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Times of India
28 July 2012
Govt Move To Benefit Consumers, Will Anger Global Pharma Biggies
Mumbai India

The government may soon bring in a mechanism to control prices of exorbitantly–priced patented medicines to make them more affordable.

Though the move has been discussed for over six years now, not much headway has been made on it. Now, a committee set up to decide the mechanism for reining in prices has submitted its recommendations, Dilsher Singh Kalha, secretary department of pharmaceuticals, told reporters on the sidelines of an industry conference, here on Friday.

"We will be putting out the recommendations in the public domain over the next month or so," he said. "There could be reference pricing system (for patented drugs) or maybe fixed–pricing, but a final decision has not been taken," Kalha said.

The government has been making attempts to bring in an effective price control mechanism in place for drugs which are patented, imported or expected to hit the market soon. Such a mechanism is required in the country, where the cost of treatment is borne by the patient (private) with practically no contribution from the government, and in cases, where the healthcare bill may run up to a few lakhs of rupees.

At present, patented drugs many of which are imported into the country, are free of price controls. Patented drugs are mostly imported by drug multinationals, and used to treat diseases like cancer, HIV and heart ailments. The committee is understood to have looked at options like reference pricing mechanism and the negotiated pricing model. Under the reference pricing mechanism, data from other countries and emerging markets, will serve as a reference for deciding the prices. Experts say that the mechanism under which prices are negotiated with pharma biggies may not work very well.

Internationally, a system of reference pricing for medicines exists across developed markets such as US and Europe. The move is almost certain to draw the ire of global drugmakers like Pfizer, GlaxoSmithKline and Merck, which spend billions of dollars researching new treatments and are hoping for huge growth for branded medicines in emerging economies such as India.

The step would be the latest by India to make medicines more affordable after it announced earlier this month it would implement a $5.4 billion plan to provide free generic medicines to its people.

Currently, patented drugs are free of price controls, but there are restrictions on the prices of 348 socalled "essential" drugs. Patented drugs are mostly imported by multinational drugmakers and used to treat diseases like cancer and heart ailments.

The medicines are beyond the reach of most of India’s 1.2 billion people, 40% of whom live below the poverty line of $1.25 a day. For example, Nexavar, a cancer drug developed by Germany’s Bayer, costs Rs 280,000 per monthly dose.

Early this year, Bayer lost a landmark drug ruling in India and was forced to grant a compulsory licence for Nexavar to Natco Pharma, a local generics maker, which sells it for Rs 8,880, a price later undercut by Cipla.

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