India’s pharmaceuticals regulator is increasingly playing a more active role expanding the list of price controlled drugs and reining in medicine companies that charge more than mandated prices for medicines on a controlled list. With zeal harking back to pre-liberalization days, the regulator is fixing prices of more drugs than ever before, combing the market finely for violations and flagging wrongly branded drugs.
The National Pharmaceuticals Pricing Authority (NPPA) and public health campaigners merely call it part of the regulator’s job, but a rattled drug industry sees it as the fallout of a widening divide between drug makers and the government, voted in on a plank of equity in prosperity in the world’s second fastest growing major economy. Health activists dismiss this as a stung industry complaining for being asked to toe the line.
The law provides for price control only on 74 bulk drugs and their formulations; all the rest—called non-scheduled drugs—are priced by the companies. But in recent months, the NPPA has expanded the scope of price control.
In the last one month, it has brought 20 new drugs under price control, capping prices using a provision—Para 10(b) of the Drug (Price Control) Order, 1995—that allows any drug to be brought under price control to protect public interest.
Not just that, since early March, a price increase of 10% invites regulator scrutiny even for a non-scheduled drug. This threshold is half the 20% that was permissible earlier, leaving less leg room for drug makers to hike their prices before appearing on the regulator’s scanner. Violations have invited penalties: drug companies owe nearly Rs1,410 crore to the NPPA for alleged cases of overcharging up to 30 April this year. The list of defaulters includesCipla Ltd, Ranbaxy Laboratories Ltd, Johnson & Johnson Ltd, Wyeth Ltd, and GlaxoSmithKline Pharmaceuticals Ltd. Some of these companies are challenging the regulator in court.
“This Para 10(b) is becoming a catch-all phrase for bringing more drugs into price control. Even if we explain the reasons for the (more than stipulated) price hike, NPPA may disagree and still cap the price,” said a official from a leading Indian drug maker who saw the price of one of his drugs capped recently. “Sometimes the notices don’t even reach the company,” he added, asking that he not be identified.
Industry lobby Indian Pharmaceutical Alliance’s secretary general D. G. Shah says that such steps will merely serve to deepen the gulf between drug firms and the regulator instead of building confidence. NPPA chairman Ashok Kumar declined comment.
The pharmaceutical industry and the ministry of chemicals and fertilizers in the last year have accused each other of breaking promises. Minister Ram Vilas Paswan has openly expressed his disappointment with the industry for reneging on its promise of reducing prices of 886 drugs by up to nearly three-fourths and offering drugs at 50% discounts to the poor through drug banks. A survey by the ministry in May revealed that prices of only one-third in the list of 886 drugs had actually been reduced and in over 70% of the drugs, the reduction was 20% or less. The industry says the offer to reduce prices was in return for lighter regulation, something that the ministry has not delivered on. A National Pharmaceutical Policy, which will cover this and other issues, is being deliberated by a group of ministers, headed by minister for agriculture Sharad Pawar.
Amit Sengupta, a public health activist, who has campaigned for lowering the drug prices, says that the drug regulator is just doing its job. Some “50-70% people in India are unable to access drugs they require because they cannot afford them,” he says. “We should look at price regulation in that context.” Sengupta, who is the general secretary of All India People Science Network, argues that price regulation at the retail level is important as more than two-thirds of medicine sales in India take place through pharmacists unlike other countries that have extensive public health-care or health insurance agencies.
The drug regulator, meanwhile, has more action planned. NPPA and the ministry of chemicals and fertilizers are working on setting up an enforcement team that can track cases of overcharging and violations to other provisions of price control order. The ‘directorate’ will require an officer from police or revenue intelligence who will be responsible for collating data as well as have a team on the ground. Currently, NPPA depends on complaints, feedback from state drug controllers, market researcher ORG-IMS and public.
The regulator has also begun flagging off trademark violations to the Office of Controller General of Patents, Design and Trade Marks. The ministry also wants to fix trade margins of 15% on wholesalers and 35% on retailers for the so-called ‘generic-generic’ drugs that represent 5-7% of the Rs34,000 crore medicines sold here. (Drug sales, including exports, in India total Rs55,000 crore.)