Govt likely to extend price caps to more ‘essential’ drugs

Price cut-offs were expanded to 348 drugs last year from 74; Move likely to hit earnings of drugmakers.

By: Reuters | Mumbai | Published:June 25, 2014 12:44 am

The government is likely to raise the number of drugs deemed essential and subject to price caps, people directly involved in the process said.
A panel formed by the health ministry is meeting to consider adding more drugs to the list of essential medicines, all of which would then come under price caps, one of the people said. The move would make the drugs more affordable.

Making more drugs subject to price caps will draw the ire of global drugmakers like Pfizer Inc, GlaxoSmithKline Plc and Abbott
Laboratories, all of which have a large presence in India’s $15 billion pharmaceutical industry.

The global drugmakers have already been hit by wide-ranging government-imposed price reductions and a legal system with a history of disallowing patent protection in recent years in an emerging market that is a vital growth driver for the firms.

Bringing more drugs under price controls would dash hopes for an easing of the populist drug policies of the previous government, industry analysts said.

“It is surprising that yet another committee is being formed (on price control),” a top executive at the Indian unit of a large global pharmaceutical company said, declining to be named due to sensitivity of the issue. “This (is) quite the antithesis of what is the purported philosophy of the new government.”

India last year raised the number of drugs that are subject to price controls to 348 from 74 earlier, covering up to 30 per cent of the total drugs sold in the country, according to industry officials.

Health minister Harsh Vardhan and secretary for the ministry of health and family welfare Lov Verma did not respond to mails for comment on the panel meeting.

The sources declined to be named because the details of the plan are not public.

Healthcare activists say that India needs to expand its list of medicines in the National List of Essential Medicines (NLEM) to improve access as the drugs that are under price caps now don’t adequately address healthcare needs.

Many medicines, such as the anti-infection agent amikacin, and the antibiotic cycloserine, which are included in the World Health Organisation’s essential medicines list, are not included in the Indian NLEM, said Chinu Srinivasan, member of the All India Drug Action Network, which has been campaigning for drug price caps.

The pharmaceutical industry, however, has primarily blamed such price controls for declining profit margins in India.

Many companies are still reeling under the impact of last year’s expansion of the price cap list.

“Most companies have taken the last round of price cuts in their stride, (but) they are not happy about it,” said Sujay Shetty, India pharmaceuticals and life sciences leader at consultant PricewwaterhouseCoopers.

“I don’t think the industry would be receptive to another round of price cuts.”

Pharmaceutical sales in India, a key emerging market with sales of patented drugs in Western countries slowing, recorded about
6 per cent growth in FY14 — its lowest ever — mainly due to price controls, according to research firm Crisil.

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