Money & Banking
RBI keeps repo, CRR, and other key rates unchanged

While keeping key rates unchanged, the RBI said given the wide bands of uncertainty and weak state of the economy there is merit in waiting for more data

The Reserve Bank of India (RBI), in its mid-quarter credit policy review has kept repo, reverse repo, cash reserve ratio (CRR) and bank rate unchanged. The central bank said the policy decision is a close one as current inflation is too high. "However, given the wide bands of uncertainty surrounding the short term path of inflation from its high current levels, and given the weak state of the economy, the inadvisability of overly reactive policy action, as well as the long lags with which monetary policy works, there is merit in waiting for more data to reduce uncertainty," RBI said in the policy statement.


According to RBI, there are obvious risks to waiting for more data, including the possibility that tapering of quantitative easing by the US Fed may disrupt external markets and that the Reserve Bank may be perceived to be soft on inflation.


"Even though the Reserve Bank maintains status quo today, it can help guide market expectations through a clearer description of its policy reaction function: if the expected softening of food inflation does not materialise and translate into a significant reduction in headline inflation in the next round of data releases, or if inflation excluding food and fuel does not fall, the Reserve Bank will act, including on off-policy dates if warranted, so that inflation expectations stabilise and an environment conducive to sustainable growth takes hold," the central bank said.


With no change in key policy rates, the repo rate (the rate at which the RBI lends money to banks) remains at 7.75%. Similarly reverse repo rate (the rate at which the RBI borrows from banks), CRR, and bank rate remains at 6.75%, 4.00% and 8.75%, respectively.


Repo Rate.......................7.75%


Reverse Repo Rate..........6.75%




Bank Rate......................8.75%


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.



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