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      Drug price control order

      Posted AtExpress Pharma Pulse

      The task force recommendations on drug pricing have been under the scrutiny of the industry, while a new drug policy may be welcome, industry specialists are more intereseted in the finer aspect of the policy.The new Drug Pricing Control Order (DPCO) is all set to replace the present order. It is designed by taking into account, the recommendations of the task force for pharma pricing and the Sandhu Committee. The pharma task force, which was headed by Pronab Sen, Principal Advisor of the Planning Commission, has sparked off a series of discussions on what would be beneficial to the industry as well as the consumers. Following are some of the recommendations proposed by the pharma task force for the new DPCO.

      Drug pricing

      The present price control system, blocks the entry of new drugs because companies do not have a price point to enter the market. Discontent with that the task force suggested a compulsory price negotiation for all patented drugs before they are approved for marketing and regulation of prices of 314 essential drugs. The remaining essential drugs would be brought under ceiling prices that are not cost-based. The task force recommended fixing ceiling prices based on a weighted average of the prices of top three brands of a drug value.

      Conversely the task force proposes no control on bulk drugs and unbranded formulations, no cost based price control, making "essentaility" the sole criterion for selecting drugs for price control or regulation and selective de-branding in case of prolonged market dominance of 70 percent or more.

      Single Drug Body

      An important recommendation of the task force is to form a National Authority on Drugs and Therapeutics (NADT) by merging National Pharmaceutical Pricing Authority (NPPA), Drugs Controller General of India (DCGI)and the Central Drugs Standard Control Organisation (CDSCO). The present system, according to an official, is fragmented and these three bodies are carrying out multiple and overlapping functions. The DCGI regulates new drugs, the manufacturing licenses are given by state drug authorities and pricing is fixed by the NPPA. The single body will consolidate the processes and their ownership. The proposal is still being drafted and though it is still debateable how much action will be taken, from reports, and based on statements made by the Union Health Minister earlier this year, a National Drug Authority is surely on way.

      DPCO Act

      The Drugs Price Control Order may be replaced with a new ‘Drugs and Therapeutic Act’. Presently, under the Essential Commodity Act, the punishment for price violation is imprisonment. In the new act however, a fee may be levied. That may act as a saviour for some, and perhaps be more enforceable for the authorities.

      Debranding of generics

      The task force has also suggested de-branding as a means to promote generic medicines, but that is regarded as an anti-competitive and unsafe strategy by the industry. "It could lead to growth of spurious and substandard drugs," says D D Chopra, Adviser Director, J B Chemicals. Shifting from brand to generics will take the choice away from doctor to chemist says the IPA spokesperson. India is not ready for this shift, says Organisation of Pharmaceutical Producers of India (OPPI).

      The government is negotiating with the industry for a special pricing of specific drugs like anti-cancer and anti-retroviral drugs so that their prices are reduced. For this government is proposing tax concessions in excise and customs duty on anti-cancer and anti-retroviral (HIV/AIDS) drugs.

      Industry reacts

      The Confederation of Indian Industry (CII) pledges support to the government mission to ensure affordable medicines. Nevertheless, some of the recommendations faced disapproval. A commentary released by the CII on the proposed changes said, "We believe that the recommendations of the task force on price controls, debranding and promotion of generics will have very serious consequences for Indian consumers, pharma industry and the economy."

      According to the CII a pricing policy is likely to cause unhealthy imbalances. It says that an integrated policy across all relevant aspects including R&D, product approvals, pricing should be formulated. De-branding of products will probably be too sever, instead companies should be allowed to retain their brands and participate in government procurement at 50 percent of MRP reserve price for distribution of inexpensive drugs wherever required.

      CII is of the opinion that the government should initiate collaborative negotiations with industry for procuring propreitary drugs, particularly in the areas of HIV and Cancer.

      Indian Pharmaceutical Alliance (IPA) has pointed out fallacies in the recommendations like mandatory debranding which is anti-competitive and unsafe and which will encourage spurious and substandard products. IPA also questioned the subjectivity of the "essentiality" as described in the recommendations.

      IPA proposes to subject products outside "core" list under a transparent mechanism for monitoring. Indian R&D products should be exempted from price control mechanism.

      The policy is a step towards governing the pharma industry and like all other major policy changes, it is bound to face bouquets as well as brickbats. However, the regulatory authority should take into account the opinions of industry as well so that the policy becomes a win-win situation for everybody.

      September 30, 2005


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