it is ethical and to what extent do we go?

Drug pricing

I would like to share some specific examples. Let me startwith the example of AIDS which is prevalent in several partsof the world, including some of its most disadvantaged

Ethical issues in health care sector in India 59

parts, especially sub Saharan Africa, parts of Latin America,and Southeast Asia. Typically the cost of first line therapyfor an individual afflicted with AIDS used to be $50e60$ perday irrespective of which part of the world the individuallived in. As a consequence, many people were deniedaccess because the drugs were simply unaffordable, espe-cially so as several patients were living at below $1 a dayWith genericisation and competition, several players camein, providing cheaper versions of the same therapy whichled to costs coming down to $1 a day. My next example is ofRituximab, a monoclonal antibody, the biosimilar version ofwhich is manufactured by Dr Reddy’s, the company I workfor. The number of patients in India who were deriving thebenefit of this therapy was a handful, a few thousand, whenthe product was being sold only by Company X, the inno-vator. Enter the biosimilar version, at a price point that wasabout 50% lower, and the number of patients gettingbenefitted expanded dramatically to several fold. Thus, forthe right kind of price and the right kind of free marketplay, there can be a substantial impact on the number ofbeneficiaries. This can be especially effective in scenarioswhere the payer pays from the pocket, in countries such asIndia, Brazil, Latin America, Africa, and other parts ofSoutheast Asia. The coming in of competition immenselyincreases affordability. While these kinds of drugs are stillvery expensive for several patients, the coverage increasesdisproportionately with the fall in price.

This is one of the most important issues around ethicsand health care. It should be possible for someone to accessan intervention/drug at the right time and in a manner thatdoesn’t cripple him/her financially. This is a very importantissue that generic companies and competition in the phar-maceutical space have been able to address. I feel happyand proud to be a part of this sector in India especiallybecause we are making a tremendous impact towardsimproving the affordability of drugs, in every part of theworld.

Drug discovery

Drug development is a high risk, high investment andresource intensive game. It takes 10e12 years to get a drugto the market; it costs anywhere between USD 800 mn toa billion. If companies cannot recoup the money, ascorporations they will find it difficult to invest in specificareas. This determines choice of areas to invest in, andcommercial attractiveness often scores over public healthconcerns. This is one reason we see so many new drugs inthe neuropsychiatry space and so little, for example, intuberculosis.

As a synthesis, we must harness and leverage the powerof free markets with the benefits of collaboration, espe-cially on research in areas of public health concerns.Technology is an enabler and the more we use it to impacthow drugs are researched and manufactured, and howdiseases are diagnosed, the easier it will be for new drugsto get to the market.

Investments in research also have to be a collaborativeeffort between the public and private sectors with higherfunding for non-profitable drugs. Several old diseases, forexample malaria, are coming back with a vengeance and

there are no drugs targetting such resurgence. We mustprovide incentives and funding for the right kind of research.

Influencing doctors

The third issue is around influencing doctors and others inthe industry on the drugs that are prescribed. Many phar-maceutical companies have been questioned or criticisedfor the way they achieve their financial targets, and thefinancial metrics that they adopt, for example, categorisingdoctors by the value of prescriptions they generate, andthe methods used to influence doctors and generateprescriptions. Even with regard to unbranded generics,concerns have been raised in the US about influence overanother set of players in the value chain e the pharmacychains, aggregators, and super markets, who are customersand influence drug usage.

Clinical trials

Clinical trials are performed while establishing the safetyand efficacy of drugs intended for use on human beings.There are a series of tests which need to be undertaken, onhealthy volunteers as well as patients. One of the mostcontroversial ones is the issue of trials on human beings. Arewe treating patients in the right manner? Are they aware ofwhat is happening? Are we providing the right kind of post-trial support to volunteers? This impacts us in India a lot, asIndia is a preferred CT destination owing to lower costs. Oneestimate put the comparative cost of CTs in the ratio 1:4;that is if it costs $10M in India, then it will cost $40M in theUS.The important thing to note here is that there is a need fortransparency and this is not a very strongly establishedsystem in India. Concerns have been cited about themedical,ethical and financial treatment of volunteers and subjects. Apharma report suggests that in 2012, more than 200 peoplehave died as a result of clinical trials in India. This brings us tothe question whether all was fair and square, and whetherthe subjects weremade fully congnisant of the issues aroundenrolment and subsequentmedical attention. So, how dowecreate health care ethically and legally?

There is debate around reducing clinical trials on humans,wherever possible. Can we use more of technology and IT?Can we use more statistical tools and be accepting of them?Can we do more predictive in vitro experiments to reducein vivo activity? Can we formalise authorities’ responses, sothat there is mutual recognition of each other’s approvals?Some of these questions could show us the way.

Ravikumar Banda

Perspective on Indian health care

My perspective is likely to be different from that of theother panellists on this subject. Let me tell you where Icome from. I have done my medicine, post-graduation inpsychiatry and I practised for some time. I then workedwith Astra Zeneca research foundation after which I startedmy own company. So I have seen the industry from within,plus I know what a medical practitioner feels.

60 C. Chatterjee, V. Srinivasan

Paradox of health care industryHealth care is a very peculiar industry in that the consumerhas no rights. The consumer is completely governed bya middleman who doesn’t pay for it, and that is the doctor.In this situation, there is one thing that is quite frightening;a clinician crossing ethical borders can cause lot moredamage than the pharmaceutical industry crossing the legalborders. So we require phenomenal ethical regulationwhich includes both the doctors and the other peopleconcerned within the same framework. To enable this, wehave one organisation, the MCI. While MCI is an august bodyin this country, it has zero capability of enforcing regula-tions or taking anybody to task. They do not have recourseto legal aid that can help them to take action if somethinggoes wrong. Even when legalities have been breached byclinicians it is very difficult for MCI to intervene and dosomething about it when somebody complains to them.They have to seek justice through the courts.

We have a paradoxical situation in this country, wherewe have a huge disease burden when compared to theWestern world, but we are doing little to effectivelymanage the abundant sickness. We have a lot of plans but Idon’t think we are implementing any of them.

The need for innovative health care deliveryWhat we require is two things, namely, inventions to tacklesome of these problems, and innovation in delivering thesolution to the last man in the remotest village. We lackinnovative health care delivery. Quite often, we blame theperson who invented the solution for the disease. We, thegovernment and society have been opportunistic. Whilemany people have been benefited by making some druggeneric we have killed innovation in the process. We don’tsee how we can keep the person still interested in the solu-tion, in going further. At the end of the day, the pipeline willdry up. Patent and patent protection is not a problem. Theproblem lies in intellectual property rights (IPR) manage-ment, the pricing of the new drug, negotiating witha company when a new innovation has been made in makingthat available to people, and so on. There we don’t havesolutions and we require a lot of inventions in that space.

However, we have the problem of poor performancewith regard to inventions, ethically as well as on themanagement side. Big corporations are scared of investingin inventions and SMEs are enthusiastic in niche areas, theythink that it can give them a unique position if they havea new invention but they don’t have the money to see theproblem through. There are government initiatives such asNew Millennium Indian Technological Leadership initiative(NMITLI), Biotechnology Industry Research Assistance Pro-gramme (BIRAP), where part of the funding comes fromprivate initiatives. However, we have ethical issues when itcomes to supporting inventions in this country or supportingfunding. We have committees which look at publiceprivatepartnerships and they are worried that at the end of theday, there is public money coming into a project that ulti-mately can be taken up as a product in the private sector.Though one may have price controls, it is the company thatmakes a profit. They feel that the private investors in thecompany have been made rich by expenditure at thepublic’s expense. Amidst these confusions and ethicaldilemmas we forget that they there could be a public good

at the end of the process, and we lack the confidence thata private company could make medicines affordable topeople. Since the product has come with peer-funding, itcomes with fewer problems, so the company could make itmore affordable.

They do not also understand the issues connected withcommercialisation of a product. Let me give you theexample of a company X that came up with a medicaldiagnostic device that could be plugged into the Internetand would provide excellent tele-medicine services, con-necting doctors and patients in remote villages. But thatproduct has gone nowhere because of the insistence thatthe price should be kept very low and within that pricing,there was no distribution margin for 2e3 levels as required.We need to think through the whole distribution chain andincentivise the whole system, if not it won’t reach the lastman.

Ethical practices and positionsI now come to a problem that Rijit alluded to: the cutstaken by doctors. It’s a huge problem in our diagnosticsindustry. Where did the cuts get created? The doctorsblame it on pharmaceutical industry; I completely blamethe doctors. We need to have highest ethical practices withdiagnostics and drugs as the cuts and incentives add to thepatient’s burden. The doctors within their own fraternity,and with the MCI and all the others concerned, need to gettogether and see that the highest ethical standards aremaintained.

Let me demonstrate what I mean by unethical practice.As a diagnostic provider let us say that I sell an HIV test kitat a price between Rs. 17 and Rs. 25 depending on the taxstructure of that state to the hospital but the hospital inturn charges the patient anywhere from Rs. 325 onwards. Isthere so much of value addition in the hospital on thisdiagnostic kit? Definitely not. The charges are arbitrary andthis is largely an unethical practice. Hospitals are built ata certain cost and they generally want to earn their costsback on everything that goes through that hospital andthat’s where everything gets overcharged. I don’t knowwho will control it, but it’s a huge problem in making healthcare affordable in this country. Whatever the manufacturerdoes, it does not reach the people because the hospital willhike up the price.

Coming to the regulatory hurdles, we have a CentralDrugs Controller General of India (DCGI) who reports to theUnion Health Minister. Each state has a drug controller whoruns the day to day business of regulating, inspecting andprosecuting. This is under each state government sepa-rately and it is a very confusing situation for the industryand it needs to be rectified. The second problem in thisarea is the lack of a clearly defined work ethic. Even if weput aside things like corruption, delay in issuing license esometimes for years together, is an unethical practicewhich is not punished. On the other hand, if a drug isgranted a license and is used effectively for four years, andin the fifth year there is a problem, the manufacturer willbe punished severely and the Drug Controller gets a blackmark. So many people feel that inaction is the best way.This is how it is all over the world, not only in India.However, the US FDI says there are ethics within that. Ifa new drug is going to improve health care by even 5% or 2%

Ethical issues in health care sector in India 61

more than what the current drug is doing then it is yourethical duty to see that the drug reaches society in theshortest time. This is lacking in India. We have not everstated the ethical position, that it is also the duty of thegovernment to see that a drug reaches the people withina stipulated time. Therefore, some ethics has to be broughtinto the regulatory process. One important point thateverybody forgets, including the health ministry, is that ifwe delay a drug then the cost of this delay is loaded on tothe price of the drug. We have to think through every delayand include it in the process.

Public-private partnershipNext, I would like to continue what Deepak brought up eabout public-private partnership and the point of trust and Iwill say that trust is lacking on both sides. Both the industryand the bureaucracy are culpable in their own way but if wekeep blaming each other and carry on a game of one-upmanship, this will go nowhere. At some point we need tosay stop and restore the ethical balance. The most impor-tant aspect of this is, what is the effect on the ethics of thewhole society. We need to be responsible as a society onmany of these issues.

Let me give you an example from clinical trials. Therehave been instances where committees working under theDrugs Controller General of India (DCGI) have given oppo-site decisions in similar situations. Very often committeemembers though academically qualified do not understandthe ground realities of public health, and they take deci-sions based on convenience.

It is a clinical trial which costs the maximum whiledeveloping a drug. If we want to develop generic drugs,which are important for the common man, we wouldprobably have the following situation. An anti-tuberculosisdrug was developed by a company in India, which wentthrough toxicology successfully, and through phase one ofthe clinical trials, after which nothing further was heardabout the drug. Do you know why? The next step is a bigtrial that would cost about S750M. The company is ina dilemma whether to proceed or not because when thisproduct is successful, every country poor or rich will wantto procure it. It would be the governments of countries whowould want to procure it and they would negotiate over theprice. But who will finally pay for this $750M worth ofclinical trials? This dilemma could prevent the drug fromseeing the light of day because if this question is notsettled, the company could cap the drug indefinitely. This iswhere public-private partnership can come into play.Maybe the Government of India should permit the companyto conduct the clinical trial in India and negotiate fora differential price in India. But nobody is doing that.Everybody is willing to do what is called open source drugdiscovery platform in which first discovery costs $100M orless. That part they want to subsidise. But nobody is talkingabout the remaining $650M. We need that kind of pub-liceprivate partnership if you want to take the new drugswhich are invented elsewhere to the masses; you arerequired to support them too and their inventions, other-wise you will have a big problem of demoralising theinventive companies.

The foremost point is we need to think about how tobring ethics back into medical community back.

Discussion

Vasanthi Srinivasan: Thank you. You have laid out therange of issues on the subject of ethics in health care quitecomprehensively. The issues discussed reflect thecomplexity of the sector, the multiple stakeholdersinvolved, the different interests of each of these stake-holders, the weak regulatory framework, and the questionof self-regulation at the level of medical professionals andorganisations.

What would be the three recommendations or sugges-tions that each of you has to any of the stakeholders thatwould contribute to building a more ethical health caresystems?

Rijit Sengupta: A critical issue, which was raised by Ravias well, is the role of the drug controller (DCGI) both at thecentre and at the state level. The Ministry of Health andFamily Welfare must develop a mechanism that promotesco-operation and consistency across the drug controllerfunctions in the states.

Most of the services in this country have a dedicatedsector regulator but the private health care sector (privatehospitals and clinics) neither has a regulatory frameworknor a regulator. The government must articulate its positionin terms of regulating the private health care sector, giventhe proliferation of private providers in this sector which isonly going to increase. The third thing would be with regardto the marketing of drugs. The government must move fromdeveloping voluntary guidelines to stricter regulatory normsas far as marketing and distribution of drugs is concerned.These are my key recommendations.

Deepak Sapra: The core of my argument is based aroundaffordability and I have a few recommendations on that. Inthe Indian context, one aspect that really impacts afford-ability is the time it takes for drugs to get approval e thisaspect was pointed out by Ravi in his presentation. It wouldbe a very important aspect in health care overall. In orderto increase affordability we would have to reduce the timeit takes to get approval for various kinds of drugs and wehave to make sure of getting more people into the marketas early as possible. Another aspect, on the same point,concerns the affordability of drugs which are still governedby patent. On this my recommendation is that we must lookat compulsory licensing not just from the perspective ofpatent protection but also from the perspective of numberof patients it is likely to impact. To my mind, compulsorylicensing could be one way, especially in certain criticaldiseases where alternatives are not available. This couldget more drugs into the market in a manner that isaffordable to a wider mass of people in a country like India.I am conscious that it is a very dangerous argument,because it could open the flood gates and therefore youneed to be very careful. It needs to be selectively done inthe case of those products where there are no substitutesavailable and where there is a real case for public health orwhere a large number of patients are not being able to gainthe benefits of that medication.

My third point draws upon the emerging thinking aroundinnovation, which Ravi and Rijit also spoke of. I agree thatthe scope for innovation in this sector is phenomenally highat the moment because of the various kinds of possibilities

62 C. Chatterjee, V. Srinivasan

that exist in the value chain. My recommendation toventure capitalists would be to be consciously on thelookout for the models which incorporate innovation in thehealth care industry, especially around delivery, and tostart in places which are not conventionally consideredimportant markets or important customer segments. Thereis a lot of value at the bottom of the pyramid and there isa lot of value in taking it forward. There are various inno-vative approaches that people are trying out and peoplehave done it in different parts of the world. We should beable to encourage innovation and get it into the Indianscenario. Another aspect I would like to draw attention to isthat there is tremendous potential to leverage technologyto reduce many of the barriers that exist, especially aroundinformation asymmetry. We could collaborate with theleaders in the field over this.

Vasanthi Srinivasan: I have a PhD student who isresearching on scaling up of health care services and one ofhis areas of interest has been telemedicine. Many tele-medicine initiatives have been announced in the public-private partnership mode but the incentive structuresthat are built in are unclear. What is likely to be the futureof telemedicine given that it could enable affordableaccess to health care in rural areas?

Deepak Sapra: For this, we would have to look atcollaboration with different players in the value chain.

Ravikumar Banda: Telemedicine is a subject close to myheart. There are all sorts of problems around it and I haveseen companies struggle. The point in telemedicine istaking the product to the end customer. How do you reachit and how do you make the whole path smooth? It’s likethis: People say if you have a small margin and largevolume, it’s a great business to do in health care. Butreaching a large volume of people requires hecticmarketing and that’s a hugely expensive proposition. Inorder to aim at very big markets, you should be able toreach a large volume of people and that gap has to be firstlooked at. There we need to think how to reach a largesector of people without going through the classical phar-maceutical marketing method, which is a very expensiveproposition. Only if we bridge that gap, I think more andmore innovations will occur which will simplify telemedi-cine. People forget that if a farmer can be saved a trip fromhis village to his city for medical consultation, he is willingto pay for the telemedicine service. So we must think ofhow we can cost telemedicine cleverly to make it acces-sible to the end user.

To reply to Vasanthi’s question, my three suggestionswould be: Firstly we need to integrate MIC with theenforcement agency. We need to have MCI tie up with IMAs(which are very powerful bodies in this country) to inte-grate all the doctors and put back a programme in whichthey are exposed to ethical values and made aware of whatthat would do to their practice. I think their own living willimprove. Secondly, we seem to have forgotten the existingpublic health care system through general hospitals and

medical college hospitals attached. We were providinggood medicine through that system where the poor wouldget a certain amount of care. Today they are all ina dilapidated state, and we need to improve them. Thefunds allotted by the World Bank to improve the publichealth system are not being used effectively.

We need to urgently strengthen the public health caresystem. Thirdly and most importantly we need to integratethe regulatory mechanism of the pharmaceutical industryinto one body. We need to put in place much more rigourand time lines in executing these regulations, be trans-parent and evolve guidelines by involving the pharmaindustry.

Vasanthi Srinivasan: Thank you all for making this suchan enlightening discussion.

Appendix ASupplementary data

Supplementary data related to this article can be found athttp://dx.doi.org/10.1016/j.iimb.2012.11.004.

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