Pharma firm Sanofi opposes drug price control order

The move of the National Pharmaceutical Pricing Authority, country's drug price regulator, to control the price of commonly used diabetes and heart diseases drugs in a bid to improve affordability has dismayed the pharma industry.

"By issuing a price control order under Para 19 without any consultation with the industry bodies, the NPPA has shocked and disappointed the pharma industry. This order brings 120 anti-diabetic formulation packs and 247 cardiovascular formulation packs under price control. This is in addition to the National List of Essential Medicines (NLEM) listed in Schedule I of Drug Price Control Order 2013, which are already under price control," said Shailesh Ayyangar, Managing Director India and Vice-President (South Asia), Sanofi India Limited, one of the companies likely to be affected by this move.  

Ayyangar said in a statement issued by Sanofi, "While we appreciate the government's intent to improve affordability…, the manner and method in which this unilateral decision has been taken is untenable. We have been a committed partner of the government in its mission to achieve the health objectives of the nation. When the government brought in 348 essential drugs under the Drug Price Control Order 2013 in spite of a decline in profitability, the industry welcomed the change in the methodology of price control from cost-based to market-based one…"

He says that the July 10 notification has shaken the industry confidence. The NPPA had pointed to the exploitative pricing by the industry as the reason for such a move. "But this is incorrect given that every product category (in consideration) has approximately 30-70 brand options across price ranges for physicians and patients to choose from. The premise that products are not accessible due to affordability is misplaced," Ayyangar said.

In his capacity as the President of the Organisation of Pharmaceutical Producers of India (OPPI), Ayyangar had earlier issued another statement, in which he said, "We were assured that there would be no price volatility and that the government will work in close consultation with industry. However the NPPA's arbitrary and unilateral action runs contrary to all these sentiments. It has shocked the industry and will be detrimental to the investment climate for market expansion, brand building and employment generation."

He has urged the government to revisit the decision and help build a more collaborative environment, partnering and engaging with all stakeholders to find sustainable solutions to the health care challenges that face the country.

However, it seems the quantum of impact on the industry as a whole is meagre. These drugs whose prices have been slashed contribute only to 10 per cent of the overall Indian pharma market. Their overall maximum retail price (MRP) will come down by 11.68 per cent based on the estimates put out by AIOCD-AWACS, India's second largest pharma research organisation.

In other words, these drug products together have around Rs 5,480 crore annualized turnover and the reduction in value would entail a drop of Rs 640 crore for the companies. This amount however is just about one per cent of the total pharma market size, which is around Rs 75,000 crore. The net impact on companies operating in these segments (diabetic and cardiac) varies from 5 to 35 per cent based on their current pricing structure.