Report from India

Industry players brace themselves to face challenges as India's new drug-pricing policy kicks in full gear.
Aug 02, 2013

On July 1, India's new Drug Pricing Control Order (DPCO) 2013 replaced the 1995 version. Under this new regime, the National Pharmaceutical Pricing Policy 2012 will regulate prices of 348 drugs covered under the National List of Essential Medicines (NLEM) 2011 compared with 74 drugs in the former list. Adopting the market-based price mechanism, the policy is based on the simple average price for all brands with a market share above 1% in their segment.


Pharma industry players brace for challenges as India’s new drug-pricing policy kicks in full gear. (DMITRY RUKHLENKO/GETTY IMAGES)
According to industry sources, the new drug-pricing policy will affect two thirds of the Indian pharmaceutical industry. Consumers, on the other hand, will benefit greatly. Tapan Ray, director general of the Organization of Pharmaceutical Producers of India (OPPI), said in an interview with Pharmaceutical Technology, "Ceiling prices will now be based on approximately 91% of the pharmaceutical market by value, resulting in more than 20% price reduction in 60% of the NLEM. The prices of some drugs will fall by up to 70%." According to Ray, DPCO 2013 will "achieve the objectives of the government in ensuring essential medicines are available to those who need them most by managing prices in the retail market and balancing industry growth on a longer-term perspective."

Impact on consumers

While consumers could potentially benefit from price cuts, it may not necessarily lead to easy medicines access, which is based on patients' socioeconomic strata, Amit Backliwal, general manager of IMS Health, South Asia, told Pharmaceutical Technology. The effect will not be as pronounced for those in the upper strata who can afford the pre-2013 DPCO prices; whereas, patients who are on the other end of the spectrum will continue to be unable to afford the medicines even after the revision. Only the middle-income groups will reap maximum benefits from the changes of the new drug-pricing policy.