J. S. Majumdar

What were Existing

Public Healthcare System – Integral Part of Planning Process

In India, public healthcare system evolved out and remained important part of planning process after independence. Health planning was integral part of Community Development Programme. It adopted a primary healthcare model based on the principle that inability to pay should not prevent people from access to health services. It envisaged public spending and people’s participation. However, all these remained deficient due to successive governments’ faulty policies and failures in implementation.

Health Policies

India is a signatory to 1978 Alma-Ata Declaration ‘Health for All by 2000 AD’ of the World Health Organisation (WHO). The Declaration defined the Primary Healthcare which serves the community including mother and child which included family planning, immunization, prevention of locally endemic diseases, treatment of common diseases or injuries, provision of essential facilities, health, education, provision of food and nutrition and adequate supply of safe drinking water.

Based on WHO Declaration, first National Health Policy (NHP) was adopted in 1983 with objective of (i) comprehensive primary healthcare service linked with health education; (ii) involvement of ‘health ‘volunteers’; (iii) a referral system for treatment and (iv) an integrated network for speciality services free for the needy to achieve by 2000 AD. NHP 1983 admittedly failed to achieve these goals within the time frame of about two decades.            

It was replaced and diluted by NHP 2002 in the neo-liberal stage by the then NDA government. Instead of reviewing and correcting the deficiencies in policies and in implementation, it blamed the failures on the earlier health policy itself being ‘optimistic’ and beyond the financial resources and administrative capacity; and, therefore, designed NHP 2002 claiming to be ‘realistic’ in expectation, financial resources and administrative capacity with involvement of private sector saying “Considering the economic restructuring under way in the country, and over the globe, in the last decade, the changing role of the private sector in providing health care will also have to be addressed in this Policy.”

Added to these are the National Rural Health Mission, 2005 and National Urban Health Mission, 2013, integrated in National Health Mission, 2013, for selected backward states in health indicators for establishing health delivery system with simultaneous action on health determinants like water, sanitation, education, nutrition, social and gender equality within a time frame up to 2018, later extended up to 2020. ICDS has important contribution in healthcare while ASHA scheme is an integral part of public healthcare system.

Public Healthcare Network

Public healthcare organisational structures have, as in March 2015, 1,53,655 Sub Centres (SCs); 25,308 Primary Health Centres (PHCs) and 5.396 Community Health Centres (CHCs) and district hospitals and medical colleges. In urban areas, there are also hospitals / dispensaries in subdivisions and under municipal local bodies.

Each SC serves a population of 5,000 (3,000 in hilly and tribal areas); consists of at least one Auxiliary Nurse Midwife (ANM) and Multipurpose Health Worker (MHW); and the expenses are entirely borne by the Central government. SCs also work to educate the rural people on health.

Each PHC is staffed by Medical Officer and other paramedical staff; serves 30,000 population (20,000 in remote areas); supervises over 6 SCs; acts as referral hospital from SCs; and its expenses are borne entirely by the respective State government.

Each CHC serves 1.2 lakh population (80,000 in remote areas); funded entirely by the State government; acts as referral hospital from PHCs.

District Hospitals are the final referral centres for the primary and secondary levels of the public health system. In 2010 there were 605 district hospitals when there are 640 districts in the country. 

Medical Colleges and Research institutions under both the Central and State governments and jointly owned also act as referral hospitals.

Low Health Indices and Deficiencies

Despite all these, due to faulty policies and lack in implementation by the successive governments, India’s healthcare indices are among the lowest in the world. According to the Global Burden of Disease Study 2015 published in the prestigious medical journal The Lancet in October 2016, India stood at dismal 154^th among 195 countries on the healthcare index. The journal lists India among the biggest underachievers in Asia in healthcare access.

The statistics released by the WHO (Global Health Observatory) in July 2016 reveals India below the global averages in providing basic healthcare services. Life expectancy of Indians is lower than the global average; mortality rate is 130 in one lakh population and 167 in 1 lakh population due to TB; maternal mortality is 174 in 1 lakh births.

20% of all maternal deaths and 25% all child deaths in the world occur in India; 69 out of 1000 children are dead by the time they reach the age of 5; communicable diseases are cause of death for 53% of all deaths. 

The public health network suffers due to lack of adequate fund, infrastructures, personnel, and for administrative failures. The shortage of doctors was one of the health-management failures cited by the report of Parliamentary Committee on Health and Family Welfare placed in the Parliament on 8 March, 2016. With more than 7.4 lakh active doctors at the end of 2014, the doctor-population ratio stood at 1:1,674, worse than Vietnam, Algeria and Pakistan; needing 5 lakh more service doctors. The proportion of birth attended by skilled health personnel is 74% according to WHO report. As per the rural health statistics 2014-15, more than 18,000 posts of ANMs are vacant in the Sub Centres as on 31 March 2015.

There are serious infrastructural deficiencies. A survey report on infrastructure of PHCs shows that all India average of availability was Water – 62.3%, Electricity – 81.3%, Labour Room – 47.4% and Laboratory – 45.4%.

High out of pocket cost in the private healthcare sector has led many households to incur catastrophic Health Expenditure.

Modi Government’s attacks People’s Healthcare

It was necessary to briefly note the above existing healthcare system to understand the nature of attacks on the people’s healthcare since BJP’s Modi government came to power at the Centre. Modi government has been demolishing all existing structures in healthcare system and bringing basic changes in the people’s healthcare.

Ending Healthcare Planning

Coming to power, Modi government abolished Planning Commission and ending planning process altogether leaving economic development entirely on the market forces. Public healthcare system, which was integral to planning process, became the worst victim.    

In the neo-liberal stage of capitalism, healthcare remained a big-ticket business for profit. But, in the ongoing stage of world economic crisis, for maximising profit through public funding, privately owned insurance-driven healthcare system is rapidly replacing the governments’ responsibility in healthcare throughout the capitalist world.

In India, there are two prong attacks on the ailing people – (i) privatisation of public healthcare system and (ii) privately owned insurance-driven healthcare system. These are epitomized in the Modi government’s ‘Ayushman Bharat for a New India – 2022’ programme announced in the Union government’s 2018-19 budget. Both of the two components of Ayushman Bharat were announced as ‘flagship programmes’ of Modi government. BJP is trying to popularise Ayushman Bharat as ‘Modicare’ in ‘Obamacare’ style of USA.

National Health Policy 2017 for Privatisation Drive

The stage was set earlier by adopting National Health Policy 2017 replacing NHP 2002 giving four reasons as (i) changing health priorities due to growing non-communicable diseases and some infectious diseases; (ii) “emergence of a robust health care industry estimated to be growing at double digit”; (iii) incidences of catastrophic expenditure due to healthcare costs and (iv) enhanced fiscal capacity in public funding. The policy thrust revolved round ‘emergence of robust health care industry’ and increased fiscal capacity in public funding.

NHP 2017 directs to “Align the growth of private health care sector with public health goals” to “Enable private sector contribution to making health care systems more effective, efficient, rational, safe, affordable and ethical.” For these, NHP 2017 also decided to establish Health and Wellness Centres (HWCs) by upgrading existing Centrally Funded Sub Centres (SCs).

It may not be out of place to note here that all World Bank projects and funding in health sector in different States in India since mid nineties with onset of Neo-liberalism has had a common feature that is private sector’s involvement in all public healthcare programme.  

Ayushman Bharat: Programme of Privatisation    

For implementation of one ‘flagship programme’ of Ayushman Bharat, Union budget 2018 allocated a measly sum of Rs.1,200 crore for more than 1.53 lakh SCs, renamed as HWCs, across the country for the purpose of providing free ‘essential drugs and diagnostics’ for primary healthcare. If the entire amount is meant for purchase of essential drugs and diagnostics, then how the deficiencies in infrastructure and staff shortages in SCs would be removed and these will be ‘upgraded’ as HWCs? Therefore, NHP 2017 suggested aligning with the private sector.

In Rajasthan, even before Ayushman Bharat project of privatisation of public healthcare system; the BJP ruled state government was already in privatisation spree of public healthcare system handing over PHCs to private hospitals and others. It has already privatised 42 rural PHCs in 2016, 19 to WISH Foundation; and 43 urban PHCs in 13 districts in 2017; and issued tender notice in August, 2017 for privatisation of 50 more rural PHCs. In Rajasthan PPP model in healthcare the government offers to pay up to Rs.30 lakh per PHC in return for the private entity taking over the PHC management and all its operations. Rajasthan has 2,211 rural and 245 urban PHCs.

In Chhattisgarh, immediately, after Ayushman Bharat programme was announced in the Central budget, the BJP state government decided, in March 2018, to hand over 9 government-run CHCs, including 4 in the State capital Raipur and 2 in Steel City Bhilai, in PPP model listing the reason as shortage of staff including doctors even in the heart of the cities!

In Uttar Pradesh, BJP government’s health minister announced to the press (PTI) on 29 April, 2018 that UP government planned to establish around 1000 hospitals in PPP model as part of central government’s Ayushman Bharat programme; and already asked the UK consultancy firm Ernst & Young to prepare a project report. PPP model envisages government providing 3 acres of land in CHC areas and the hospital to be built by the private company for healthcare business. And to fill the shortage of doctors in existing hospitals, the minister informed that tender will be issued for the private firms to recruit doctors on contract basis.

NITI Aayogin July, 2017, issued a Guideline for “Public Private Partnership for Non-Communicable Diseases (NCDs) in District Hospitals” on 30 years contract making the state governments accountable if they default on paying their private partners through a penalty. “This is a very positive attempt to make the PPP contract more equitable. Businesses cannot run in a sustainable manner if outstanding payments are not cleared in a timely manner,” president of Fortis Healthcare Ltd said, reported Economic Times on 24 July, 2017.

Low Budget Allocation

Although Modi government’s National Health Policy 2017 aimed to raise budgetary allocation in health sector from 1.15 % of the GDP to 2.5 % by 2025; the ratio to GDP has actually come down in the 2018-19 budget compared to 2017-18 budget. Budgetary allocation in Financial Year (FY) 2018-19 was merely 5% higher than the revised estimate of Rs.50,079.6 crore in FY2017-18; and it declined to 2.1% of the total budget from 2.4% in previous year despite claim of enhanced fiscal capacity and launching two ‘flagship programmes’ of Ayushman Bharat. 

Insurance Driven Ayushman Bharat – NHPS    

The other ‘flagship programme’ of Ayushman Bharat is the National Health Protection Scheme (NHPS) for hospitalisation expenses up to Rs.5 Lakh per family each year covering 10 crore poor and vulnerable families (about 50 crore people) for secondary and tertiary healthcare announced in the budget FY2018-19.

Former Union secretary of the Ministry of Health and Family Welfare, Sujatha Rao has aptly said, “The NHPS, however, raises a more important issue: The decisive redefinition of the role of the state from being a service provider to a financier.” (India Express February 13, 2018). Financing whom? – Of course the corporate hospitals and private insurance companies. “This will be a big boost for us. The current insurance schemes were unviable, but with the increase in cover, I think we will see a growth in our state-sponsored scheme patients, said Suneeta Reddy, MD, Apollo Hospital Enterprise,” reported ET on 2 February, 2018.

Data released by the Department of Industrial Policy and Promotion (DIPP) shows that the hospital and diagnostic centres attracted FDI worth $4.83 billion during 2000-17. According to National Family Health Survey-3, the private medical sector remains the primary source of healthcare for 70% of households in urban areas and 63% of households in rural areas. This burgeoning private sector hospitals having substantial FDI must have a growing market.

Seeking new investment, the government had relaxed FDI norms in 2016 in insurance sector permitting 49% FDI though automatic route. Two public sector insurance companies were listed in 2017 for disinvestment. 2018-19 budget proposed merger of three public sector insurance companies.

The UPA government led by Manmohan Singh has already allowed 100% FDI through automatic route in Greenfield projects (new ventures) and, under approval by FIPB (Foreign Investment Promotion Board) in Brownfield project (existing companies) in India. Those foreign drug companies, who left India during pre-neoliberal stage, started coming back through FDI’s Brownfield route. To facilitate the process of Indian companies’ take-over by drug MNCs, Modi government has taken one more step allowing up to 74% of FDI in Brownfield in pharmaceuticals through automatic route.

A disciplined, integrated and pan India market has to be provided for this troika of corporates in hospital, insurance and medicine producing business with substantial foreign capital. NHPS is meant for that.

Reaping Huge Profit by Insurance Companies

One can draw conclusion on the insurance companies reaping huge profit out of public funding from the experience of Modi government’s much touted Pradhan Mantri Fasal Bima Yojna (PMFBY). Ayushman Bharat NHPS is in much bigger scale.

According to the data available from the Insurance Regulatory and Development Authority of India (IRDA) shows that 11 insurance companies have hugely benefitted by Rs.10,000 crore in just one year in 2016. Insurance companies got Rs.15,891 crore in premiums while total claims amounted to a little over Rs.5,962 crore due to crop failure during the June–November, 2016 Kharif season.

On 6 June, 2018 NDA ally and Bihar Chief Minister Nitish Kumar, rejected Centre’s PMFBY accusing the scheme being beneficial for insurance companies rather than farmers and launched Bihar Rajya Fasal Sahayata Yojana. Bihar’s Principal Secretary (Cooperatives) in a statement said that Bihar paid its 49% share of insurance premium amounting to Rs.495 crore, Centre also paid its 49% share and the farmers paid rest 2% share of insurance premium in 2016 to cover crop failures in Kharif season. As against that Bihar’s farmers received only Rs.221 crores benefitting the insurance companies by Rs.788.80 crore.

Launching of AB-NHPM

On 21 March 2018 Modi government announced launching of NHPS as ‘Ayushman Bharat – National Health Protection Mission’ (AB-NHPM). AB-NHPM will subsume the on-going centrally sponsored schemes – Rashtriya Swasthya Bima Yojana (RSBY) and the Senior Citizen Health Insurance Scheme (SCHIS). It also proposes to subsume State sponsored healthcare schemes.  

In line with PM Modi’s concept of ‘cooperative federalism’ in Centre-State relation, a Ayushman Bharat National Health Protection Mission Council (AB-NHPMC) will be set up, to be chaired by the Union Health and Family Welfare Minister and State health ministers as its members at apex level to take policy decisions in line with GST council. Centre and States contribution in insurance premium would be in the ratio of 60:40. AB-NHPM will be governed in corporate style by Ayushman Bharat National Health Protection Mission Governing Board (AB-NHPMGB) with a CEO as its Member Secretary.

An Ayushman Bharat – National Health Protection Mission Agency (AB-NHPMA) will be registered as a ‘Society’ to manage the AB-NHPM at the operational level which will be headed by a full time CEO. On 27 March, 2018 Modi government appointed Indu Bhushan, the Director General of East Asia Department of Asian Development Bank in Manila (Philippines) as the CEO of AB-NHPM.

Each State must have State Health Agency (SHA) to implement the scheme. Transfer of funds from Central Government will take place through AB-NHPM directly to SHAs. Like GSTN, under NITI Aayog, an IT platform will be made for ‘paperless, cashless transactions’ at all levels.

Supply of Essential Drugs to HWCs

It has already been mentioned above that Rs.1200 crore was allocated for the primary healthcare at HWCs in the FY2018-19 budget for purchase of essential medicines and diagnostics. Who will supply these essential drugs for HWCs?

Budget 2018-19 speech said, “More than 800 medicines are being sold at lower price through more than 3 thousand Jan Aushadhi Centres.” The privately-owned ‘Jan Aushadhi Stores’ were established by the predecessor UPA government led by Man Mohan Singh, in 2008. ‘Bureau of Pharma PSUs of India’ (BPPI) consisting of the Department of Pharmaceuticals and 5 public sector drug companies – Indian Drugs and Pharmaceuticals Ltd (IDPL), Hindusthan Antibiotics Ltd (HAL), Bengal Chemical and Pharmaceuticals Ltd (BCPL), Karnataka Antibiotics and Pharmaceuticals Ltd (KAPL) and Rajasthan Drugs and Pharmaceuticals Ltd (RDPL) – with its headquarter at IDPL office in Gurgaon, was registered under ‘Societies’ Act in 2010 to “supply, fixing prices and monitoring sale of generic drugs through the network of ‘Jan Aushadhi Stores’. Modi government’s Health Policy, 2017 also had to admit that “Public sector capacity in manufacture of certain essential drugs and vaccines is also essential in the long term for the health security of the country.”

But, as recommended by NITI Aayog, same Modi government has already declared outright sale of all these pharmaceutical PSUs. Hence, the supply of essential drugs has become entirely dependent on private sector. Allocation of Rs.1200 crore for supply of essential drugs in primary healthcare through 1.53 lakh HWCs is entirely for creating market for private drug companies by state funding.

Corporatisation of Entire Healthcare Network

In addition to privatisation drive of public healthcare network and insurance driven healthcare system designed in Ayushman Bharat scheme; Modi government has taken other steps for handing over entire healthcare in India to the Troika of corporates in insurance, hospitals and drug making business to decide everything – level of treatment, medicinal prescriptions and supply of medicines and diagnostics and the cost determined by and amongst the Troika.   

To facilitate this process, Modi government allowed E-retailers like Amazon and now Walmart to enter medicine supply market as corporate suppliers replacing about 7.5 lakh medicine retailers. In protest, about 20 lakh people of 7.5 lakh medicine retailers, with average 2/3 employees each, were on strike on 30 May, 2017.

Corporatisation of Medical Education & Practice

On 2 January 2018, nearly 3 lakh doctors joined the 12 hours countrywide shutdown of out-patient department (OPD) services at all private hospitals and Indian Medical Association (IMA) observed this day as “Black Day” in protest against the National Medical Commission Bill, 2017 placed in Lok Sabha by the Union Health Minister on 29 December 2017 which is now pending before the Parliamentary Standing Committee. National Medical Commission (NMC) Bill replaces Medical Council of India (MCI) and revokes Indian Medical Council Act, 1956.

Some of the objections raised by the medical practitioners and their organisations, including IMA, across the country against the NMC are as follows.

• MCI is an elected body by the States and Universities and within itself to regulate both medical education and practice; whereas proposed NMC is a nominated body under the central government to administer medical education and practice through appointed boards.
• To start a medical college, regulatory approval is required under MCI. NMC removes such regulatory approvals altogether allowing automatic approval route.
• Proposed NMC raises managements’ quota from the present 15% to 60% of seats in private medical colleges; the government regulated quota will be cut down from 85% to 40%; fees will be entirely at the discretion of the management. This will cut down seats for economically weaker section and for SCs/STs.
• Proposed NMC allows any foreign doctor to practice in India without any restriction. The existing screening test for the Foreign Medical Graduates will be abolished. At the same time licentiate examination for the Indian Medical Graduates will be introduced to allow them to practice medicine in India. This is nothing but double standards by the NMC.  
• NMC proposed mixing of different systems in medical treatment like Ayurveda, Siddha, Unani, Yoga, Homeopathy, Naturopathy etc to practice Allopathic modern medicines once they complete a short term “Bridge” course.

No Law to Punish Bribe Giver Drug Companies

More than 1 lakh Medical and Sales Representatives were on one day’s countrywide strike on 3 February, 2016, in addition of pursuing their own job and work related demands, demanding drug price reduction, reverting to cost-based fixation of drug prices, zero GST on all essential drugs, revival of drug PSUs and to frame law to punish bribe giver drug companies who promote their products selectively bribing replacing the sales promotion through medical representatives under 1954 drug law and 1994 judgement of 5 members Constitutional Bench of the Supreme Court.

Prime Minister Narendra Modi, sitting in London (15-23 April, 2018), publicly accused the entire fraternity of Indian medical practitioners taking bribe from drugs companies which is already a punishable offence for the medical practitioners under MCI Rules. But, despite several urging Modi government, in line of ‘ease of doing business’, is not prepared to touch the bribe-giver drug companies and make it a punishable offence, including imprisonment, under law. There is no specific law in the country yet to punish such bribe giver drug companies.             

Medicines Price Control: Shifts from Cost-based to Market-based calculations; From All Medicines to only Essential Medicines

Drug prices control was introduced first time in India after 20 years’ long discussion inside and outside the Parliament; adoption of Indian Patent Act 1970 not allowing patent on pharmaceutical products; and on the recommendation of Parliamentary committee, the Hathi Committee report, 1975. Drug Prices Control Order, (DPCO) 1979 was issued under Section 3 of Essential Commodities Act bringing all medicines under price control and fixing cost-based pricing of all medicinal formulations using the bulk drugs divided in 3 categories – category I for ‘essential medicines’, category II for important medicines and category III for the rest of the medicines with 40%, 55% and 100% additions (called as ‘mark-up’) over the total cost of production plus excise duty as ceiling price plus 16% retailer’s margin and then fixing total amount as maximum retail price (MRP) of the medicines, irrespective of their being ‘brands’ or ‘generics’. On Kelkar committee’s recommendation, DPCO 1987 was issued completely removing category III medicines from price control and diluting the lists and mark ups in categories I and II. In neo-liberal stage and after accepting ‘product patent’ of medicines in 1994 in the Marrakesh Conference of WTO; DPCO 1995 was issued further diluting the drug prices control limiting it only for essential medicines in category I list; reducing the number essential bulk drugs in the list from 140 to 76; and increasing the mark-up to 100% plus excise duty.

This cost-based price fixing of essential medicines based on 76 bulk drugs continued till there was complete departure from the past when DPCO 2013 was issued. The Supreme Court of India on 10 March, 2003 issued an order giving two directions to the Government – (1) on controlling medicine prices and (2) for preparing the list of Essential Medicines. These are recorded in the proceedings of Lok Sabha in the written statement of the then Minister of State for Chemicals and Fertilizers on 23 October, 2008.

Accordingly, the Government prepared a new list as ‘National List of Essential Medicines’ (NLEM) of 348 single or combinations of medicines and issued DPCO 2013 changing from hitherto followed cost-based price control to market-based ceiling prices of drugs. DPCO 2013 in clause 4 states, “First the Average Price to Retailer of the scheduled formulation” be calculated from “Total number of such brands and generic versions of the medicine having market share more than or equal to one percent of total market turnover on the basis of moving annual turnover for that medicine” and then add 16% as retailer’s margin and the total amount becomes the MRP of that medicine.

Government is relying on the ‘Fortune 500’ listed US multinational company ‘IMS Health’ for the data for fixation of prices of essential medicines in India. Surprisingly, 2013 Order carries the name of this particularly selected company. Its clause 9 states, “The source of market based data shall be the data available with the pharmaceuticals market data specialising company – IMS Health (IMS).” IMS Health since merged with another US company and became QuintlesIMS operating in health information technologies; clinical trials; as bio-pharmaceutical developer and in commercial outsourcing services.

DPCO 2013 also provides “The manufacturers may increase the maximum retail price (MRP) of scheduled formulations once in a year, in the month of April, on the basis of the wholesale price index with respect to previous calendar year and no prior approval of the government in this regard shall be required.”

As such, DPCO 2013 did not reduce prices of existing essential medicines in the earlier DPCO 1995 list. It further allowed already decontrolled and existing high prices of medicines which were outside the earlier essential drug list and now included in the list of 348 medicines in NLEM. Added to this, it has the provision of annual increase of 348 essential medicines prices. As a result, after DPCO 2013, the prices of all medicines jumped upward and continuously rising. It may be noted that under DPCO 2013 there is no drug prices control on the medicines which are outside the NLEM. Modi government increased the number of medicines in NLEM from 348 to 376 in 2015 as per core committee’s recommendation. It should be remembered these out-of-price-control medicines added to NLEM shall carry the existing market price with them in the NLEM and shall contribute further in increasing the ceiling prices of essential medicines.     

Modi government is aggressively implementing the deregulated ‘market-based’ name-sake price control of essential drugs. National Pharmaceutical Pricing Authority (NPPA) under the Department of Pharmaceuticals of GOI so far fixed ceiling prices of 700 plus medicines in different forms, strength and dosages as required under clause 14(1) of DPCO, 2013. This the Prime Minister Modiji claimed as the singular achievement of his government in capping the prices of medicines for the ‘poor’! 

GST Structure Escalated Drug Prices

GST Structure includes erstwhile Central Excise Duty (CED), which was fixed quantity-cost based, and VAT which was retailers’ price level based. Both now embedded in GST, CGST in place of CED has also become ad valorem with its rise with each MRP rise. This substantially is adding to the price of medicines.

Fraudulent Method in Fixation of GST Rate on Medicines

Modi government adopted fraudulent method in fixing GST rate on Essential Medicines. My letter on this sent on 28 July, 2017 was acknowledged by PMO assuring follow up, but remained answered.

Firstly, GST Rate Schedule, as applicable from 1 July, 2017, under SL 30, Chapter 30 (Pharmaceutical products), column 5% (as GST), item 8, states – “Formulations manufactured from bulk drugs specified in List 1 of notification No.12/2012 – Central Excise, dated the 17^th March, 2012.”That means the government fixed 5% GST Rate Schedule on the medicinal formulations based on 74 bulk drugs in the ‘List 1’ of DPCO 1995 (!). ‘List 1 of Essential Drugs’ under DPCO 1995 was already replaced by “NLEM” under DPCO 2013. How then GST Rate in on 1 July, 2017 was fixed on a non-exist ‘List 1’ of DPCO, 1995? Obviously, for GST calculation majority of NLEM drugs are not treated as “essential medicines’ at all charging high rates of GST escalating drug prices many fold.

Further, vide Central Excise Notification No.22 /2013-CE, dt. 29.7.2013 as amended by 29/13, the then UPA government exempted “the scheduled formulations as defined under the Drugs Price Control Order (DPCO), 2013.” By that notification all formulations based on NLEM were exempted from Central Excise Duty. Several State Governments also exempted Sales Tax on all Essential Medicines. Virtually no tax was being collected on essential medicines prior to GST in line with the Supreme Court’s direction.

By 29 July 2013 notification, the then UPA government had already (i) exempted Central Excise Duty (CED) on all formulations based on 348 drugs in NLEM; (ii) nil CED on several other drugs; and (iii) 6% CED on rest of the drugs at cost / kg. That means there was no excise duty on total 348 NLEM and many other drugs beyond NLEM list and only 6% on rest of the drugs vide central government’s notifications of 17 March 2012 and of 29 July, 2013.

These notifications were nullified by Modi government by its notification on 18 May, 2017 by imposing minimum 5% GST only on 74 drugs; 12% on many other NLEM drugs and much higher in several drugs. 50% of this GST goes to the central government which already exempted most of the drugs from central taxes.   

As a result the prices of essential medicines jumped immediately due to increased rate in central taxes in GST and National Pharmaceutical Pricing Authority (NPPA) had to revise upward the cap on NLEM drugs.

We Demand:

Under the above circumstances, the workers and the people of India should raise the following demands and carry forward their struggle in pursuance of these demands.

1. No privatisation of public healthcare system; adequate funding, infrastructural development and deployment of trained personnel in public healthcare network
2. Strengthen anganwadi centres and ASHA as important supplementary healthcare network  
3. Free all treatment and supply of medicines in all healthcare networks
4. Increase budget allocation in healthcare sector to 5% of GDP
5. Revival and strengthening of Public Sector Drug companies for production and supply of essential drugs, vaccines, medicinal and diagnostic implements
6. Reduction of import of drug APIs by manufacturing bulk drugs and intermediates from basic stages by public and private sectors to make India as self-reliant in drug production
7. Enact drug laws to stop E-retailing of medicines
8. Reject NMC and Strengthen MCI and IMC Act
9. Enact law to punish bribe giving drug companies
10. Immediately reduce drug prices; revert back to cost-based drug pricing of all drugs having minimum on all NLEM drugs
11. Zero GST on all NLEM drugs and their formulations; minimum GST rate on rest of the medicines

2018

Published by Centre of Indian Trade Unions