The government?s reported move to link prices of pharmaceutical drugs with India?s per capita income is in keeping with government policy of lowering drug prices. Based on this, prices of important drugs could fall to a tenth or even less. Last month, the government announced a $5.4 billion plan to provide free generic drugs to the Indian public, and also promised to initiate a project through which patients can look for cheaper alternatives to prescribed medicines via SMS. Earlier, the government gave a compulsory licence to Bayer for its R2,80,000 cancer drug Nexavar, allowing domestic pharma company Natco to sell it for R8,800.
While all of this will cheer patients, we need to keep some perspective. For every patented formula that makes the market, around 10-15 fail, and the pharma companies have to bear this cost?most often, they shift the cost of the failures onto the price of the successful drug. If compulsory licensing (CL) keeps away important drugs from India, who does this benefit? Ideally, CL should be used in the case of mass diseases?swine flu, bird flu, etc?not when a drug?s impact is limited to a relatively smaller number of patients. India is already a hyper-competitive pharma market, with one of the lowest prices in the world. The government would do well to focus instead on eradicating spurious drugs, which can cause great harm. Also, if it does want to focus on lowering prices, it should look to buying drugs in bulk, and then providing them to the public at rates it deems fit.