IAS Gyan

Daily News Analysis


6th June, 2020

6th June DNA


A right time to shift pharma gears.


-       Medicines are among humanity’s greatest achievements.

-       They have helped attain dramatic improvements in health and longevity as well as huge cost savings through reduced sick days and hospitalizations.

-       The global market for pharmaceuticals is currently worth ₹110 lakh crore annually, 1.7% of the gross world product (IPFPA 2017, 5).

-       Roughly 55% of this global pharmaceutical spending, ₹60 lakh crore, is for brand-name products, which are typically under patent.

High drug prices

-       Commercial pharmaceutical research and development (R&D) efforts are encouraged and rewarded through the earnings that innovators derive from sales of their branded products.

-       These earnings largely depend on the 20-year product patents they are entitled to obtain in WTO member states.

-       Such patents give them a temporary monopoly, enabling them to sell their new products without competition at a price far above manufacture and distribution costs, while still maintaining a substantial sales volume.

-       In the United States, thousand fold (100000%) mark-ups over production costs are not atypical.

-       In India, the profit-maximising monopoly price of a new medicine is much lower, but similarly unaffordable for most citizens.

Large R&D costs

-       To be sure, before such huge mark-ups can yield any profits, commercial pharmaceutical innovators must first cover their large R&D costs. Currently, this cost is  ₹14 lakh crore a year (Mikulic 2020).

-       This includes the cost of clinical trials needed to demonstrate safety and efficacy, the cost of capital tied up during the long development process, and the cost of any research efforts that fail somewhere along the way.

Three concerns with R&D

1. Neglect of the diseases suffered by the poor

-       Innovators motivated by the prospect of large mark-ups tend to neglect diseases suffered mainly by poor people, who cannot afford expensive medicines.

-       The 20 WHO-listed neglected tropical diseases together afflict over one billion people but attract only 0.35% of the pharmaceutical industry’s R&D (IFPMA 2017, 15 and 21).

-       Merely 0.12% of this R&D spending is devoted to tuberculosis and malaria, which kill 1.7 million people each year.

2. High prices of new medicines

-       Thanks to a large number of affluent or well-insured patients, the profit-maximising price of a new medicine tends to be quite high.

-       Consequently, most people around the world cannot afford advanced medicines that are still under patent.

-       This is especially vexing because manufacturing costs are generally quite low.

-       Every year, millions suffer and die from lack of access to medicines that can be mass-produced quite cheaply.

3. Rewards are poorly correlated to the therapeutic value of drugs

-       Rewards for developing and then providing pharmaceutical products are poorly correlated with therapeutic value.

-       Firms earn billions by developing duplicative drugs that add little to our pharmaceutical toolbox — and billions more by cleverly marketing their drugs for patients who won’t benefit.

-       These large R&D investments would be much better spent on developing new life-saving treatments for deadly diseases plaguing the world’s poor.

-       Health Impact Fund: Solution to the above problems

-       The Health Impact Fund as an alternative track on which pharmaceutical innovators may choose to be rewarded.

-       Any new medicine registered with the Health Impact Fund would have to be sold at or below the variable cost of manufacture and distribution.

-       But would earn ten annual reward payments based on the health gains achieved with it.

4. Funding for the health impact fund

-       The Health Impact Fund could start with as little as ₹20000 crore per annum and might then attract some 10-12 medicines, with one entering and one exiting in a typical year.

-       Registered products would then earn some ₹17000-₹20000 crore, on average, during their first ten years.

-       Of course, some would earn more than others – by having greater therapeutic value or by benefiting more people.

-       Long-term funding for the Health Impact Fund might come from willing governments.

-       Those countries would contribute in proportion to their gross national incomes — or from an international tax, perhaps on greenhouse gas emissions or speculative financial transactions.

-       Non-contributing affluent countries would forgo the benefits: the pricing constraint on registered products would not apply to them.

-       This gives innovators more reason to register as they can still sell their product at high prices in some affluent countries and affluent countries reason to join.

-       The fund will have the following 5 major benefits

1. More knowledge, effective intervention and greater capacity to develop targeted response

-       The Health Impact Fund would get pharmaceutical firms interested in certain R&D projects that are unprofitable under the current regime – especially ones expected to produce large health gains among mostly poor people.

-       Such projects would predominantly address communicable diseases, which continue to impose devastating disease burdens mainly upon the poor.

-       With the Health Impact Fund in place, there would be much deeper and broader knowledge about such diseases, a richer arsenal of effective interventions and greater capacities for developing additional, more targeted responses quickly.

-       Pharmaceutical innovators would thus have been much better prepared to supply or develop suitable medicines for containing the COVID-19 outbreak.

2. Rewarding health outcomes and not sales

-       The Health Impact Fund would make an important difference also by rewarding for health outcomes rather than sales.

-       For selling a medicine, it helps, of course, if this medicine is known to be effective.

-       But it is quite possible to sell a relatively ineffective drug or to sell a drug to patients who will not benefit from it or would benefit more from another.

-       With exorbitant mark-ups, this sort of thing happens often: firms seek to influence hospitals, insurers, doctors and patients to use their patented drug and to favour it over others.

3. Sustainable research and marketing system

-       For achieving health gains with their product, innovators need different strategies.

-       They need to think holistically about how their drug can work in the context of, or in synergy with, other factors relevant to treatment outcomes.

-       They need to think about therapies and diagnostics together, in order to identify and reach the patients who can benefit most.

-       They need to monitor results in real time to recognize and address possible impediments to uptake or therapeutic success.

-       They need to ensure that high-value patients have affordable access to the drug and are properly instructed and motivated to make optimal use of it with the drug still in prime condition.

-       In sum, a reward mechanism oriented towards health gains rather than high-mark-up sales would lead to a sustainable research-and-marketing system.

-       Such a system would be better prepared for fast and effective responses to outbreaks of unknown diseases, such as COVID-19.

4. No fear of compulsory licence clause

-       Participation of commercial pharmaceutical firms is crucial for tackling global pandemics.

-       They are best suited to develop and scale up provision of new vaccines and medications fast.

-       At present such firms do, however, face discouraging business risks from governments who may — as some have done — use compulsory licences to divest them of their monopoly rewards.

-       Health Impact Fund registration would remove this risk as states would have no reason to interfere with innovators whose profit lies in giving real and rapid at-cost access to their new product to all who may need it.

5. Focus on result will benefit the domain of communicable diseases

-       Nowhere is this focus on results, which the Health Impact Fund would encourage in innovators, more important than in the domain of communicable diseases.

-       A firm rewarded for merely selling malaria drugs need not be distraught by the fact that malaria continues to infect over 20 crore people each year (WHO 2019, xii), killing 5 lakh of them.

-       A firm rewarded for making its medicine reduce the malaria disease burden, by contrast, would aim to decimate the proliferation of malaria as rapidly and cost-effectively as possible.

-       Collaborating with national health systems, international agencies and NGOs, such a firm would seek to build a strong public-health strategy around its product.

-       Its highest goal would be complete eradication.

-       If it succeeds in year seven, it can enjoy the world’s gratitude and collect three additional handsome reward payments for investment in its other research projects.

-       Can we apply the above to Covid-19?

-       Applying it to a new disease like COVID-19 is complicated by the fact that we lack here a well-established baseline representing the harm the disease would have done in the absence of the new medicine to be assessed.

-       For malaria, such a baseline can be established on the basis of a stable disease trajectory observable over many years.

-       In the case of a new epidemic, one must rely on a modelling exercise that estimates the baseline trajectory on the basis of obtainable data about the spread of the disease and its impact on infected patients.

-       This surely is a challenging undertaking which cannot yield precise or uncontroversial results about what damage the epidemic would truly have done if the vaccine or medication in question had not appeared.


The Health Impact Fund would give innovators the right incentives. It would guide them to develop an effective product and then deploy it so as to help reduce the overall disease burden as effectively as possible.

Source: https://www.thehindu.com/opinion/op-ed/a-right-time-to-shift-pharma-gears/article31761582.ece


Unmanned Aircraft System (UAS) Rules of 2020

Context: The Ministry of Civil Aviation notified the draft rules, known as Unmanned Aircraft System Rules, 2020, on June 2 for importing, manufacturing and owning drones as well as for drone ports, or airports for drones.


Who can sell drones? 

-Only authorised entities.

Who can own or operate? 

-       Entities authorised by the Director General of Civil Aviation.

-       Permits for flying these also have to be sought online and a log has to be shared after the flight.

-       The norms apply to all existing drones as well.

Exception: Nano-drones weighing 250 grams or less can be operated without a drone pilot license.

No unmanned aircraft (UA) system shall be operated in India unless there is in existence a valid third party insurance policy to cover the liability that may arise on account of a mishap.

Rule number 36 and 38 in the Ministry’s draft state that no unmanned aircraft shall carry any payload, unless specified by the Director General of DGCA. Neither shall a person “drop or project or cause or permit to be dropped or projected from a UAS (unmanned aircraft system) in motion anything,” except when specified.

Eligibility conditions for owning and using a drone: 

-       An individual has to be at least 18 years old.

-       In the case of companies, the requirement is that their main place of business has to be in India and the chairman and at least two thirds of directors have to be Indian citizens.

-       Businesses operating drones have to be substantially owned and effectively controlled by Indian nationals.

Need for these rules:

-       Drones have wide use in commercial, safety, law and order, disaster management and surveillance operations, which cuts down manpower requirement and costs.

-       The government is also keen to encourage domestic production of drones.

-       Besides, the rules come at a time the coronavirus pandemic has highlighted the role technology can play in reducing human interface and costs.

Source: https://www.thehindu.com/news/national/draft-rules-prohibit-use-of-drones-for-delivery/article31760839.ece

Unlawful Activities (Prevention) Act

Context: The police have filed an FIR against Devangana Kalita, who is associated with the ‘Pinjra Tod’ group, under the stringent Unlawful Activities (Prevention) Act in connection with a case related to communal violence in northeast Delhi in February.

Unlawful Activities (Prevention) Act (UAPA)

Key provisions:

Aim: Prevention of unlawful activities (by individuals, organisations, or associations)in India.

The central government may designate an individual/organisation as a terrorist organisation if it:

-       Commits or participates in acts of terrorism,

-       prepares for terrorism,

-       promotes terrorism, or

-       is otherwise involved in terrorism. 

Objective: To make powers available for dealing with activities directed against the integrity and sovereignty of India.

-       Under the act, it is a crime to support any secessionist movement or to support claims by a foreign power to what India claims as its territory.

-       The UAPA, framed in 1967, has been already amended twice since; first in 2008 and then in 2012 and 2019.

2019 Amendment:

-       Property Seizure by NIA: With the approval of the Director General of NIA.

-       Investigation by NIA: Investigation of cases may be conducted by officers of the rank of Deputy Superintendent or Assistant Commissioner of Police or above.  The amended act additionally empowers the officers of the NIA, of the rank of Inspector or above, to investigate cases.

-       Insertion to schedule of treaties: The Act defines terrorist acts to include acts committed within the scope of any of the treaties listed in a schedule to the Act.  The Schedule lists nine treaties, including the Convention for the Suppression of Terrorist Bombings (1997), and the Convention against Taking of Hostages (1979).  The Bill adds another treaty to the list.  This is the International Convention for Suppression of Acts of Nuclear Terrorism (2005).    

Few draconian provisions:

-       The Act provides a vague definition of terrorism to encompass a wide range of non-violent political activity, including political protest which are prone to misuse.

-       It empowers the government to declare or brand any person or an organisation as ‘terrorist’ without adequate safeguards.

-       Anticipatory bail is out of the question.

-       The accused person can file an application before the Central Government for de-notification, which will be considered by a Review Committee constituted by the Government itself.

-       It creates a presumption of guilt for terrorism offences merely based on the evidence allegedly seized.

-       It mandates creation of special courts, with closed-door hearings, secret witnesses without sunset clause and no provisions for mandatory periodic review.

Source: https://www.thehindu.com/news/cities/Delhi/delhi-police-slaps-uapa-on-second-pinjra-tod-activist/article31762594.ece


Payments Infrastructure Development Fund

Context:The RBI has created a Payments Infrastructure Development Fund (PIDF)

Aim: To encourage acquirers to deploy Points of Sale (PoS) infrastructure — both physical and digital modes — in tier­3 to tier­6 centres and northeastern states

More about the fund:

-       The RBI has made an initial contribution of Rs 250 crores covering half the fund. The remaining will come from the card issuing banks and card networks operating in the country.

-       The fund will be governed through an advisory council but it will be managed and administered by the RBI.

Need of the fund:

-       Over the years, payments ecosystem in the country has evolved with a wide range of options such as bank accounts, mobile phones, cards, etc. Hence, to provide further fillip to digitisation of payment systems, it is necessary to give impetus to acceptance infrastructure across the country, more so in underserved areas.

-       The fund is also in line with the measures proposed by the vision document on payment and settlement systems in India 2019-2021.

-       The enhanced ability of PoS infrastructure is supposed to reduce demand of cash over time. By 2021, there will be around 5 million active PoS by 2021.

Source: https://www.thehindu.com/business/Economy/rbi-creates-500-cr-fund-to-boost-payment-infrastructure/article31761067.ece



Nagar van scheme

Context: The ministry of environment, forest and climate change (MoEFCC) has launched ‘Nagar Van’ (city forest) scheme on World Environment Day. The theme was Biodiversity.


-       The scheme emphasises on urban forestry.

-       Under the scheme, around 200 urban forests are to be developed all over the country in the next five years.

-       The scheme will also provide an opportunity to the states to manage urban ecosystems.

Need of urban forestry

Biodiversity conservation has traditionally been considered confined to remote forest areas but with increasing urbanisation a need has arisen to safeguard and save biodiversity in urban areas also. Urban forest is the best way to bridge this gap.

Protection is necessary:

India is endowed with rich biodiversity having several species of animals and plants and hosts 4 of the 35 global bio-diversity hotspots containing several endemic species. However, increasing population, deforestation, urbanisation and industrialisation have put our natural resources under tremendous pressure causing loss of biodiversity. Biodiversity is vital for survival of all life form on this planet and is a key to providing various ecological services.

Source: https://pib.gov.in/PressReleasePage.aspx?PRID=1629563

Sunderbans damaged in Cyclone Amphan

Context: The powerful cyclone passed through the vast mangrove forests of the Sundarban delta.

The issue:

-       The storm’s impact was devastating for the millions who live in the Sundarbans. About 28% of the Sunderbans has been damaged.

-       Despite the massive plantation drives, it may take years to restore the mangroves. Experts say the mangroves not only reduce wind speed but breaks the waves during a storm surge caused by a cyclone.

Sundarbans affected:

-       The lives of the estimated 4.5 million people in the region are tied to the fragile ecosystem.

-       Farming, fishing, collecting honey and tourism are the few employment opportunities available. But climate change has been making their lives harder.

-       Cyclone Amphan also damaged almost the entire length of the 100-kilometer (62-mile) nylon fence that had been erected to prevent tigers from straying into human habitations.

-       But it is the breaking of embankments, resulting in salt water pouring onto the land, which will have the most durable impact on livelihoods.

-       Saline water kills freshwater fish in ponds in a day, most sources of drinking water disappear, and land can’t be used for cultivation for up to five years.

About Sundarbans:

-       The Sundarbans comprises hundreds of islands and a network of rivers, tributaries and creeks in the delta of the Ganga and the Brahmaputra at the mouth of the Bay of Bengal in India and Bangladesh.

-       Located on the southwestern part of the delta, the Indian Sundarban constitutes over 60% of the country’s total mangrove forest area.

-       It is the 27th Ramsar Site in India, and with an area of 4,23,000 hectares is now the largest protected wetland in the country.

-       The Indian Sundarban, also a UNESCO world heritage site, is home to the Royal Bengal Tiger.


Prelims special:

LiDAR- Light Detection and Ranging

What is Lidar?

Lidar, which stands for Light Detection and Ranging, is a remote sensing method that uses light in the form of a pulsed laser to measure ranges (variable distances) to the Earth. These light pulses—combined with other data recorded by the airborne system— generate precise, three-dimensional information about the shape of the Earth and its surface characteristics. A lidar instrument principally consists of a laser, a scanner, and a specialized GPS receiver.

How it works:

-       Airplanes and helicopters are the most commonly used platforms for acquiring lidar data over broad areas.

-       Two types of lidar are topographic and bathymetric.

-       Topographic lidar typically uses a near-infrared laser to map the land, while bathymetric lidar uses water-penetrating green light to also measure seafloor and riverbed elevations.


-       Lidar systems allow scientists and mapping professionals to examine both natural and manmade environments with accuracy, precision, and flexibility.

-       NOAA scientists are using lidar to produce more accurate shoreline maps, make digital elevation models for use in geographic information systems, to assist in emergency response operations, and in many other applications.

Source: https://www.thehindu.com/sci-tech/science/how-archaeologists-continued-digging-from-home-during-lockdown/article31760027.ece


-       It is the Indian side of Petrapole-Benapole border checkpoint between India and Benapole of Bangladesh, on the Bangladesh-India border, near Bongaon in North 24 Parganas district of West Bengal.

-       Petrapole border is the only land port in south Bengal. It is also the largest land customs station in Asia.

-       The land port alone accounts for nearly 60 per cent of the bilateral trade between India and Bangladesh.

#iCommit’ initiative

-       Launched on the occasion of World Environment Day.

-       The ‘#iCommit’ initiative is centred around the idea of building an energy resilient future.

-       The calls upon all stakeholders and individuals to continue moving towards energy efficiency, renewable energy, and sustainability to create a robust and resilient energy system in the future.

-       The initiative is driven by Energy Efficiency Services Limited (EESL), under the administration of Ministry of Power.

-       It includes a diverse set of players such as Governments, Corporates, Multilateral and Bilateral Organisations, Think Tanks and Individuals.