Earlier this week, the Department of pharmaceuticals (DOP) issued a draft proposal on price negotiation of patented drugs and has invited comments from stakeholders on the recommendations of the committee before the end of this month. This draft policy proposal couldn’t have come at a better time, especially since the IPAB decision on Bayer’s appeal against compulsory license(CL) issued for its Nexavar (First ever post TRIPS CL granted by India) is expected early next week.
The Parliamentary standing committee’s report in May 2012 noted that no action had been taken on gamut of issues concerning availability of quality medicines at affordable prices. This report acted as a catalyst for the DOP committee which was set up in 2007, to come up with the proposal on pricing system for patented drugs.
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The committee noted that the three categories of patented drugs viz. (1) A totally new class of drugs which have no therapeutic equivalence (2) A drug that has therapeutic equivalence in addition to improved therapeutic equivalence over the existing drug (“improved efficacy”) (3) A drug which has comparable therapeutic efficacy as an existing drug, should be given differential treatment while fixing the price.
The report stated that the prices for patented drugs are high and beyond the reach of general masses of India even after factoring in Gross National Income (GNI) and purchasing power parity (PPP). For instance after price is weighted in terms of per capita GNI, If Sunitinib (25mg capsule) costs Rs 23,462 in India its cost in France and Australia would be Rs.17,541 and Rs.13,430 respectively.
The proposal stated that the Government should expand the coverage of Health insurance. Currently, Health insurance coverage by Govt. and other private operators is around 23% and majority of population spend money from their own pockets for medicare expenses. In addition the committee recommended price negotiation methodology for procurement of patented medicines by Govt. and health insurance companies.
The committee observed that “Once a Government appointed Committee goes for some form of price regulation of patented medicines and fixes a price of the medicines which is accepted by the government, this fixed price would be supposed to be reasonable and hence it won’t be possible for the Government to use the tool of Compulsory License on the ground of reasonableness of the price of the patented medicine”
Although this would undermine CL provisions, compulsory license could still be granted if any one of the other criteria is met i.e. “reasonable requirements of the public have not been satisfied” or “invention was not worked in the territory of India.”
Also, as reported here Sakthivel Selvaraj, a public health activist with the All India Drug Action Network (AIDAN) opines “If the prices have to be decided by way of negotiations, why should the government get involved at all. Hospitals can individually negotiate prices when they purchase in bulk and get up to 20% discounts. Besides when the government starts fixing the prices, cases for compulsory licensing will also get weaker.”
AIDAN supported by several NGOs had filed a PIL in the Supreme Court in 2003 (almost a decade ago) seeking Govt. intervention to keep the prices of essential drugs within the reach of common man.The PIL had come up for hearing several times and in the last hearing AIDAN’s counsel expressed apprehension that National Pharmaceuticals Pricing Policy drafted in 2011,may lead to a steep increase in drug prices. No one has heard about the PIL since then.
With the Govt. deliberating the issue of CL licenses for 3 more anticancer drugs this proposal on pricing of patented drugs could have a huge impact.
While we are on the topic of pricing, Shamnad’s thought provoking article on pharmaceutical pricing is an excellent read.