All this comes at the cost of the end user. Consumers pay a high cost, financially and health-wise, because of this competition throughout the medicine supply chain.
The modus operandi of the two recently busted rackets in the capital region was to bring spurious or unauthorised drugs into the market in the guise of physicians samples, and sell them at low prices to hospitals that run on non-profit basis.
According to sources in Drug Control Administration (DCA), pharma companies now have carry forward stock points in all major cities. In the past, there used to be one or two authorised stockists in every district, but now there are many in the market.
Pharmaceutical companies attract stockists with discounts, depending on the quantity of drugs they purchase. Stockists, who get the medicines at discounted rates, woo retailers with higher profit margins.
Retailers prefer to buy medicines from stockists who provide them higher margins. This system helps spurious medicine rackets infiltrate the market. They strike a deal with stockists or dealers, and send spurious drugs into the markets.
The disturbing fact is that even the representatives of drug manufacturing companies cannot distinguish between original and spurious medicines. These medicines have to be lab tested as their packaging is just like the original ones.
Racketeers also infiltrate the supply chain with ‘physician’s samples’. It is a normal practice by the pharmaceutical companies to send physician samples to doctors through marketing executives free of cost to promote the sale of their products.
These samples have separate labels stating that they are meant for free distribution by physician’s to their patients, and not intended for sale. However, some drug companies do not print separate labels, and send normal medicines to the doctors.
The competition among pharmaceutical companies is high, and they also compete in distributing sample drugs to doctors. This practice has been extended to retailers also. Marketing executives woo retailers with free medicines, and manipulate them to into selling their drugs even if doctors prescribe drugs from rival firms.
There is another system that racketeers exploit. Pharma companies offer low-price medicine to doctors, and hospitals run on non-profit basis. The companies sell the drugs directly from carry forward depots based on referral letters by doctors, to non-profit hospitals. The dealers, with an eye on earning extra bucks, exploit these referral letters, and acquire stocks at cheaper prices.
To beat the competition, dealers again offer these medicine with high-profit margins to retailers. This practice is rampant in the market, and retailers travel to far off places to purchase medicine at cheaper prices.
Assistant director of DCA, Krishna district, Paruchuri Rambabu, said retailers in Vijayawada travel to Rajahmundry to buy certain medicines, which they get at 25% lower price. This is only one example, and they buy different medicines from different places for more profits.
Drug racketeers also use this competition for purchasing drugs at a lower price, and introduce spurious medicine in the market. They usually mix spurious drugs in the original batch of medicine, and distribute them evenly into the market. The spurious medicine contains the same batch number as the original ones.
Opaque marketing of medicines throughout the supply chain makes it difficult for DCA sleuths to trace the culprits. The search often ends at the dealer level, where unauthorised and spurious drugs are sold without bills.
Except the consumers, everybody else — dealers, stockists and retailers — get benefitted from the system.
While racketeers are exploiting the system, the DCA is struggling to act because of staff shortage. According to the norms, there should be one drug inspector for every 100 medical shops. In Vijayawada, only one drug inspector works in One Town, where there are more than 400 shops. There are more than 3,000 medical stores across Krishna district.