Over-prescription of medicines, a side effect of unhealthy competition among makers of branded drugs, could decline, with a new regulation that manufacturers will sell single-drug formulations only under their generic names. The move by the central drugs regulator, which plans to issue a directive to state health departments in this regard soon, is resisted by pharmaceutical companies for obvious reasons. Some independent analysts too have expressed doubts about the feasibility of the move.
The analysts say the regulation could result in companies stopping production of single-drug formulations which would turn less profitable if sold as unbranded products. The pharmaceutical market has already seen a proliferation of combination drugs ? formulations with more than one active pharma ingredients ? although several of these drugs are of doubtful rationality from a regulatory perspective.
There is a huge price difference between branded drugs and unbranded versions having the same therapeutic profile. The unbranded drugs segment, which consists mainly of government purchases, is hardly 10% of the total retail medicine sales in terms of value.
Promotional expenses ? read the incentives to the trade and doctor community ? account for a significant fraction of the price of the drug to the consumer in many cases.
According to official sources, state drug regulators are likely to be asked to stipulate that the manufacturing licence for single-drug formulations be issued only if the drugs are sold under generic names.
The Drug Technical Advisory Board, the Centre’s highest decision-making body, has already taken a decision to this effect.
The move is expected to wheedle pharma firms to slash prices further, considering price points would remain the only determinant in a brand-less single drug market. However, the move is is not without some flip sides.
Since the majority of India’s seven lakh doctors use brand names while prescribing medication, changing habits would be easier said than done. Some analysts say that before imposing a condition on companies, the government must first make it mandatory for doctors to prescribe drugs by their generic names. Also, there is fear that pharmacists might misuse the provision to push the sales of unbranded drugs which offer them the highest margins.
From the industry perspective, most top domestic drug firms, which earn a substantial part of their revenues from branded generics, may make attempts to retain brand names by shifting from single drug formulations to combination drug formulations by tweaking drug composition. A few pharma companies FE spoke to said that the proposed regulation would discriminate between imported medicines and drugs manufactured in India. ?If manufacturing drugs in India would mean you have to market it without a brand, multinationals would hardly have any incentive to manufacture it here, and could merely import the drugs,? said a company executive at a top drug firm, asking not to be named.
However, an official source said drug companies will get one year for the transition to the new regime. The state drug authorities are expected to make the necessary rule changes within six months of issuing the relevant notification. The regulation will only have prospective effect.