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Free Medicine: India May Control Prices Of Patented Drugs

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India is planning to rein in prices of expensive patented drugs to make medicines affordable to its predominantly poor population, a top government official said on 27 July.

The step would be the latest by India to make medicines more affordable after it announced earlier this month it would implement a $5.4 billion (approximately Rs 30,240 crore) plan to provide free generic medicines to its people.

The move is almost certain to draw the ire of global drugmakers like Pfizer, GlaxoSmithKline and Merck, which spend billions of dollars researching new treatments and are hoping for huge growth for branded medicines in emerging economies such as India.

"A committee has already finalised a proposal and we will put it out in the public domain in a month or so," Dilsher Singh Kalha, secretary of the department of pharmaceuticals at the ministry of chemicals and fertilisers, told reporters on the sidelines of an industry conference.

"There could be reference pricing system (for patented drugs) or maybe fixed-pricing, but a final decision has not been taken," Kalha said.

The early July free drug initiative by the government could lead to the long-pending national pharmaceutical policy getting cleared. In 2002, the Supreme Court had struck down the policy saying it did not specify how essential medicines would be made affordable and available to the masses.

To start with, the government plans to make generic versions of 348 medicines covered in the National List of Essential Medicines (NLEM) free of cost against prescriptions generated from all government hospitals and public health centres. With this, the government has not only made essential medicines affordable as the apex court had sought, but gone beyond to provide them free to anyone who accesses a public healthcare facility.

In the absence of such a scheme, the government was compelled to expand the scope of drug price control to cover all NLEM medicines; but the pharmaceutical industry feared that it would bring 60 per cent of the medicines sold in India under price control and hence seriously affect their domestic revenues. Today, less than 20 per cent of the Rs 65,000-crore medicines sold in the domestic market annually come under direct price control.
The free-for-all drug scheme is not expected to hit the industry significantly as only 25 per cent of patients in India are dependent on public healthcare facilities today. While the government estimates this percentage will go up by 40 per cent after the introduction of the scheme, the additional numbers are expected to come from the people who do not access treatment at all currently. Of the total patient population, 20 per cent are expected to be in this missing category.

Before 1970, western MNCs used to control over 75 per cent of the pharmaceuticals market in India, mostly through imported drugs. The situation changed with the Patents Act of 1970, which mandated only process patents for drugs. The law allowed generic drug producers to basically reverse-engineer a product by tweaking the production process.

Back then, the reasoning was that a weak IPR regime might allow domestic firms to imitate foreign technology so as to boost access and keep drug prices low in the bargain. However, hard bargaining by Big Pharma saw the change in world trade rules, in 1995, which called for a system of product patents and legal protection to all Trade-RelatedIntellectual Property Rights (TRIPS) that included pharmaceuticals but with safeguards like provision for compulsory licensing.

And since 2005, the patent regime in India - and China and Brazil from 2002 and 1997, respectively - has allowed patenting of drug products.

Compulsory Licences
Earlier this year, in March, India, for the first time, issued what's known as a "compulsory licence" to override a patent on a cancer drug. Under certain conditions, possibly a health emergency, countries can act to break patents and manufacture generics. The holder of the patent would get some sort of compensation. However, it's not a simple process and can trigger international legal battles. China also has established a system to override patents. Internationally, a system of reference pricing for medicines exists across developed markets such as the United States and Europe as well as in emerging markets.

In March 2012, Bayer lost the landmark drug ruling in India and was forced to grant a compulsory licence for Nexavar to Natco Pharma, a local generics maker, which sells it for Rs 8,880, a price later undercut by Cipla.

Currently, patented drugs are free of price controls, but there are restrictions on the prices of 348 so-called "essential" drugs. Patented drugs are mostly imported by multinational drugmakers and used to treat diseases like cancer and heart ailments.

The medicines are beyond the reach of most of India's 1.2 billion people, 40 per cent of whom live below the poverty line of $1.25 (about Rs 70) a day. For example, Nexavar, a cancer drug developed by Germany's Bayer , costs Rs 280,000 per monthly dose.

(With agencies)

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