Patented drugs face price caps

Source: The Times of India

27 Jan 2014

NEW DELHI: After sitting on it for years, the government is finally initiating steps to regulate the price of patented medicines and medical devices, a move that may provide relief to patients suffering from life-threatening diseases.

A committee comprising representatives from the health ministry, pharmaceuticals department, the drug price regulator and department of industrial policy and promotion is scheduled to meet early next month to discuss at least three options, said an official familiar with the development. While negotiated price mechanism, that was recommended by an earlier panel and junked, is one of the options, the inter-ministerial committee will also explore the possibility of reference pricing and differential pricing.

Under a system of reference pricing, the domestic price is linked to those in comparable markets. In case of differential pricing, the government can fix separate prices for its procurement programme and for purchase by others, including individual buyers.

While the committee was set up a couple of months ago, the preliminary discussions come weeks before general elections are announced and may be aimed at addressing some of the criticism over the government’s handling of the overall price situation and its poor track record of making quality healthcare available and affordable.

Although drug firms, including domestic players, have never backed checks on their pricing power, the local industry has supported regulating the price of patented medicines since they have virtually no record of discovering new molecules and have nothing to lose. Multinational companies may be a little more willing than they were earlier, after the recent setbacks in India, including the patent controller’s decision to suspend the patent for a cancer drug, and allow a local manufacturer to also sell it in the market to increase its affordability. Since then, the health ministry has been batting for compulsory licence, or patent suspension, for a number of medicines, raising the hackles for Big Pharma.

Various countries, including developed ones, use various tools to regulate prices, India controls prices of only a handful of medicines and patented ones are not covered, often resulting in complaints of over-pricing. During the period of a patent, only one company, which has invented the medicine has rights to manufacture it and uses its monopoly rights to fix the price.

Although a proposal to regulate the price of patented medicines was floated several years ago, the government has refused to move forward. In fact, an internal committee of the department of pharmaceuticals had recommended a negotiated price mechanism for government purchases and for use by insurance companies. The proposal was to link the domestic rate with those at which governments in the UK, France, Canada, Australia and New Zealand purchase drugs from the company that holds the patent. The actual price was to be linked to the purchasing power in India.

But, this mechanism was only going to apply to 23% of the market, leaving a vast majority outside the proposed regime and opening the proposal to criticism.

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