The Economic Times
20 April 2009
By Sushmi Dey
New Delhi, India
A government move to regulate prices of patented medicines imported and marketed in India by multinational drug–makers may come as a big relief to those suffering from diabetes, arthritis, cancer and heart diseases.
The proposed mechanism, whereby prices will be regulated in consultation with the drug marketers, is currently being finalised, said a senior official who didn’t want to be named. “After negotiations with the government, companies will sell imported drugs at two different prices–one for bulk medicines sold to the government–run hospitals and the other for the retail market,” he said.
“Forced pricing may lead to shortage of imported drugs and free market would mean these drugs will not be affordable for the poor. Therefore, we decided to arrive at a price through negotiation,” he said.
An official in the department of pharmaceuticals confirmed the move saying the government has called for a meeting on Monday with all the stakeholders, including multinational drugmakers, consumer organisations and patient groups.
While the National Pharmaceutical Pricing Authority (NPPA) regulates prices of all notified drugs sold in the country, the government finds it difficult to keep a check on prices of imported medicines even if they are under price control. Imported brands often circumvent price control norms as the pricing authority has no means of verifying their production cost. To determine the cost, the NPPA relies on MNCs’ version of the production cost and sets profit margins as a percentage of their landed costs. As the margin is decided in percentage terms, raising the landed cost helps MNC drug companies get a higher margin.
The move is expected to benefit consumers as big pharmaceutical companies launch their patented medicines in the country at high prices and with a 20–year patent protection, resulting in monopoly pricing. The proposed pricing mechanism for patented drugs would ensure that essential medicines are affordable for the common man.
A panel chaired by Pronab Sen had first suggested price negotiation for monopoly drugs. The ministry of chemicals and fertilisers appointed a high–level government committee in February 2007 to look into high cost of new medicines in the country.
The committee, chaired by a deputy secretary in the department of pharmaceuticals, comprises representatives from the National Pharmaceutical Pricing Authority, department of industrial policy & promotion, National Institute of Pharmaceutical Education & Research and the Drug Controller General of India.