Pharma price control
Aug 17 2012, 11:06 | By Moneycontrol.com
Q. What's the proposed patented drug pricing plan of the government?
A. Government wants to control prices of expensive patented medicines sold in India so that they become more affordable, especially to the poor people. These patented drugs are manufactured by multi-national corporations abroad and imported in to India. These drugs are mostly related to the treatment of illneses like cancer, HIV and heart diseases. According to some reports the government could itself fix prices for the drugs or there could be a reference pricing. According to a report in a newspaper on Thursday an inter-ministerial group has recommended a per-capita income linked drug pricing mechanism. This is not the first time that the government has sought to control price of drugs, which it feels are essential and expensive. Earlier this year, India's Natco Pharma won a compulsory license to sell Bayer's patent protected anti-cancer drug Nexavar, chemically known as Sorafenib. According to the terms of the license, Natco can't sell the drug for a price exceeding Rs 8,800 for a pack of 120 tablets (one month therapy). Bayer's Nexavar is sold for over Rs 2.8 lakh.
Q. Who will benefit?
A. Such a move will definitely benefit a lot of people and bring affordable treatment to the middle and lower income groups. However, experts and analysts point out that even if the government fixes prices of essential drugs or grants compulsory licenses like in the case of Nexavar, prices will still be expensive for a lot of people, especially in rural areas, who might earn just a dollar or two a day. For instance, the Rs 8,800 per pack cost for Natco's copy of Nexavar will still be too expensive for many who don't even that much salary in a month.
Q. Who will be impacted?
A. If at all the government succeeds in implementing a drug pricing mechanism, it will be the MNC pharma companies like Pfizer, Bayer, GlaxoSmithKline, Merck, and Novartis that will be hit the hardest. The companies justify the high prices since these patented drugs involve high research and development costs, which need to be recovered. The companies will see a huge squeeze on margins if the fixed prices are significantly lower than they are sold at currently. But at the same time their volumes could also a get a big boost.
Q. When will the price control come into effect?
A. The government plans are at a very preliminary stage and so don't expect it to come into effect any time soon. Also the MNCs through their lobby Organisation of Pharmaceutical Producers of India (OPPI) will also fight hard against it. Further more, if implemented, the MNCs, instead of falling in line with the government, might just decide to stop selling the drug in India, which will affect even more patients, an analyst told moneycontrol.com. The government will also have that to consider and the analyst doesn't expect any such mechanism being put into place for at least a year. More over analysts point out that more than affordability, the government also needs to look at the accessibility issue of medicines. A lot of times there is acute medicine shortage in rural areas, there is counterfeiting etc. These issues also need to be addressed if the government is keen on making medicines affordable and accessible to the poor people.
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