Report from: India

The Indian government may soon monopolize its pharmaceutical industry to cut costs and improve healthcare, but the move is sounding off alarm bells with the companies whose drug products are under review.
Nov 02, 2008
By A. Nair
Volume 32, Issue 11

Diagnosis and treatment of diseases may soon become less expensive in India, if the Indian government's proposal to become the country's sole purchaser of drugs and medical devices takes shape. Under new proposals to cut costs, the Indian government is considering monopoly purchases of generic drugs, medical devices, and patented drugs from small and medium enterprises,

The government is also in the process of framing guidelines for compulsory price negotiation with drug companies for their new products—both patented medicines as well as medical devices—at the time of granting marketing approvals. The government has asked the National Pharmaceutical Pricing Authority (NPPA) to collect data on price, supply, and availability of all medical devices and patented drugs in the country.

NPPA is part of the government established inter alia to fix and revise the prices of controlled bulk drugs and formulations and to enforce prices and availability of the medicines in the country under the Drugs (Prices Control) Order of 1995. The organization is also entrusted with the task of recovering amounts overcharged by drug manufacturers.

Behind the monopoly idea

Confirming the move toward monopoly, Debasis Panda, joint secretary of India's Ministry of Health and Family Welfare, says, "The government is mulling such a move as part of its effort toward achieving quality healthcare for all. In the next couple of months, the government will provide some regulations, especially for the medical devices sector that is literally growing in a haphazard manner." Panda added that the Health and Family Welfare Ministry is also working toward a switch from a control-type regime to a regulatory regime to cope with the new technologies and treatments that are now available.

The data gathered by NPPA would provide the government with enough reference information to negotiate prices of medical devices and drugs accordingly. While this move would ensure that medical device makers price their brands reasonably, the goal is to benefit consumers who need devices such as stents, catheters, orthopaedic implants, and heart valves, by offering them at a lower price.

The government's attempt to buy patented drugs, however, has rung alarm bells across the nation and with multinational corporations (MNCs) operating in India. "It is completely illogical. How can the government decide on the prices of patented drugs?" questions Ranjit Shahani, vice-chairman of Mumbai-based Novartis India. "The pharma MNC gravy-train might just go off-track in India, if the government persists with its move," he added.

Shahani recalls that the Indian government proposed to buy and sell generic-generic products last April to add to its national program to fight malaria and tuberculosis. "The government was keen to buy directly from drug manufacturers and then distribute it via its own channels," he said. "That was a voluntary purchase." Most drug companies such as those belonging to the Indian Drug Manufacturers Association, the Organization of Pharmaceutical Producers of India (OPPI), and the Indian Pharmaceutical Alliance (IPA), supported the move.

However, the current monopoly idea, "to buy the whole lot, could well be the institution of compulsory licensing, under a new guise," says Shahani, stating that such action should not be considered.

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