Why is the government not serious about super-profiteering by the pharmaceutical companies

Covid Vaccine
A health care worker holds a vial of Covishield at a vaccination center in Sopore, in the Baramulla district of Jammu and Kashmir on May 3, 2021. Photo: Nasir Kachroo/NurPhoto via AP

Pharmaceutical companies have been a bone of contention around the globe. Exorbitant profiteering in this industry should not be a priority. But around the world these companies are making huge profits at the expense of people’s health. There is enough data to support super profits by the pharmaceutical companies. During the COVID Pandemic when the people were dying in large numbers, the vaccine making companies made huge profits. Not only that, they forced many developing countries that do not have resources or technical knowhow to make vaccines, to accept the conditions laid down by these companies. These included the clause of no civil liability of the company in case of any adverse reaction to the vaccine. They also made the governments to mortgage their properties as a guarantee. 

India has been no better. Aparna Gopalan in an article in The Intercept published on 19th June 2021 has pointed out that ‘for each dose sold to private hospitals, Serum made profits of up to 2,000 %  and Bharat Biotech up to 4,000 %, what might be considered as “super profits”.  In India, 38 new billionaires were minted in the first year of the pandemic, while the combined wealth of the country’s 140 billionaires went up by 90.4 %’.(1)

After much outcry on the drug prices by the health activists the Government of India formed a Committee on the High Trade Margins in the Sale of Drugs on 16th September 2015. The committee submitted its report on 9the December 2015. The committee pointed that on some medicines the profit margin was up to 5000%. As a remedy it recommended capping of the trade margins and came out with the proposal of graded trade margins with reference to the Price to Trade (PTT). According to their proposal no capping of the trade margins was recommended on the product with a value of Rs.2/- per unit i.e per tablet, capsule, vial, injection, tube etc. But at higher unit price i.e  on the product from Rs.2 – Rs. 20 per unit a capping of 50% and from per unit price Rs. 20 – Rs. 50 a capping of 40% and above Rs.50 per unit it recommended a capping of 35% on the trade margins. Even though the committee submitted the report in December 2015, the government has been just sleeping it over till date.

The World health assembly had recommended in 1988 that the Pharmaceutical marketing practices should be controlled, checked, streamlined and made ethical. As a follow up of that the Department of Pharmaceuticals, Government of India formed a code for the pharmaceutical companies named as Uniform Code for Pharmaceutical Marketing Practices (UCPMP) on 19th March, 2012. This made recommendations for the Pharmaceutical companies so that they adopt ethical practices like promoting only the evidence based drugs and desist from over claims and avoid irrational combinations which can be harmful. However the UCPMP mentioned that the code will be voluntary for a period of 6 months after which it will be reviewed and made mandatory if it is found to be not being followed properly by the pharmaceutical companies. The world wide experience however has shown that voluntary codes are hardly practiced. They have to be made legally binding.

Now the government has come up with a new UCPMP on 12th March 2024. Even this new code is not mandatory. It has again asked the companies to voluntarily implement the rules of the code. Companies have been asked to form ethical committees. Their associations too have been asked to form ethical committees. But these committees clearly have a conflict of interest. So it is only a window dressing. Interestingly the punishment to the companies is simply losing membership of the association.

Sensing the need for cost effective drugs, Prime Minister Jawahar Lal Nehru went ahead to establish drugs manufacturing in the Public sector. While inaugurating the Indian Drugs and Pharmaceutical Ltd.(IDPL) in 1961 he cautioned  “the drug industry must be in the public sector….. I think an industry of the nature of the drug industry should not be in the private sector anyhow. There are far too much exploitation of the public in this industry”. The IDPL played a major role in the strategic National Health Programmes. Recognising its role, the World Health Organisation commended that “IDPL had achieved in 10 years what others have in 50. IDPL products have been examined for quality very carefully by the developed countries and many of them want to buy from here”.

All this is being reversed now. In 2016, the government took a decision to close two Public Sector Units (PSUs) of the five, namely the IDPL and RDPL. The government had also decided to strategically disinvest HAL, BCPL and Karnataka Antibiotics & Pharmaceutical Ltd (KAPL).

It is well known that the people in our country have to spend on the healthcare from their own pocket. Nearly 70% of this is on the purchase of drugs. It is therefore imperative that the prices of medicines should be within the reach of common man. But government’s indifference is a cause of concern. There is a strong suspicion of government having nexus with big pharma magnates. No wonder some pharmaceutical companies and some healthcare facilities purchased electoral bonds to the amount of 800 crore rupees. This strengthens scepticism over the nexus between the government and the big Pharma magnates. 

It is time to review the policy and strengthen the public sector units in pharmaceutical to save corrupt practices and super profiteering at the expense of people’s health. Free market approach to drugs and vaccines will only help the big pharma magnates and add to profiteering while ignoring the people’s health needs.

Dr Arun Mitra is a Practicing ENT Surgeon in Ludhiana, Punjab. He is also the President of Indian Doctors for Peace and Development (IDPD) www.idpd.org 


  1. https://theintercept.com/2021/06/19/india-covid-vaccine-profiteering/

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