The government plans to prevent pharma MNCs from selling their patented drugs, which are mostly expensive, in India unless they agree to earmark a portion of their supply for public healthcare system at negotiated prices.
About 17 new chemical entities or therapeutic breakthroughs are patented in India, of which 11 have hit the market. Swiss drug maker F Hoffmann-La Roche?s hepatitis C drug Pegasys, lung cancer drug Tarceva and HIV drug Valcyte and Pfizer?s kidney cancer drug Sutent and HIV Aids treatment Selzentry are among them.
Since a patent, or exclusive right to market, is an incentive for investing in research, companies charge a high price for their patented drugs. The government plan is to make available breakthrough therapies ?which are usually exorbitantly priced and might need prolonged use ?through the public healthcare system, a senior government functionary, who asked not to be named, told FE.
Even within the government procurement price, there could be further segmentation, say, differential pricing for BPL and non-BPL population, said the official. The MRP (maximum retail price) would be the same for both the public and private segments of the market to avoid confusion, but the supplies through the public healthcare system would be on a discount.
The move would appear harsh towards the corporate sector in a free-market economy, but is a significant dilution from an earlier proposal to make price negotiation mandatory for all patented drugs sold in the country, including those sold through private hospitals and retail chemists.
The latest plan is to limit price negotiation to government purchase and make it a condition for the patent holder?s wider market access. ?This conditional market access can be implemented through entry restrictions at the import level or at the time of granting marketing approval in India,? the official said. Import restrictions would require changes in rules by the commerce ministry, while marketing restrictions would require changes in the Drugs and Cosmetics Act administered by the health ministry. ?Government procurement for public distribution offers an assured market for the producer and it eliminates the need for a costly, sophisticated sales army,? said the official. So, the huge volumes of government procurement could be an incentive for the companies to offer substantial discounts.
Medecins Sans Frontiere?s campaigner in India Leena Menghanay said that price negotiations in other countries have not worked. It is only a pretext that helps patent-holders to delay a ?compulsory licensing?, which is suspension of a patent to facilitate launch of generic drugs in public interest. Menghaney said negotiations might help in reducing the price a bit, but not significantly and despite such negotiations, the final price would be several times higher than a generic copy. Leena said quoting a 2009 study meant for parliamentarians in India that Thailand?s experience shows that compulsory licensing is the most effective measure of price reduction. Besides, price negotiation is not a legal requirement under the WTO, she said.
The ministry of chemicals and fertilisers is now working on the guidelines for price negotiation. The guidelines may require a patent holder to submit the prices at which it sells a drug in various markets and study the price of alternatives available in India before a starting reference price for negotiation is arrived at. The premium the producer could command in India may be linked to the therapeutic advantage the new patented drug offers over the ones available locally.