Economy
India conducts talks with UAE on pharma export pricing challenges
Summary
As per the agreement, the UAE had agreed to allow market access for Indian medicines within 90 days of approval in the US and UK.New Delhi: India is holding high-level talks with the UAE to work out a solution for pricing norms in the Gulf nation that act as a barrier to Indian generic drugs and vaccine exports, two people privy to the development said.
The UAE along with several high- and middle-income Gulf and European countries use what’s called external reference pricing (ERP) to regulate pharmaceutical prices. Under this policy makers specify a basket of countries whose prices they use to inform the price of medical supplies in the country.Trade experts say profit margins for drugs are fixed in the UAE, which means wholesalers or distributors are not allowed to offer bonuses or discounts to pharmacies, leaving them with no incentive to sell low-cost Indian generics.
The UAE has a $3.5 billion pharma market and imports 80% of its pharma products. It is a transnational hub that can give Indian drugmakers access to other global markets, especially large GCC markets such as Bahrain, Kuwait, Oman, Qatar and Saudi Arabia.
In addition, the UAE in 2020 adopted a national policy on vaccination that listed the US, Germany, France, Switzerland and Ireland as import partners of vaccines but not India. As a result Indian covid-19 vaccines were not able to make their way to the UAE.
“UAE has a generic drug substitution policy since 2018, and allowed more than 6,000 generic drugs that cost 60% less than branded products. The main issue is public preference and no incentive for local pharmacies to promote low cost medicine," Arpita Mukherjee, a professor at ICRIER said.
To be sure, every country regulates the price and quality of imported drugs. In India, pricing of imported drugs is looked into by the National Pharmaceutical Pricing Authority and the quality is monitored by the Central Drugs Standard Control Organisation.Experts said that under the free trade deal that India signed with the UAE, it managed to get fast-paced drug approval. However, the pricing barrier remains.
As per the agreement, the UAE had agreed to allow market access for Indian medicines within 90 days of approval in the US and UK.
India’s drug and pharma exports to the UAE has more than doubled to $342.47 million during the last financial year compared with FY17 when outbound shipments stood at $128.29 million. In FY22 pharma exports to UAE stood at $332 million.
A person aware of the development said that reference price is being discussed at the “highest level" as the issue is a cause for concern for Indian drug manufacturers which dominate the affordable generic drug industry.
As per a London School of Economics research, the UAE uses reference prices from relatively developed markets including Austria, Bahrain, Belgium, Canada, France, Germany, Italy ,Switzerland and the UK. Experts said that the absence of India and China where prices are low means that the price mechanism would be tilted on the higher side and therefore act as a barrier for Indian exporters even as India produces affordable medicines.
External reference pricing tries to ensure that a country does not pay more for a product than other comparable countries, or that lower‑income countries pay less. It may or may not lead to affordable prices, and the prices set through external reference pricing are often used for further price negotiation.
Experts also stated that external reference pricing is widely used in many European countries, as well as in high and middle income countries in other parts of the world such as Brazil, Egypt, Saudi Arabia, Thailand, Turkey, and the United Arab Emirates.
