The center, earlier this year, had indicated that his government may bring in a legal framework under which doctors will have to prescribe generic medicines, which are cheaper than equivalent branded drugs, to patients.
According to the proposed draft national pharmaceutical policy, the government plans to cap trade margins to make drugs cheaper, replace brand names with names of salts or generic drugs, clamp down on unfair marketing practices and give a boost to local manufacturing to reduce dependence on imports.
The key objectives of the policy are to make essential drugs accessible at affordable prices to common people while providing a long-term stable policy environment for the pharmaceutical sector, the draft policy said.
Calling for cap on “unreasonable trade margins”, it said the issue along with bonus offers by various stockists, distributors and retailers have been adversely affecting both the industry as well as consumer interest.
“After detailed stakeholder consultations, the level of trade margins will be prescribed to create a level-playing field for the industry and to bring down prices,” it added.
According to the draft policy, institutions receiving supplies directly from manufacturers, distributors or retailers would also be covered under the trade margin reforms.
At present, the
The draft policy also said that regulation for marketing practice which is at present voluntary will be made ‘mandatory’ and an agency for the implementation would also be assigned.
“An area of concern is unethical marketing practice deployed by the drug manufacturing and marketing companies,” it said, adding “doctors are lured to recommend a particular brand trough all expenses paid trips often disguised and called ‘educational conventions’ and such other incentives”.
Further, to provide a level-playing field, the draft policy said, “The regulation for marketing practices which is at present voluntary will be made mandatory. Penalty for violations and an agency for implementation would also be assigned.”
But several companies in the arena believe, if implemented, this policy may have a negative impact on growth and profitability of the industry due to continued emphasis on price control, cap on trade margins and discontinuation of loan licensing or third-party manufacturing.
On the draft policy, D.G. Shah, secretary general of Indian Pharmaceutical Alliance said, “It appears to be a hurriedly prepared document with several flaws…It is more a product of perceptions than evidence. It will hurt patients by promoting proliferation of substandard and poor quality drugs, reducing competition and compromising availability. It will damage the industry by further slowing down growth and its profitability.”
“The policy document explicitly states providing a longer term stable policy environment for the sector which is much needed. However, the policy needs to ensure it addresses facts rather than perceptions. The continued focus on price control versus allowing market factors and quality to determine prices seems flawed. In the end, the patient will suffer if the manufacturing of good quality medicines at prevailing prices becomes a challenge and the government must be thoughtful on this,” Rahul Guha, partner and director at The Boston Consulting Group (BCG), said.
In a country where 65% of medical costs are out-of-pocket expenses, the government’s efforts to provide quality medicines to patients at affordable prices are in the right direction but such moves are expected to squeeze margins of pharma companies.
Since the draft policy document states that loan licensing raises many quality maintenance and assurance issues. Therefore, except in biopharmaceuticals where India is at a relatively nascent stage of development, in other pharmaceutical formulations, loan licensing is proposed to be phased out over three years and allowed up to only 10% of total production of the company and from a WHO-approved manufacturing unit.
“The draft pharma policy does not have the requirement of doctors prescribing the medicines through molecule/salt names (except procurement by public hospitals). The policy is based on the principle of ‘one company–one drug–one brand name–one price’. Even for public procurement, the policy allows the use of brand names for fixed dosage combinations. The key worry for the sector was use of generic names, and with the new draft policy not emphasizing on it, this removes a key overhang from the sector,” broking firm Credit Suisse said in a report dated 17 August.
Doctors also believe that the theory that generic drugs cannot be quality controlled is pathetic and mostly in the interest of large corporations. For instance, the price of the injectable iron ampule come down from Rs 156 to Rs 18 because doctors realised that lakhs of ampules need to be ordered for women suffering from anaemia.
“Five years ago, when we scaled up the use of the medicine, the next step was to bring down the cost because that was the only limiting factor. Because of our emphasis on the drug, 15 players in the market recognised the value of the product, competition was generated and the prices fell,” said Hema Divakar, former president of FOGSI (Federation of Obstetric and Gynaecological Societies of India).
