Money & Banking
RBI is not soft on inflation, claims Dr Raghuram Rajan

RBI Governor Dr Raghuram Rajan has assured that he will act outside policy if inflation does not soften in a press conference on 18 December 2013

RBI (Reserve Bank of India) has kept repo rate unchanged at 7.75% and CRR unchanged at 4% in its 18th December policy meeting. In a press conference following this announcement, RBI Governor Dr Raghuram Rajan made it clear that he was not soft on inflation and that he will act outside policy, if inflation does not soften. It is felt that inflation as per current data looks higher because of the rise in vegetable prices and these are likely to come down. In this context, Dr Rajan indicated, “We will not react to every spike in inflation, which is temporary. We as responsible central bankers will react to longer term phenomena.”


Dr Rajan said the RBI will wait for more inflation data to come in to make up its mind whether inflation was well-entrenched and called for higher rates. The current inflation data is marred by noise, he said. In a month’s time the inflation picture in the country will become clearer and RBI will tighten policy if required to control inflation. Dr Rajan was clear that there was no room for complacency on CPI inflation.


Dr Rajan also pointed out that this was the correct policy in a weak economic environment. He admitted that while inflation could be caused by supply bottlenecks, the RBI would have no option but to control demand even if supply-driven inflation persisted.


Dr Rajan argued that the RBI policy was not the sole controlling factor in inflation. Central and State governments in the country will be working on inflation, and RBI will take a decision after the government has improved matters. This is because inflation was even now stable excluding food and fuel.


On the growth-inflation issue, the RBI governor forecasted that GDP growth will be higher in the second half of FY2014. Also, the government is firm on achieving the fiscal deficit target by March 2014. Revenue from disinvestment will help in doing so. The exchange rate of the rupee has stabilised and the current account deficit position is under control.


On NPAs (non-performing assets), Dr Rajan said that there will be an appropriate circular in two weeks. Finally, Dr Rajan added that the curbs on borrowing from LAF (liquidity adjustment facility) will continue to exist.


GlaxoSmithKline to quit paying doctors for promotional talks

The sixth-largest drug maker already had begun cutting back on paid speaking, ProPublica's Dollars for Docs database shows

In a major departure from industry practice, GlaxoSmithKline, the sixth-largest global drug maker, announced Tuesday that it will no longer hire doctors to promote its drugs.

The company also will stop tying compensation for sales representatives to the number of prescriptions written for drugs they market. The changes will be made worldwide over the next two years.

The New York Times broke the news late Monday. But the company said it will continue to pay doctors for research, consulting and “market research.” It will also continue to provide unsolicited funding for continuing medical education activities run by “independent” groups.

Glaxo’s move is more evolutionary than revolutionary, the last step in a dramatic reduction in its spending on physician speakers in recent years. Some competitors have shown no signs of letting up.

Glaxo first began reporting its payments to doctors in 2009. During the last nine months of that year, it spent an average of $15.4 million per quarter on paid promotional talks, according to ProPublica’s Dollars for Docs database of pharmaceutical company payments to physicians.

Spending on promotional speaking dropped to $13.2 million per quarter in 2010, to $6 million per quarter in 2011 and to $2.5 million in each of the first three quarters of 2012, data show.

That’s an overall decline of more than 80 percent.

By comparison, Forest Labs, a much smaller drug maker, spent more than $9 million a quarter on physician speakers last year.

Earlier this year, Glaxo spokeswoman Mary Anne Rhyne wrote in an email to ProPublica that the company’s promotional spending tracks with new drugs or new uses for existing products. “That activity has been relatively low in the past year, so spending for speaker programs has been lower, too,” she said.

Glaxo’s well-known drugs include Advair for asthma, Lovaza for high triglyceride levels and Avodart for prostate enlargement. It also makes the diabetes drug Avandia, which was subjected to tough restrictions from the FDA in 2010 because of concerns about heart risks. The FDA recently eased those restrictions after reconsidering the risks.

The top recent speaking programs for Glaxo involved Advair and Jalyn, which treats problems with urination for men with enlarged prostates, Rhyne said earlier this year.

In an email this morning, Rhyne said the company had taken a number of steps to change its sales and marketing practices in recent years. "This is the next step of that evolution,” she wrote.

Pharmaceutical companies have faced increased pressure as their payments to doctors have been made public, in part through efforts like Dollars for Docs. More than 15 drug companies report their payments to doctors for speaking, consulting, meals, travel and research under Corporate Integrity Agreements with the federal government that arose from settling lawsuits alleging unlawful marketing.

Beginning next year, every drug and medical device company will have to make payments to doctors public under the Physician Payment Sunshine Act, a provision of the 2010 Affordable Care Act. Some experts have said that such transparency will discourage doctors from accepting payments, a contention supported by some doctors themselves.

“Many people have wondered, what difference will it make?” asked Susan Chimonas, a research scholar at the Center on Medicine as a Profession at Columbia University. “Will it clean up practices, or just allow the status quo to continue so long as there is transparency? Glaxo's move is giving us an early answer - and reason for optimism. The saying about sunlight being the best disinfectant - that's exactly what we're seeing here. The Sunshine law is working.”

The American Medical Student Association has called on medical schools to adopt strict policies limiting pharmaceutical company interactions with faculty. And some doctors themselves are calling on peers to be transparent with patients. They have created a website called Who’s My Doctor: The Total Transparency Manifesto.

Still, some doctors continue to accept hundreds of thousands of dollars in payments from the pharmaceutical industry.

Glaxo’s chief executive Andrew Witty told the Times yesterday that the changes were being made “to try and make sure we stay in step with how the world is changing. We keep asking ourselves, are there different ways, more effective ways of operating than perhaps the ways we as an industry have been operating over the last 30, 40 years?”

“Today we are outlining a further set of measures to modernize our relationship with healthcare professionals,” Witty said in a press release. “These are designed to bring greater clarity and confidence that whenever we talk to a doctor, nurse or other prescriber, it is patients’ interests that always come first. We recognize that we have an important role to play in providing doctors with information about our medicines, but this must be done clearly, transparently and without any perception of conflict of interest.”

The British drug maker has faced intense criticism of its business practices. In July 2012, Glaxo agreed to pay $3 billion, a record, to settle criminal and civil claims “arising from the company’s unlawful promotion of certain prescription drugs, its failure to report certain safety data, and its civil liability for alleged false price reporting practices,” the& U.S. Justice Department announced.

Glaxo also agreed to plead guilty to two counts of introducing misbranded drugs, Paxil and Wellbutrin, into interstate commerce and one count of failing to report safety data about Avandia to the Food and Drug Administration.

The company also has been under fire for bribing doctors in China to prescribe its drugs and using travel agencies to cover it up. In July, the company said that some senior executives in China appeared to have violated Chinese law.

Amid these troubles, Glaxo has also been more transparent than some of its peers. In October 2012, the company said it would disclose its clinical trial data to researchers — another industry first.

“We’re increasingly realizing that the more you can make this an open enterprise, the more likely you are to be able to get an advance which allows you to make a medicine,” Dr. Patrick Vallance, president of pharmaceuticals research and development at GlaxoSmithKline, told The New York Times. “I think we recognize that you learn as much about the medicine after it’s launched as you knew before.”

Look up your doctor’s financial ties to pharmaceutical companies here.



Sugar industry crisis: Why not fully implement Rangarajan Committee's Recommendation in toto?

To resolve the sugar industry crisis, assistance should be given to sugarcane growers to get better returns through ethanol, molasses and bagasse

In the recently held 79th Annual General Meeting of the Indian Sugar Mills

Association (ISMA), M Srinivasan, chairman of ISMA requested the government to increase the import duty on sugar from 15% to 40% as the indigenous sugar industry was facing a glut. The wholesale sugar prices ranged between Rs30 and Rs31 per kg whereas the average cost of production actually amounted to Rs33 to Rs36 per kg!


He further went on to suggest that the government should go ahead and procure at least 20 lakh tonnes of sugar to create a strategic stockpile or reserve and use in the public distribution system to stabilise the market prices.


He reiterated that the state and the government must fully adopt the formula recommended by the Rangarajan Committee, in linking sugar cane price with realisation of the end product.


Under Sharad Pawar, the agricultural minister, a panel formed to study the deteriorating conditions found out that the sugar industry actually sought interest free loans up to Rs7,500 crore to the sugar mills and wanted the banks to restructure loans given to the sugar mills. In the AGM, Minister K V Thomas called for the diversification of the sugar industry to produce more refined and raw sugar and increase ethanol blending in petrol to 10% against the mandatory 5% as at present, which is not being fully followed.


In contrast to this claim, president of the Indian Sugar Cane Association, Kurubur Shantakumar, has stated that, according to information available, Rs3,300 crore are the arrears due to sugar cane growers in Uttar Pradesh, while estimates on all India basis amounted to around Rs6,800 crore. He feels that if the government was so keen to assist the farmers why can't the money be given to them directly against dues? Why should the money be given to the factories for such distribution? Such a move naturally follows the much talked about issue of Aadhaar IDs which can be utilised in paying out to the farmers through their bank accounts!


In the meantime, the Central Institute of Agricultural Engineering (CIAE) at

Coimbatore has developed two mechanisation packages; one for sugarcane bud chipping, which reduces the requirement of seed cane (for sowing by about 90%) while mechanical transplanter for sugarcane bud chip settlers reduces plantation cost by 40%. They have further stated that manual transplanting costs Rs9,000 per hectare and the mechanical transplanting costs only Rs5,500, which costs Rs80,000 with a payback period of 27 months. This is a recent development and it would take a few months more, possibly for the next sowing and harvesting seasons, to be able to introduce them on a large-scale. As a start, at least Tamil Nadu and Karnataka could experiment with these equipments before bringing out the same on a national level. At least a good start has been made.


In so far as the ethanol production is concerned, this is also bogged down to pricing; however, congratulations are due to Bangalore Metropolitan Transport Corporation (BMTC). It has been using ethanol for more than one year now and has been asking sugarcane growers to offer more. In fact, according to Mr Shantakumar, for every tonne of sugarcane, 90 litres of ethanol could be produced, and at the market rate of Rs50, this works out to Rs4,500 per tonne and the farmers can get a better return this way. He has submitted a memorandum to prime minister Dr Manmohan Singh that blending of ethanol should be increased to 25% to benefit everyone. It may be borne in mind that by 2017, India plans to reach a 20% blending of ethanol with petrol.


Karnataka's success is likely to have a rippling effect in both Tamil Nadu and Maharashtra taking serious steps to increase ethanol production and also thus help cane growers to get better returns through ethanol, molasses and bagasse!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)



Mukesh kamath

3 years ago

Ramadas ji routinely espouses use of aadhaar while moneylife in a rabid campaign is hell bent on scuttling aadhaar in its tracks. How come ramadas gets to write in this magazine is beyond me. The ratio of pro and against aadhaar articles is something like 1:10.

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