Price Controls in India: Emerging Dichotomy between Consumers Groups and Domestic Industry

The ET reports on the recent opposition of the pharmaceutical industry to price controls:

“Pharma industry on Wednesday opposed a move to tighten controls on drug pricing at a meeting of a Group of Ministers, even as Chemicals Minister Ram Vilas Paswan maintained his stand for expanding the list of essential medicines to be regulated. “My ministry is in favour of strengthening National Pharmaceutical Pricing Authority (NPPA) so that prices of essential medicines remain under check,” Paswan reporters after the GoM meeting here.

The GoM, headed by Agriculture Minsiter Sharad Pawar for looking into the National Pharmaceutical Policy, held its second meeting where representatives of the industry and consumer organisations made their presentations. Ranbaxy Chairman and Managing Director Malvinder Mohan Singh was among those who briefed GoM about the industry’s stand.

“Drugs are already cheaper in India compared to neighbouring countries. Even if we were to reduce prices of these drugs then how would you ensure that these drugs are made available,” Singh said, adding there was no machinery to ensure essential medicines reached consumers in remote areas. He said though Indian pharmaceutical industry accounts for 14 per cent of the global sales volume, its only one per cent in terms of value. Consumer Voice, VHAI and CUTS, which represented consumer organisations in the meeting, favoured a single authority addressing all issues related to the pharma sector, including price monitoring.”

I am really curious to find out what the exact position of consumer associations are in this regard. Historically, in issues of patent policy, generic manufacturers and consumer associations were on the same wavelength (by and large). Both opposed product patents–and their interests were captured by Ayyangar who went on to write his report recommending the abolishment of product patents for pharmaceutical patents in India–and his report in turn became the basis of the 1970 patent act in India. Since then, with the introduction of TRIPS and even later (well into the early 2000’s), the positions of both these stakeholders have remained the same.

But, given the fact that Ranbaxy, Dr Reddys, Lupin etc have begun doing more R&D and filing more patents, there is a rapidly emerging dichotomy between the positions of these two stakeholders. Illustratively, during the Mashelkar Committee Report days, the Affordable Medicines Treatment Campaign (AMTC) submitted a paper supporting the introduction of a clause that would have restricted patentability to only new chemical entities (NCE’s)–in other words, it advocated a total ban on any kind of incremental pharmaceutical patenting. Contrast this with Ranbaxy which supported incremental patents in its submission to the Committee.

Price controls are also an excellent example of this emerging dichotomy–where the position of Ranbaxy and Dr Reddys tally more with the MNC’s (Pfizer, Novartis etc) , than with consumer associations.

It will be interesting to see how this dichotomy pans out. If any of you have further information on what the position of consumer associations are in this regard, I’d appreciate hearing about it.