The tradeoff between regulation and cost

Last blog post, I wrote about visiting the Gujarat Food and Drug Administration and learning about their integrated IT system to track medication quality. While this is a very clear step forward (and it shows as the percentage of low-quality medication in Gujarat has dropped by a factor of 3 since its initiation), there is still a lot left to do. The Gujarat FDCA finds about 5% of tested medication to be low-quality or fake, but this number has been estimated to be quite a bit higher in other states. One issue is that states seem to be tacking the medicine quality issue after the fact, once low-quality medication is already on the market. Regardless, while 5% is not a high number, from the data I’ve been collecting it seems the highest percentage of low-quality medication is coming from government hospitals aimed at treating the poor, which is worrying from a welfare standpoint.

A lot of people I’ve spoken to have argued for more regulation of the pharmaceutical industry, or rather enforcement of regulation. In the words of one interviewee “India has the regulation in place, it is the enforcement of the regulation that is the issue. Think of the US and the IRS – Americans are so afraid of IRS persecution that they report their income honestly.  It’s not a matter of Americans being more honest, it’s a matter of effective and intimidating regulation.” The generic companies I’ve spoken to, all of whom ship to other countries, indicate quality is their highest priority, and note that they have to meet multiple regulatory agency standards, not just the FDA. However, a lot of generics companies are local and only sell their products in India. I have a list of drugs that have been found to be low-quality, and what is striking is that the overwhelming majority are manufactured by these local companies.

That being said, I have also heard the opposite argument – that you should not increase regulation as this increases cost, making medication less accessible. A lot of FDA, EMEA, WHO and other regulation is a matter of a large amount of paperwork and this is what some people find to be unnecessary. Granted, this paperwork is tracking important things such as tests of drug quality, but it still requires a lot of work.  One interviewee said it might be more effective to increase persecution and punishment of producers of low-quality drugs, using more of a scare tactic to keep producers focused on quality. Either way, it is clear that a balance is needed between the costs of increased regulation and the benefits of quality assurance and it has certainly been interesting to hear everyone’s opinions on the topic!

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About emmacboswell

PhD student at the Wharton School studying Health Care Management and Economics planning to spend the summer researching pharmaceutical pricing in Mohali and Bangalore, India.