Legal and Regulatory Instruments to Address Collusive Practices in Healthcare Delivery

Abstract

The Competition Act, 2002 (as amended up to date) was enacted with an object, keeping in view economic development of the country, to ensure that anticompetitive practices do not occur within different markets and to ensure that consumers get the benefits of the new market economy. It replaced the archaic MRTP Act, which excessively relied on structure, conduct and performance. The new Competition Act was enacted to bring about substantial changes in ways that anticompetitive agreements, monopolies and combinations in several sectors are treated. One among various sectors prone to rampant anticompetitive practices is the healthcare sector. The healthcare sector is one of the most sensitive of all since it is marred by greater degree of information asymmetries when compared to other sectors. It is critically so in case of pharmaceutical and therapeutics where the doctor chooses and the consumer pays - more so in the case of ethical drugs or prescription drug markets. One unique situation in pharmaceuticals is that the costliest brand is also the highest preferred brand. This has led to a host of practices being followed right from how reach the supply chain and how doctors tend to prescribe a particular brand. Unfortunately, laws dealing with supply chain practices are quite lax. The problem is also with lack of adequate enforcement of ex-ante regulatory systems. Much is expected of the ex-post legal regime of Competition law. The Competition Act, 2002, also, prohibits both vertical and horizontal practices in relation to cartelisation and collusion. The presentation will basically deal with situations that normally arise in the health care delivery system in India and how ex-ante regulatory framework and Competition law could to a certain extent take care of situations so as to minimise the adverse impact of lack of competition in pharmaceutical drug markets on consumers in India.