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1.Reducing out of pocket burden for Indians (Live Mint)

2.Tracing the roots of smog in Northern India (Indian Express)

3.A neutral Internet (The Hindu)

1.Reducing out of pocket burden for Indians (Live Mint)

Synoptic line: It throws light on the issue of high out of pocket expenditure for medical care. (GS paper II)

Overview

  • India is the largest supplier of generic drugs in the world, and Indian pharmaceutical companies have famously succeeded in pushing down the cost of medication in many countries across the world. Yet, too many Indian citizens do not get access to medicines owing to high costs. The preferred solution of the government right now price control is suboptimal.

Problem of out of pocket expenditure

  • The problem starts with the thin insurance cover that leads to most patients paying for medical expenses out of their pockets after they have been diagnosed with an ailment. The latest National Sample Survey Office (NSSO) survey on healthcare, in 2014, shows that 86% of the rural population and 82% of the urban population were not covered under any scheme of health expenditure support, and that medicines are a major component of total health expenses 72% in rural areas and 68% in urban areas.
  • Healthcare costs pushed 60 million Indians below the poverty line in 2011. Therefore, even a modest drop in drug prices will free hundreds of households from the widespread phenomenon of a medical poverty trap.

Government’s efforts and its challenges

  • The government is aware of the problem, which is why it has been fixing the prices of “essential medicines” for some time, and even medical devices such as stents and knee replacement caps from this year. However, price controls have their costs.
  • First, investment in price-controlled medicines has fallen vis-a-vis non-price-controlled ones. Second, while stent manufacturers like Abbott have been denied permission to withdraw their high-end stents from the market, it is also unlikely that high-end, innovative products will be introduced in the market if they’re commercially unviable.
  • Generic medicines are affordable versions of the drug, introduced after a company loses patent over a medicine. These medicines are sold either by their salt-name or by a brand (called branded generics). For example, Crocin is a branded generic whose active ingredient is paracetamol. A study by the Indian Journal Of Pharmacologyin 2011 revealed that the price to the retailer for the branded product of cetirizine was 11 times the price of branded generics by the same company the price of the generic was Rs2.24 per strip of 10 tablets and that of the branded medicine, Rs27.16.
  • These costs reveal the markup that companies charge for the research, reputation and marketing costs of branded medicines. However, doctors continue to prescribe branded medicines for rational reasons.
  • In most countries, the generic drug manufacturers have to prove “bio-equivalence”, i.e. the generic medicine works the same way, to the same extent and for the same purpose, as the originally patented drug. The regulations in India until April 2017, oddly, required bioequivalence testing only during the first four years of a drug becoming available for generic production; after four years, manufacturers only need permission from the state licensing authorities that don’t demand the data.
  • The law has changed to require bioequivalence tests for some classes of generic medicines, but its coverage is not universal and enforcement is yet to be evaluated.
  • This is going to be a challenge because the Central Drugs Standard Control Organization (CDSCO) has been accused of engaging in malpractices such as faking endorsement letters from doctors to secure marketing authorizations, approving drugs without conducting clinical trials, and accepting bribes from companies for fast approval of products.
  • Moreover, the president of the Indian Medical Association (IMA) told that there is an inadequate number of drug inspectors roughly 1,800 for the entire country.
  • Thus, there are several challenges before generic medicines can become mainstream.
  • First, the poor regulatory regime has dented perceptions about the quality of generic drugs. Second, since generic products don’t advertise and save costs that way the good-quality manufacturers are not able to compete with shoddy manufacturers on cost, essentially creating the “lemons problem” by driving the good-quality generic manufacturers to advertise and become branded generics, or exit the market.
  • Third, the incentive to cut costs increases as massive government contracts are allocated to the lowest bidder. That probably explains why over 10% of the medicines in the government supply chain were found to be not of standard quality (NSQ), according to the National Drug Survey 2014-16. The globally accepted NSQ level is only 2%.

Way ahead

  • The government’s strategy of increasing affordability by reducing compliance costs on the pharmaceutical industry has increased the advertising burden on the good-quality producers. Certification practices, whether by government or a private agency, can mitigate that problem and allow good-quality generic medicine manufacturers to differentiate themselves on a variable other than price.
  • Cheaper generics are one of the important factors for reducing healthcare cost. The practice of generic substitution is strongly supported by health authorities in many developed countries, where bioequivalence tests are mandatory, to help contain prescription drug spending. These requirements might increase the price of generic medicines slightly, but they will drive poor-quality manufacturers out of the market and allow generics to compete with branded generics.

Question India’s high out of pocket expenditure threatens the stability of lower-middle income class groups, Comment.

 

2.Tracing the roots of smog in Northern India (Indian Express)

Synoptic line: It throws light on the origins of the great smog witnessed in northern India. (GS paper III)

Overview

  • Recently, the System of Air Quality and Weather Forecasting and Research (SAFAR) under the Ministry of Earth Sciences published a ‘Scientific Assessment of Delhi Winter Air Quality Crisis’ for the period November 6-16, which listed two “Extreme” events behind the smog that had smothered Delhi and its neighbourhood.
  • “Extreme 2” was the much discussed stubble burning in Punjab, Haryana and Uttar Pradesh; “Extreme 1”, the SAFAR report said, was a “large multi-day dust storm that emerged at Iraq, Kuwait and Saudi Arabia in the last week of October 2017 and continued up to November 3-4”. Surprisingly for many, the report blamed this storm much more than the burning of stubble for Delhi’s air quality crisis during that period “the pollution contribution of Gulf dust storm on peak day (November 8) was around 40% and from stubble burning was 25%”

Origins of the storm

  • On October 29, the Visible Infrared Imaging Radiometer Suite (VIIRS) aboard the NOAA/NASA Suomi NPP satellite captured images of a massive dust and sand storm over Saudi Arabia and Iraq which, a note released by NOAA said, was “reported to have originated in northern Syria and Iraq”.
  • Media reports in the Middle East said the storm triggered over 4,000 cases of suffocation across Iraq’s governorates, forced Iraq’s civil aviation authority to shut down flights and, according to the Al-Monitor, a US-based online newspaper that covers the Middle East through extensive local tie-ups, even halted fighting between the Iraqi forces and the Islamic State. On October 31, the newspaper said, operations to retake the city of al-Qaim had to be stopped due to poor visibility.
  • Also on October 31, Moderate Resolution Imaging Spectroradiometers (MODIS) aboard NASA’s Terra and Aqua satellites released images of skies over Saudi Arabia and Iraq from two days earlier, red with a thick blanket of dust. A massive storm was “swirling”, NASA said, the land was completely hidden, and including most of Lake Therthar, which lies between the Euphrates and the Tigris. On October 30, visibility in parts of Iraq was down to 600 metres, and the following day, the dust storm engulfed Kuwait and the Persian Gulf. Operations at Kuwait’s Shuwaikh port had to be stopped after visibility fell to 500 metres.

Getting Worse

  • While dust storms are normal in Iran, Saudi Arabia, Kuwait and Iraq, there has been an increase in their frequency, especially in Iraq, over the past decade. Scarce rain and advancing desertification are the key reasons, and Iraq’s Prime Minister is in discussions with the UN Environment Programme (UNEP) for a regional solution. UNEP had predicted last year that within the next decade, Iraq could witness 300 dust events per year.
  • A study published four years ago noted that “occurrences of dust and dust storms (sand storms) had enormously increased as compared with those occurring during the last century” in Iraq, and cited climate change as the main reason which led to drastic changes in annual rainfall and temperature besides other reasons such as drought, mismanagement of water, and abandonment of agricultural lands.
  • In neighbouring Iran, a World Metrological Organisation report said in 2016, a thick dust plume covered a massive swathe of the southeast on July 13-14. The main reason for the dust in this area is apparently massive dam-building exercises that Tehran has undertaken, along with the diversion of water resources for agriculture. Storms in this area are capable of burying entire villages.

Expansion of storm towards India

  • According to the SAFAR assessment, the late October-early November dust storm “was carried (eastward) by relatively cool winds”. The report explained: As air temperatures dropped, winds and dust were likely to slowly diminish, but by that time, it got into the upper part of atmosphere (1.5-3 km, 700-850 hpa) where winds became very strong (15-20 km/hr) and direction became towards India (westerly, north-westerly) and dust affected the larger region of NCR including Delhi.
  • The Middle Eastern storm started on October 28 and was to subside by November 1, but due to its intensity, it prolonged until November 3-4 and entered 700 millibars, where there was a wind jet and direction was west and north-west. As the storm swept eastward, “it contaminated all path countries including West and North India.
  • Meteorologists in India have said that a high-pressure zone over Delhi and its neighbourhood and the absence of strong winds kept pollutants trapped close to the surface. During the second week of November, anti-cyclonic weather conditions were observed in North India, which helped in building up of pollutants in the lower troposphere.
  • The SAFAR report noted: “The very calm surface wind conditions which do not allow to disperse pollution was due to anti-cyclonic circulation connected with late withdrawal of monsoon, persisting at about 700 hPa lower troposphere over northwest India with its centre near Delhi.
  • Other conditions added to the crisis, including stubble burning, which, the SAFAR report said, was “very high on November 6, and upper air winds became north-westerly (towards Delhi) with high speed and started pumping pollution in Delhi”. These conditions started to change from November 11 onward because there was no pumping and influence of stubble burning and Gulf storm dust after November 10 night onwards owing to slowing down of upper air winds and change in wind direction.

Question What are the origins of the great smog that swept Northern India during the month of October-November?

 

3.A neutral Internet (The Hindu)

Synoptic line: It throws light on the issue of TRAI recommendations for Net neutrality. (GS paper II)

Overview

  • “The debate of Net neutrality was about the freedom and choice of access for end users”, the Telecom Regulatory Authority of India (TRAI) came out in strong support of Net neutrality in a series of recommendations following a long process of consultations on the issue.

Assessment

  • The Telecom Regulatory Authority of India (TRAI) finally came out with clear guidelines in favour of Net neutrality that are consistent with its earlier stand on Facebook’s Free Basics proposal. After consultation papers issued in May 2016 and this January, the regulator reiterated that there cannot be discriminatory treatment of websites on the Internet by service providers.
·        In February 2016, TRAI had barred telecom providers from charging differential rates for data services in its Prohibition of Discriminatory Tariffs for Data Services Regulations, 2016, effectively blocking such attempts by Facebook and Airtel.

·        Facebook had earlier rolled out its Free Basics service in partnership with Reliance Communications as a “differential service” and lobbied hard for it on social media which put it at loggerheads with the telecom regulator.

  • The TRAI warned service providers that as telecom companies cannot stand in the way of a consumer’s access to content that would otherwise be provided to her without any undue hindrance. They cannot, for instance, charge consumers for access to certain content, or receive payment from websites promising greater promotion of their product over the rest.
  • TRAI’s decision comes in the wake of international focus on the U.S. Federal Communications Commission’s decision to scrap regulations on service providers imposed during the Obama administration.
  • While batting for the right to an open Internet, TRAI has been also careful to allow some exceptions that allow companies to discriminate between content if it helps them regulate the flow of traffic or offer “specialised services”.
  • TRAI’s new guidelines will help the cause of building the Internet as a public platform with open access to all, the concerns of service providers should not be dismissed altogether. The Internet has spread all over the world, so widely that many believe it is now an essential good. But the infrastructure that serves as the backbone of the Internet has not come without huge investments by private service providers.
  • TRAI has been open to adopting a nuanced view that differentiates between various forms of content instead of imposing a blanket ban on all forms of price differentiation.
  • The new policy, for instance, will still allow companies to justify the costs incurred in providing niche content to consumers. At the same time, TRAI’s measured response is likely to effectively address the problem of anti-competitive practices adopted by certain providers.

Way ahead

  • There is need to have a proper mechanism to make sure that the exceptions are not used as loopholes by the big Internet players. Policymakers will also need to think hard about creating an appropriate legal framework to prevent the capture of regulation by special interests.
  • According to the Internet Association of India (IAMAI), Internet in India, unlike possibly in the U.S. or China, is going to be ‘free and open’ upholding the democratic principles of the country.

Question The debate of Net neutrality was about the freedom and choice of access for end users, critically analyse in the context of TRAI’s recommendation for Net neutrality.