Indian pharma miffed with uncertainty, pricing issues

On October 20th the ministry of chemicals and fertilizers issued a press note in what seems an attempt to allay industry fears on the issue of price controls. While, it does appear to have brought some comfort to the drug manufacturers, the concerns seem far from over.

Written in bold were two important statements:

1.  Any impression regarding tightening of price control is both misleading and misplaced.

2. Any changes in the methodology of calculating ceiling prices of scheduled medicines are presently not under consideration.

Why should the industry still be concerned? These have apparently to do with two paragraphs in the press note and the questions they raise.

The paragraph 3 reads: Important issues under consideration of the Department are-

i) treating the drugs which have become non-scheduled as non-scheduled drugs without any freezing of their prices for a further year; ii)  revision of the list of scheduled medicines on the basis of revision of NLEM (National List of Essential Medicines) by incorporating only additions and deletions to the list so that the prices of only "new medicines" which are added to the NLEM will be fixed by NPPA (National Pharmaceutical Pricing Authority); iii) limiting the determination of overcharged amount of a medicine found to be sold at higher than the ceiling price to the stock available with the defaulter; iv) In case of negative WPI, mandating the NPPA to change the ceiling price of scheduled drugs and not require the individual drugs to also reduce their MRPs if they are already lower than such revised ceiling price; etc.  Other issues include new provisions for using Institutional price data for fixation of prices of those scheduled medicines which are being supplied directly to the Healthcare Institutions.

The concerns here: A reading of these by D G Shah, Secretary General of the Indian Pharmaceutical Alliance (IPA), an association of some of India's leading pharmaceutical companies,  point that "at least three out of the four pointers do not need amendment to the DPCO (Drug Price Control Order) 2013 and are matters of interpretation of the existing statues. For instance, he says the department of pharmaceuticals has "already notified its views/decisions these matters [pointers  (i) and (iv)] but it is unable to enforce them. The item (ii) is mere procedural. Likewise, item (iii) relates to implementation of an existing provision in the DPCO. It requires the amount allegedly overcharged be recovered from the defaulter, that is the  retailer, wholesaler, distributor or manufacturer. Currently, the NPPA holds only manufacturers responsible for all overcharging complaints." In addition, "the proposed new provisions regarding using "institutional price data for fixation of prices" for supply to healthcare institutions should be a matter of concern as it may negatively impact the competition. The targeting procurement prices is not the solution for prices charged by Healthcare Institutions. It needs to tackle prices charged to patients."

The other paragraph in the note raising concern says: As regards "new drugs" as defined in DPCO 2013, the government is considering a change in the method of approving their prices. The Government is in consultation with the Industry to explore doing away with the present practice of deciding a new price for each applicant of "new drug", which is causing considerable time delay in launch of the new drugs in the market by the manufacturers.

The issue with this is that "A committee appointed by the Department of Pharmaceuticals (DoP) with a view to enhancing the accessibility and affordability of essential medicines at reasonable prices had recommended doing away with the retail price for "New Drugs" as defined in the DPCO 2013, and instead fix ceiling price. The IPA expects that the DoP also confirms that this proposal is not under consideration, as such a move will expand the span of price control, discourage competition and jeopardise growth of the industry. "New Drugs" is the main driver of growth of the industry."

IPA's Shah is not alone. The head honcho of a leading Indian pharma company, who did not wish to be identified, summed it up as follows: "Today, the biggest concern of the Indian pharma industry is uncertainty. The government seems to be just tinkering on the policy front which is throwing up negative news for the industry at constant intervals. This is not good for the growth of the industry, which is growing at almost half the rate at which it was growing three years ago."