Paswan's PPP plans bizarre, too ambitious

NEW DELHI: Chemicals and fertilisers minister Ram Vilas Paswan’s proposed public-private partnership (PPP) with the pharmaceutical industry has been dismissed as ‘ambitious bordering on the Utopian’ by many critics.

The scheme to be finalised with the industry later this month, envisages a government-industry fund, for which companies would be required to contribute a share of their turnover to supply free medicines to the poor.

Even a 0.1% of the turnover of the industry could be more than Rs 35 crore a year, the government reckons. The idea is plain bizarre as it amounts to a tax on turnover, which is imminently avoidable in a market economy.

Sceptics consider the proposal to create the Fund too ambitious because the two departments that need to work together on this - the health ministry and the chemicals and fertilisers ministry - never seem to agree on anything. The consent of the health ministry, which has not welcomed many of the chemicals ministry’s plans saying they infringe on its domain, is essential.

Chemicals ministry would certainly not want to create a separate healthcare infrastructure for the project. Secondly, the pharma industry has proved recently in the case of generic drug price cuts that it cannot be relied upon to implement whole-heartedly its commitments to the government.

Nonetheless, Dr Anbumani Ramadoss’ recent bullish statement on public-private partnerships in healthcare is a welcome change in thinking. Officials say a turnover-based contribution need not be the only way to fund the project. Companies could be given the flexibility to open and run chemist shops to distribute free or subsidised medicines. Even lowering prices of drugs on which the industry makes abnormal profits may do the needful.

In addition to the industry running free-drug stores or holding medical camps, the other options before the chemicals ministry include handing the money over to the union health ministry to pool these proceeds with its existing funds for supplying medicines free to poor families or to give the amount directly to state governments.

But knowing which district hospital needs what medicine when and responding to it in time is a big task without a central body that co-ordinates the project. Ensuring that a drug company close to the hospital supplies the required medicine on time is the key.

In exchange, the industry wants the government to drop the proposed cost-based price control in the new drug policy. This is where skeptics have an issue with the proposal. They argue the government should not be naive enough to trust the philanthropy of players when they did not meet the commitments on reduction in margins.

Therefore, even if the drug industry agrees to be a good Samaritan, the government would have to evolve a mechanism to ensure that the same is implemented. As of now, the government is thinking of involving district collectors in the enforcement mechanism, who could attach the assets of the defaulting company as land revenue arrears with interest. Such a scheme, however, may be difficult to implement.

It may be advisable for the government to make concession to the industry only after the project takes off. The government could, for instance, give some concessions on the cost-based price control. The National Pharmaceutical Pricing Authority, which currently fixes drug prices, could take over the role of a coordinating body.