Tylenol tablets 500mg. Photo: Katy Warner/Wikimedia Commons, CC BY-SA 2.0
- A group of researchers looked at monthly prices and quantities of paracetamol sold in India from March 2007 to June 2015 across 24 geographical regions.
- Their study covered the implementation of the 2013 Medicines Price Control Order and their results were unaffected by the onset of the COVID-19 pandemic.
- They made an alarming discovery: more paracetamol tablets of 650 mg than 500 mg were produced and consumed in India.
- They also looked at paracetamol sales data for 75 countries from 2007 to 2019 and found that the switch to 650mg tablets was unique to India.
- Their findings raise questions about pharmaceutical marketing practices, the prescribing practices of Indian physicians, and the design and implementation of price regulation.
A media report recently alleged that the maker of a popular brand of paracetamol drug sold in India spent Rs 1,000 crore to trick doctors into prescribing their brand. India’s Supreme Court has taken notice of the case as some stakeholders want the pharmaceutical company to adhere to more ethical marketing practices.
One might be tempted to interpret these reports as an isolated case of extreme marketing practice by a specific company in a particularly important drug market during the pandemic.
A study conducted by a research group (of which I was a part) concluded otherwise. These practices are more systemic than isolated and rooted in the design and implementation of pharmaceutical pricing policies in India. Using data collected by India’s pharmacy syndicate, the All India Organization of Chemists and Druggists, we examined the monthly prices and quantities of paracetamol sold from March 2007 to June 2015 in 24 geographical regions that roughly correspond to the states of India.
The period of our study was important as it covered the implementation of the Medicines Price Control Order (DPCO) of 2013, and our results were not affected by the onset of the COVID-19 pandemic.
Our results are striking, but before discussing them, it is useful to understand the design and limitations of the DPCO 2013.
1. It regulated some dosages of a drug considered essential but left other dosages of the same drug unregulated;
2. it regulated single-ingredient drugs but excluded multi-ingredient drugs, commonly referred to as fixed-dose combinations, from the scope of regulation; and
3. it used a market-based method to determine the price cap which was based on the prevailing prices of brands with more than one percent market share in the year before the regulations were implemented.
Each of these design choices in the 2013 DPCO influences how companies market their drugs.
To come to our results: in the case of paracetamol, the 500 mg tablets were regulated, but the 650 mg tablets remained unregulated. Although one can engage in academic debates on the merits of such incomplete regulation, in practice the regulation resulted in a decline in the relative share of 500mg tablets produced as they were comparatively less profitable than 650 mg tablets. Instead, companies began to increase the relative share of production of 650mg tablets.
We were alarmed that not only were more 650mg tablets being produced, but they were also consumes After. The share of 500 mg tablets sold compared to 500 mg and 650 mg tablets fell from around 75% in March 2007 to around 50% in sales volume.
Moreover, in the paracetamol market, 650mg tablets are not common in many parts of the world. For adults in the United States, regular strength Tylenol® contains 325 mg, the strongest contains 500 mg, and 650 mg is reserved for minor arthritis, osteoarthritis, and joint pain. Still, 650mg tablets have gained unprecedented popularity in India, and we were surprised, especially because the price of 650mg tablets has also increased during this period.
It is difficult to explain why Indian consumers would buy more of the more expensive 650mg tablets when the cheaper 500mg alternative existed. After all, the goal of DPCO 2013 was to make 500mg tablets more accessible to consumers.
This is where the role of marketing spend and medical prescriptions comes in. Using marketing spend in the Center for Monitoring the Indian Economy (CMIE) dataset ProwessIQ as a proxy, we found in our study that companies that spent more on marketing reduced their relative share of output more. of 500 mg tablets and were increasing their 650-mg tablet prices more as the regulations approached implementation as well as in the months following the implementation of the regulations.
Ideally, one would measure the marketing expenditure specific to the promotion of paracetamol tablets by a given firm. But such data are difficult to obtain. Our use of CMIE data was therefore a reasonable choice.
To further examine the robustness of our results, we used the number of antibacterial prescriptions as an indicator of a pharmaceutical company’s ability to shift demand to a specific dosage in the paracetamol market. The advantage of this measure is that it is available not only to publicly traded companies that disclose marketing expenditures, but also to a large number of unlisted companies in our study.
Our results remained similar, suggesting that firms’ marketing expenditures determined their relative shares of regulated and unregulated assay production, relative prices, and sales.
It could be argued that the move from 500mg to 650mg is a global trend likely driven by new scientific knowledge and modern prescribing practices. To refute this, we looked at paracetamol sales data for 75 countries including India from 2007 to 2019 and found that the switch to 650mg tablets was unique in indiawhether the comparison is made with countries around the world or with those in South Asia.
Naturally, the rapid expansion of the market for 650mg doses defying the fundamentals of economics raises serious questions about the marketing practices of pharmaceutical companies, the prescribing practices of doctors in India, and the design and implementation price regulation of pharmaceutical products.
Ajay Bhaskarabhatla is Associate Professor in the Department of Applied Economics, Erasmus School of Economics, Erasmus University, Rotterdam.