New Delhi: Prices of new drugs seeking patent protection in India could soon fall as the Union government plans to negotiate the retail prices of such medicines based on a select basket of international prices. A government committee, studying a similar model followed in Mexico, will submit guidelines for the sameby July.
“We are studying the model in Mexico, where they calculate the weighted average of a drug’s price in its top six selling countries. We can adopt a similar formula, account for differences in purchasing power and use that average as a benchmark to negotiate prices,” said a government official present at meetings of the committee, established under the ministry of chemicals and fertilizers.
The official asked that he not be identified because discussions are still under way.
With India switching to the product-patent regime since 2005, an increasing number of pharmaceutical companies are beginning to enjoy monopoly on their drugs.
Negotiating prices is just one of the checks that New Delhi is putting in place.
According to the ministry’s annual report on patents, trade marks, designs and geographical indicators, 1,700 drug patents have been granted between 2001 and 2006, with fiscal 2006 accounting for the largest number of patents at 457.
Hoffman La Roche’s hepatitis drug, Pegasus, has already been granted a patent, while Eli Lilly’s anit-psychotic medicine, Olanzapine, and Merck Sharpe & Dohme’s diabetes drug, Januvia, and the cervical-cancer fighting Gardasil are awaiting issue of patents.
Indian companies too will come under the scanner as they launch new drugs from their research pipelines.
While the Indian model could draw heavily from Mexico, there are other elements the committee will draw from other countries while distributing drugs. The committee member said the panel was veering towards a Canadian pricing model, where drug prices are negotiated by the government for all distribution channels—retailers, insurers and hospitals.
The committee also plans to recommend setting up of a team—with representatives from drug price regulator National Pharmaceutical Pricing Authority (NPPA), Drug Controller General of India, the patent controller’s office and various ministries—that will negotiate drug prices with pharmaceutical companies.
It will also specify if these discussions should happen before or after marketing approval on these drugs and the parameters to conduct them on.
“We have asked the associations to give in components that go into drug pricing and only then we can negotiate. If we receive no cooperation, we can simply ask NPPA to do the cost studies for us and we will use that as the benchmark but that will only pinch the companies more,” said the committee member.
An industry representative said companies would be giving inputs to the committee soon.
“The associations have been asked to put in their views by the month-end which we will be doing,” said Z.H. Charna, director, Organisation of Pharmaceutical Producers of India, an industry lobby of overseas drug makers in India.
The government plans to check the prices of drugs beyond a list of 74 medicines currently controlled by NPPA and recently changed rules to allow the pricing authority to step in when the price of any drug increases more than 10% in a year, halving an earlier threshold of 20%.
In an another evidence of government’s hardening stance on the issue, minister for health and family welfare Anbumani Ramadoss had cautioned that India had so far never broken patents and should not be compelled to do so either, over high prices of patented drugs.