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Biden's focus on Obamacare positive for Indian pharma, but friction on patents, price controls to continue

Since Obamacare would lead to much better and broader inclusion of American citizens, it augurs well for India. About 40 percent of generics in the US is supplied by India. But withdrawal of the Generalized System of Preferences benefits to India by the Trump administration a concern.

November 09, 2020 / 05:47 PM IST
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File image

The Indian pharmaceutical industry sees US President-elect Joe Biden’s proposed plan to expand Obamacare, bring more competition and reduce middlemen as positive steps.

Biden, in his acceptance speech, said securing family health care would be his priority. Biden, in his election rallies, also promised that he would focus on broadening and strengthening Obamacare, also known as the Affordable Care Act (ACA), which ensures that all Americans have access to affordable health insurance.

“India's pharma industry will continue to play an important role in the US healthcare system. We are part of the affordable healthcare segment,” said Sudarshan Jain, Secretary General of Indian Pharmaceutical Alliance (IPA), an industry lobby group representing large domestic drug makers.

Biden's plan for Obamacare is in contrast to Trump, who tried to kill ACA by repealing parts of the law throughout his tenure, without much success. The issue is in the hands of the US Supreme Court.

Promotion of safe generics


Biden also promised to support numerous proposals to accelerate the development of safe generics.

This would mean more reliance on generic drugs and bio-similars to keep healthcare costs low, even as Biden expands coverage. India exported drugs worth $6.7 billion, over one-third of its total pharma exports, in FY20. In terms of volumes, every one out of three pills consumed by an American would have an Indian connection.

“Obamacare would lead to much better and broader inclusion of American citizens, particularly poorer citizens. It augurs very well for India, about 40 percent of generics in the US is supplied by India,” said Dinesh Dua, Chairman of the Pharmaceuticals Export Promotion Council of India (Pharmexcil), a trade body under the Ministry of Commerce & Industry, Government of India.

Trade frictions

The Indian industry, however, doesn't expect things to be dramatically different under Biden in terms of trade policies. They are not too sure at the moment whether the US, under Biden, would review its withdrawal of the Generalized System of Preferences (GSP) benefits to India.

“It's too early to predict anything,’’ Jain said.

GSP is preferential duty-free access given by developed nations to developing countries. As many as 3,500 products are eligible for GSP concessions, but India exports about 2,000 items, including a large number of pharmaceutical products. GSP withdrawal has sliced 4-5 percent of profit margins of Indian pharma companies on exports of certain drugs.

The GSP concessions were removed by the Donald Trump administration as they didn't see India as a poor country.

India and the US have major differences when it comes to protection of intellectual property rights and the second major bone of contention has been India fixing the prices of medical devices such as cardiac stents and knee implants that hurt the US manufacturers the most.

Those differences are not expected to be resolved anytime soon. But Dua says under Biden, “the US administration would listen more intently to you”.

“Of course, they are not going to compromise on American interests, they would be more flexible,” Dua said.
Viswanath Pilla is a business journalist with 14 years of reporting experience. Based in Mumbai, Pilla covers pharma, healthcare and infrastructure sectors for Moneycontrol.
first published: Nov 9, 2020 05:47 pm

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