After capping trade margins on 42 cancer drugs in 2019, govt may expand move to other medicines
The Indian Express
January 05, 2020
The government in 2019 made progress in its goal towards a regime of self-regulation by the pharmaceutical industry, with decisions that signify a shift in how prices of medicines and medical devices in India may be regulated this year.
The National Pharmaceutical Pricing Authority (NPPA), along with the Department of Pharmaceuticals (DoP), has been finalising a proposal to limit the trade margins of non-scheduled medicines and medical devices, which are not under price control.
In the works and recommended for over a decade now, the move aims to bring down the prices of unreasonably marked up medicines and medical devices. However, different segments of the industry feel this will have a limited impact on improving affordability for various reasons.
So far, non-scheduled medicines have mostly been out of the ambit of price control, save for a limit on how much their prices can be increased every year — 10 per cent. In certain extraordinary cases, the NPPA had used special powers under the Drugs (Prices Control) Order, 2013 to slash ceiling prices of some non-scheduled medicines, including cardiovascular and anti-diabetic drugs, in ‘public interest’.
In 2016, a DoP expert panel proposed graded trade margins between 35 per cent and 50 per cent for medicines priced over Rs 2. This followed “various representations and complaints” of a “huge” difference in the price the distributor would pay for the product and its maximum retail price (MRP).
Three years later, in February 2019, the NPPA capped trade margins of 42 cancer medicines as a “proof-of-concept” for a system of trade margin rationalisation across medicine segments.
“The trade margin concept underscores self-regulation by the pharma industry, duly mentored by the government,” NPPA Chairperson Shubhra Singh earlier told The Indian Express.
In November, the DoP and the NPPA held stakeholder discussions on expanding such a move to other non-scheduled medicines and medical devices. Trade margin rationalisation of medical devices, especially, had been an important focus of the government in 2019 due to the rising trade tension between India and the US, partially fuelled by the NPPA’s decision in 2017 to slash ceiling prices of stents and knee implants.
At the same time, it is unclear how many medicines and devices would see a price reduction and how much such a move would help in improving access to expensive medicines and medical devices in the country as a result.
There is little to no publicly available data on how much margins are enjoyed by manufacturers and importers, as well as other participants across the supply chain, according to various industry officials as well as health experts.
When the NPPA had implemented its trade margin cap on 42 cancer medicines, a senior government official involved in the process had estimated that the move would, “at best”, hit 15-20 per cent of the drugs available.
The government’s own analysis afterwards showed that prices of over 350 medicine brands would drop anywhere between 25 per cent and 75 per cent, but some industry executives feel such results cannot be expected in all therapeutic segments.
“Most cancer medicines are billed to patients at the hospital as part of in-house treatment. Other non-scheduled medicines that are sold at chemist shops would not be priced as high, to begin with,” said an executive. Most pharmaceutical industry bodies present during the stakeholder meeting, in November, agreed to a trade margin cap of 30 per cent, provided this was carried out in a phased manner across therapeutic segments.
A “majority” of medicines are already sold within the 30 per cent margin, claimed the executive, adding that only a “small” segment of medicines with higher margins, constituting 8-10 per cent of India’s Rs 1.40 lakh crore pharma market, would see a price decrease.
“Trade margin caps can only have a limited impact because we are only looking at the margins taken at the level of the wholesalers, stockists and retailers. We’re not even looking at the producer or importer’s price, which is where a major chunk of profit lies,” said Sakthivel Selvaraj, director, health economics, financing and policy at the Public Health Foundation of India.
“The entire price control mechanism has to change. A more serious issue is about the market-based pricing mechanism that is followed currently, which defeats the whole purpose of price control because the reduction in prices is moderate or nominal. The government is able to achieve a substantial reduction in prices in only a fourth of the market,” he said.
“In the late 1970s, as much as 90 per cent of the market was under price control in a cost-plus based pricing regime. Despite this, a majority of the industry developed and had huge profits,” he added.
Reference:
Comments
Post a Comment