"Establish An Independent Board on Ecolabelling in India": CUTS International
New Delhi, 21st September, 2006
Civil Society calls for stronger negotiating capacity on EPAs
Zambia, 15th September 2006
"Draft Pharma Policy May Increase Drug Prices", Says CUTS International
New Delhi, 5th September 2006

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"Establish An Independent Board on Ecolabelling in India": CUTS International

September 21, 2006, New Delhi
In view of the dismal performance of Bureau of Indian Standards (BIS) in implementation of Ecomark scheme in the country, CUTS International has suggested setting up of an independent Ecolabelling Board to promote the Ecomark Scheme with transparency. The BIS could be asked to provide experienced technical staff to such a Board.

Submitting its report ‘Why was India’s Ecomark Scheme Unsuccessful?’ to the Ministry of Environment and Forest (MoEF), Mr Pradeep S Mehta, Secretary General, CUTS International has said that even after 15 years in existence, the Indian Ecomark Scheme has not caught the fancy of the either the consumer or the industry. Only 12 manufacturers of various products like paper, pulp, leather and wood particleboard have till now applied for the Ecomark licence. Furthermore, these same licensees hardly use the Ecomark symbol ‘matka’ on their package as none of them found any benefit by the same.

This report assumes more significance because the National Environment Policy Statement of India adopted in 2006 has recognised the role of ecolabels in promoting environmental conservation. The Policy states that action would be taken to formulate “Good Practice Guidelines” for ecolabels to enhance their scientific basis, transparency and requirements of participation and at the same time promote the mutual recognition of Indian and foreign ecolabels, which adhere to the Good Practice Guidelines, to ensure that Indian exporters enhance their market access at lower costs.

According to the report, there is lack of awareness of the Ecomark Scheme among Indian industry; in particular, among medium and smaller players. At the same time, the study showed that consumer awareness continued to be poor in the absence of a national communication strategy and without the incentive of greater demand for products, a manufacturer will not apply for an Ecomark licence since greater investment is needed to reach the high stringency standards, Mr Mehta said.

According to the Report, the Scheme was flawed from its very inception. The three-tiered system set up for the implementation of the Ecomark programme including Inter-Ministerial Steering Committee in the MoEF, Technical Committee in the Central Pollution Control Board (CPCB) and BIS as the implementing authority indicated that the Scheme was heavily reliant on Government organisations. And with frequent transfers of government official the momentum of the Scheme was adversely affected.

The exclusion of the Ministry of Finance from the Steering Committee, was most inappropriate, as no incentives or rewards to manufacturers to reduce adverse environmental impact of products could be given to promote the scheme.

It seemed that the BIS had been giving a step motherly treatment to the scheme. During this study, the BIS was asked to provide data on the total number of applications made since 1991 to calculate the rate of success vis-à-vis applications. However, BIS failed to do so as the data was not readily available with the Bureau.

The BIS has also not set any targets on the number of licences to be issued per year, nor made efforts for attaining them even though during the course of this study, some units either claimed eligibility or expressed willingness for the Ecomark licence. The BIS also lacks transparency in its working, since there are no ways to identify and resolve the bottlenecks faced in the implementation the Scheme.

During the survey, the BIS was also accused of favouritism towards multinational corporations (MNCs). It was observed by a member of the BIS that the operations of BIS were quite dominated by MNCs promoting brand driven products.

As regards certification, although the first three licence holders opined that the procedure for getting an Ecomark certification was not stringent, other respondents felt it was necessary to simplify the certification procedure.

The Scheme which initially covered 16 product categories was reduced to only 10 product categories. However, there was a lack of justification why 10 product groups were to be considered instead of 16. A better approach would have been to start with lesser number of product categories but those that carry the maximum adverse environmental impact and wider consumption. Whilst the inclusion of industrial goods is acceptable, an equal emphasis should have been placed on consumer goods so that individuals could be persuaded of expressing their environmental concern by informed action.

The Survey covered individual companies, government officials from Ministry of MoEF, CPCB, BIS, State Pollution Control Boards, various industry associations, consumer and environmental advocacy groups.

"Draft Pharma Policy May Increase Drug Prices", Says CUTS International

September 05, 2006, New Delhi

"The proposal of draft pharmaceutical policy to bring 354 drugs under price control may lead to increase in prices of drugs".

“The Indian experience is that, by and large, the suggested maximum price invariably becomes the actual selling price. Hence, for many medicines, there is a risk that the price control will lead to higher prices,”Mr Pradeep S. Mehta, Secretary General, CUTS International, a leading research based civil society organization has said in a statement today.

The policy proposes to bring more medicines under price control but at the same time increase the Maximum Allowable Post-Manufacturing Expenses (MAPE) to 150 per cent from the current level of 100 per cent. This is too high and cannot be justified and also contradicts the policy of trade margin of 50 per cent (15 per cent for wholesalers and 35 per cent for retailers) for generic medicines proposed in the same policy draft, Mr Mehta has said.

According to CUTS, the issue of trade margin deserves more attention as it can check the anti-competitive practices of the retailers who are cartelised and often force the manufacturers to offer higher margins otherwise consumers will be forced to pay higher prices even if the pharmaceutical manufacturers are willing to provide them at reasonable prices.

Instead, the aim should be to encourage competition with appropriately monitoring prices. The regulation should try to simulate the "effects of competition" and price control should not be imposed on drugs where the "effects of competition" already exist.

It would be better to put fewer number of drugs under price control while retaining the existing level of MAPE of 100 per cent and put others on the watch list and adopt a threat-based policy by reserving the right to bring them under price control any time their prices cross certain levels, CUTS has suggested.

Regulation of drug prices is necessary not only because it is a different kind of product that involves issues of life and death for people, but also because normal market forces do not operate as consumers do not make the choice.

In the past, with increasing decontrol over years, prices of some medicines soared, so much that for some drugs prices are not only higher compared to neighbouring countries such as Sri Lanka and Bangladesh, but even vis-à-vis developed countries such as Canada and the UK.

It is true that the drug market is not perfectly competitive due to the peculiarities of the sector. However, it is not just the pharmaceutical companies that are responsible for this but all the other actors of the health services delivery system, including doctors, pharmacists, hospitals and diagnostic clinics, are equally responsible. The Government thus needs to take a holistic look at the issue of healthcare and availability of affordable medicine is only a part of it, CUTS has stated.

For many people living in the rural areas and for the poor in the urban areas, the primary issue is the availability of affordable and "honest" healthcare services rather than the prices of medicines. This would require measures other than price control.

If more medicines are to be brought under price control, they should be restricted to a few that might have seen excessive price increase rather than all essential drugs, Mr Mehta has said.

CUTS Centre for Competition, Investment & Economic Regulation (CCIER) had conducted a study on “Options for Using Competition Law/Policy Tools in Dealing with Anti-competitive Practices in Pharmaceuticals and the Health Delivery System”, in 2005-2006 supported by the World Health Organisation and the Ministry of Health and Family Welfare, Government of India and plans to share the findings of the study in a half day workshop on September 8, 2006, at India International Centre (IIC), Conference Room II, New Delhi.