While deciding against imposing any limit on FDI in the pharma sector, the Arun Maira headed high-level committee has mooted an undertaking from pharma companies specifying that they would manufacture affordable medicines in the interest of public health, as and when required by the government. A public health crisis has loosely been described as an event where there is a shortage of drugs in the domestic market or a time when prices of drugs cross ?reasonable limits?.
?The government should ask any company that intends to acquire or set up capacities in the country (as well as all companies already operating in the country) to give an undertaking that it will cooperate without hesitation should the government require it to manufacture under a compulsory licence, as a public commitment of its intention to make affordable medicines in the public interest,? said Maira?s final draft report on FDI policy in the pharma sector.
Sector analysts and pharma firms feel that multinationals are usually wary of signing such legal bonds and may find it objectionable unless the framework is spelt out clearly with precise terms and conditions.
However, it has not been made clear whether the undertaking is meant to be signed only by the multinational pharma firms or domestic drugmakers would have to be taken on board as well.
?TRIPS (Trade Related Aspects of Intellectual Property Rights) also provides national governments with the instrument of ?compulsory licensing? to enable them to procure medicines if they are not available in sufficient quantities and at reasonable prices in their countries. In this too, there is some pressure on the Indian government not to exercise its rights (though it has not even done it so far). The Indian Government must retain this right granted to it, and use it if necessary. Thereby it can compel manufacturers in India, whether Indian-owned or foreign-owned, to compulsorily produce specified medicines when necessary, and thus make those medicines available in India at reasonable prices,? the report says.
?The government by opting for a competition commission scrutiny of pharma deal has brilliantly addressed the pricing escalation fears and apprehensions regarding cartelisation in a sensitive domestic market. Resorting to a cap in FDI in the sector would have been a retrograde move,? said Sujay Shetty, leader – pharmaceutical & life sciences, PwC India.
While it is difficult to offer specific comments on the ?undertaking? at this stage, if such a clause is introduced, it must take into account whether the companies involved in an acquisition deal have the power to disrupt the drug supply chain or take into consideration the therapeutic profile of drugs produced by the company getting acquired, Shetty said.
During the deliberations on the matter, the health ministry was concerned that priorities of Indian generic drug firms regarding compulsory licence, would change once they are owned by MNCs and the business interests of the former converge with the latter. While presently ?compulsory licence? is perceived as a revenue stream by generic drugmakers, it may not be so once they are acquired by big pharmas. ?Instead of applying for compulsory licences for patented drugs whereby cheaper alternatives can be made available in the domestic market, these firms would be most interested in holding the prices,? a health ministry official had told FE.