Monday, June 13, 2011

The paradox of Generic Medicines: Who is the Culprit?

The paradox of Generic Medicines: Who is the Culprit?

Most of us are aware that Generic medicines are by far cheaper than
branded drugs of the same Chemical compound or molecule. For example
Paracetamil, most popular pain relieving medicine, is available as
CROCIN at Rs 16.8 for 15 tablets of 500mg and as METACIN at Rs 6.5 for
a strip of 10 tablets of 500mg. The difference is almost 100%.
However, these generic drugs are not available to public at *cheaper*
prices. However, they are stocked and sold by retailers, all the same.
Why? Let us analyze the reasons for this paradox.

It may surprise you to learn that the manufacturer prices the branded
drugs and generic drugs produced by him at almost the same MRP. The
manufacturer gets his share of 15% to 20% profit whether it is generic
or branded drug. In the case of branded drugs he sells through
distributors & stockists to retailers. Selling branded drugs also
involves huge marketing efforts costing money. As branded drug passes
through many hands before it reaches the consumer, there is little
chance of the retailer giving any big discount to consumer. Many
chemists offer 10% discount to beat competition and some big chains
like MedPlus who can afford to give more discount also offer the same
10% discount, thus making more profit. Medplus enjoys the power of
buying in bulk.

The story is different when it comes to generic drugs. In the case
of generics the manufacturer sells them through a single national
level distributor for entire country. The National level distributor
reaches the retailer via state level distributors. There is a huge
difference in MRP marked on the medicine and actual sale price to
National level distributor. The retailer gets a nominal trade
commission of about 15% to20% in the case of branded drugs and
anywhere between 60% to 200% commission on generic drugs. As both MRPs
are more or less similar, it is the last chain (thugs) of chemists /
pharmacists that eat away all the profits. Middlemen, in Generics
distribution are not very avaricious and take modest commissions.
There is not much high pressure selling or bribes involved in selling
generics. Ultimately the retailer enjoys maximum profit as he sells
both generic as well as branded drugs at the same MRP less 10%.

There is a big nexus between the doctor, the chemists, corporate
hospitals and manufacturers. Manufacturer bribes the doctor to
prescribe his brand. The chemist is again bribed to stock and give
preference to certain brand. Though many drugs are to be sold only
under prescription, as it is not mandatory to keep a copy of
prescription, chemists always say (lie) that they dispensed Schedule H
drugs only after seeing the prescription. As per law the chemist can
not even substitute a drug from one brand (or trade name) with another
unless the prescription is changed and re-validated. If the patient
wants to buy generic the doctor should prescribe it. He will not do so
because he is under big obligation for having enjoyed bribes. Most of
the time doctors are ignorant of trade names associated with generics.

The Government of Andhra Pradesh has come up with setting up 175 plus
Generic Medicine shops through out AP. This will be similar to Jan
Aushadhi shops started by the (central) Ministry of Health and Family
Welfare. The latter are an utter flop with empty shelves staring the
buyer; they are totally mismanaged. The end user prices are expected
to be highly attractive as these shops will buy in bulk from national
distributors cutting down all middlemen. In fact the AP govt has
already issued orders that all government doctors should prescribe
only generic drugs; a list running to some 80 pages of essential drugs
has been circulated.

Now who will bell the cat? Here are some suggestions. Request your
family physician to translate the Brand Name Prescription given by the
specialist to generic equivalents. He may oblige on account of long
standing relationship with your family. There are many senior citizens
who blindly believe that costlier the medicine, better will the
quality be. They need to be educated. Openly confront and tell your
local chemist shops (I have 15 medical shops within 1 km radius) that
they are looting the public; raise your voice and concern; mobilize
your friends in this venture.

Several senior citizens associations may join hands and buy generics
required by their members in bulk directly from local wholesalers. In
Hyderabad many such wholesalers (located in Inderbag, Sultan Bazar)
are offering large discounts (up to 50 to 60%) for direct individual

As IRDA Chairman recently pointed out, during a seminar on Health
Insurance for Senior Citizens organized by HelpAge in Hyderabad, there
is nothing preventing anyone setting up shops specially for selling
generics to senior citizens and others. Three such shops have already
come up - one each in Hyderabad, Vijayawada and Guntur. Andhra Pradesh
Senior Citizens Confederation (APSCCON) has been playing a major role
in promoting such bold ventures. Many more such shops should spring
up. We should be united and win this battle against unjust nexus
working against us.


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