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Apr 02, 2012, 10.57 PM IST
In an interview to CNBC-TV18, Kewal Handa, managing director of Pfizer and Vikas Dandekar, India Bureau Chief of PharmAsia News.Com discuss the issue of drug pricing.
Q: What is your view on the proposal of pricing drugs as per the prices put forth by top three retail sellers?
Dandekar: The earlier plan of pricing drugs on the basis of manufacturing and conversion cost was creating problems for the industry. Most companies when they market their products of top leading brands they pump in a lot of expense on marketing which creates pressure on the price. The government finds that that is not the right approach.
On the issue of pricing, a meeting of a Group of Ministers (GoM) headed by Sharad Pawar is expected to be held on April 4, where a decision will be taken. One school of thought is to look at a balance procurement which happens from the government side, so there will be a different approach for pricing of those products.
One can also look at these top three brands drawn from both sides and look at balance somewhere in between. Thatís the thought process right now, but it doesnít look like it will be a solution which will be reached easily.
Q: What is your view on the issue?
Handa: If you look at todayís situation there are different prices at different levels, even the products which are outside price control there is no single price. Even products which are under price control there is a ceiling price.
There are prices of products which are even lower than the ceiling price and therefore I donít buy the argument that everybody will move out. Secondly, there is a restriction on how much price increase you can take in a year. You can take a maximum of up to 10%.
Even if you want to move up, you cannot move beyond 10% and therefore this argument that everybody will converge to a single point is not true. At the end itís the competition, the number of players in the molecule that will determine at what price each one will sell.
Everybody has moved from cost-based price to market-based price and there is a total alignment today, whether you see it in EAC with the health ministry. Cost based price has its own implications. You cannot evaluate 348 bulk drugs on cost basis.
Past experience shows that cost-based prices have never helped the industry to grow. The right direction to move is on market based price. The entire pharma industry is together and recommending a market-based pricing.
Q: What are your view on compulsory licensing and allowing Natco to produce cancer drugs at lower prices?
Dandekar: The government will find a way to achieve its overarching principle of making drugs affordable. The Indian pharma sector has disagreed with the government pricing system and has said that the compulsory licensing cannot be used for every situation.The Comptroller General of Patents Designs and Trademarks has always been to make drugs affordable.
In a decision given by Kurian, in the case of Nexavar it is clear that prices of lifesaving anti-cancer drugs cannot be so high that it becomes difficult for needy patient to get access. There are ample safeguards as far as pricing is concerned. The Indian industry is gung-ho about use of compulsory license and lot of products will fall into the ambit of voluntary license.
Q: Do you think the representations from the industry and industry bodies will weigh on the governments decision and perhaps pricing control may not happen or do you think the government is firm and pricing control is likely in the next few months?
Handa: We should move towards a market-based pricing and find out the right mix. Pricing cannot solve the problem of access. Access has to be resolved separately. We need to focus on access and that needs to be done with higher spend by the government with partnerships with Indian and multi-national companies. Pricing cannot be looked at solving the access problem. That is the biggest mistake we are doing is mixing the two.
Q: Unaffordable cancer and other drugs for vital diseases would be the problem of many governments. What is the international experience?
Dandekar: Thailand and Brazil have invoked compulsory license. It has been a debated subject across the world. US Commerce Secretary came and resented the position taken by the Indian government. Infrastructure has been a big issue. Rather than pricing, people have been talking about making drugs more accessible. Thailand and Brazil have used compulsory licensing in certain positions.
Q: What is your view on compulsory licensing issue?
Handa: We are fostering a culture of innovation in this country. If you are going to bring about a compulsory licensing and if you are giving a wide power including that manufacturing has to be done in India then you can imagine that itís almost impossible to bring any patented or in innovative products. Itís just not the pharmaceutical. It will have impact on other sectors too.
As Vikas mentioned, globally some countries have invoked compulsory licensing. Only nine countries have a provision for compulsory licensing out of which Thailand has invoked in few cases. There is no innovative culture in Thailand. The companies are really running away from Thailand. Access to new medicines will be more in neighboring counties than in Thailand. When the government brought the IPR it said that it will be used very exceptionally and only in case of health emergencies.
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