MUMBAI, July 5: India has put in place a $5.4 billion policy to provide free medicine to its people, a decision that could change the lives of hundreds of millions, but a ban on branded drugs stands to cut big pharma out of the windfall. From city hospitals to tiny rural clinics, India’s public doctors will soon be able to prescribe free generic drugs to all comers, vastly expanding access to medicine in a country where public spending on health was just $4.50 per person last year. The plan was quietly adopted last year but not publicised. Initial funding has been allocated in recent weeks, officials said. Under the plan, doctors will be limited to a generics-only drug list and face punishment for prescribing branded medicines, a major disadvantage for pharmaceutical giants in one of the world’s fastest-growing drug markets. But the initiative would overhaul a system where healthcare is often a luxury and private clinics account for four times as much spending as state hospitals, despite 40 percent of the people living below the poverty line, or $1.25 a day or less.

Within five years, up to half of India’s 1.2 billion people are likely to take advantage of the scheme, the government says. Others are likely to continue visiting private hospitals and clinics, where the scheme will not operate.

In March, India granted its first ever compulsory license, allowing a domestic drugmaker to manufacture a copy-cat version of Nexavar, a cancer drug developed by Germany’s Bayer, unnerving foreign drugmakers that fear a lack of intellectual property protection in emerging markets.

In another blow to Big Pharma’s emerging market ambitions, China recently overhauled regulations to grant authorities the power to allow domestic drugmakers to produce cheap copies of medicines protected by patents.

Emerging markets are on track to make up 28 percent of global pharmaceuticals sales by 2015, up from 12 percent in 2005, according to IMS Health, a healthcare information and services company.

The Organisation of Pharmaceutical Producers of India (OPPI), a lobby group for multinational drugmakers in the country, argues that the price of drugs is just one factor in access to healthcare and that the scheme need not be detrimental to manufacturers of branded drugs.

About 600 billion rupees in drugs are sold each year in India, or 482 billion at wholesale. Drugs covered under the new policy account for about 60 percent of existing sales, or 290 billion rupees at wholesale cost.

The government’s annual cost is likely to be lower due to bulk purchasing and because patients at private clinics would still pay for their own drugs. States will pay for 25 percent of the free drugs and the central government will cover the rest.

Under various existing programmes, around 250 million people, or less than a quarter of India’s population, now receive free medicines, according to the health ministry.

Public doctors will be able to spend 5 per cent of the budget, equivalent to around $50 million a year, on drugs outside of the government’s list, on branded drugs or on medicines that are not on the list. Beyond that, they can be punished, said a health ministry official. Reuters