Price controls fail to improve poor people's access to medicines in India, IMS report says

Print 21 July 2015
EJ Lane / FeircePharmaAsia

India's National Pharmaceutical Pricing Authority (NPPA) is busy on both the pharma and device fronts to bring down costs to consumers. But the efforts may do more harm than good, according to an industry-sponsored study by IMS Health Information and Consulting Services India.

"Assessing the Impact of Price Control Measures on Access to Medicines in India," which was funded in part by industry lobby group the Organisation of Pharmaceutical Producers of India (OPPI) and other stakeholders, said measures focused on price control have a limited impact and do not improve access for the poorest.

India's business-friendly Bhartiya Janata Party which came to power in May last year has placed the pharma and medical device industries at the center of plans to boost the economy through stepped up manufacturing.

At the same time, it has tried to respond to a hornet's nest of concerns about the industry from drug safety and intellectual property protection to rising costs of essential medicines and chronic therapies. The report also focuses on policies put in place by the previous government run by the opposition Congress Party, suggesting market-based options are the way forward.

"These market forces can move towards strengthening of oligopolistic behavior which results in a reduced set of choices for doctors and patients," the report said.

Of concern is the impact on access to innovative medicines as companies both domestic and multinational avoid offering products that are under controls, the report said.

In May, in response to similar concerns, China moved to lift controls on most drug prices, seeking to spur innovation at the domestic level and regarding safety, both issues facing India as well.

The report also noted that earlier efforts by Beijing in this area as well as countries such as the Philippines and South Korea "consistently failed" to improve overall access to medicines.

At the same time, Indian companies have successfully used the country's patent laws and compulsory license avenues to make generic copies of high-demand drugs, including a new closely watched effort by little-known Lee Pharma for AstraZeneca's ($AZN) Onglyza.

India follows a market-based price system, the Drug Price Control Order, launched under the Congress Party-led government in 2013 that put around 650 drugs under a price ceiling aimed at ensuring access for poorer patients.

But critics say middle class and rich patients in urban areas actually reaped the benefits even though the variety of drug choices narrowed as a result, a view which the report bolsters.

"The consumption of price-controlled drugs in rural areas has decreased by 7% over the past two years, while that of non-price controlled products has risen by 5%," the report said, adding that the controls led to market concentration and the discontinuation of "tail-end" brands.

As fixes, the report suggests eliminating taxes on essential medicines, bulk purchases of drugs for clinics and even going as far as extending universal insurance coverage.

According to the World Health Organization, more than two-thirds of Indians have no medical insurance coverage and government healthcare spending hovers around 1% of GDP, well below China's 3% mark.

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