E-DRUG: India lifts price caps on innovative and orphan drugs; major fillip for Big Pharma
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The PharmaLetter 04-01-19
The Indian government has decided to keep its hands off the pricing of new
drugs. New legislation announced on January 4, 2019, is set to remove price
restrictions on new and innovative drugs developed by foreign
pharmaceutical companies for the first five years, reports The Pharma
Letter's India correspondent.
In a rider, the government notification states the provisions of the Drug
Price Control Order (DPCO) 2013 will not apply to drugs for treating orphan
diseases as decided by the Ministry of Health and Family Welfare.
The move is set to give Indian patients access to drugs that are currently
only available outside the country. These include orphan drugs that are
used for treating rare medical conditions.
Drug price control has been a source of considerable agony to Big Pharma,
which has repeatedly maintained that price caps on drugs, as instituted in
India, though flowing from a larger public interest perspective, has the
power to throttle the growth of the industry.
Multinationals have also said price controls could limit the availability
of new life-saving drugs to the public at large.
Several litigations on the issue have been pending in the courts, with
patient groups complaining about high drug costs and the need for the
government to make highly expensive medicines for life-threatening
conditions more affordable to the general public.
Orphan drugs like Myozyme (alglucosidase alfa) and Fabrazyme (agalsidase
beta), both from Genzyme, which are used in the treatment of rare genetic
diseases, are among a host of medicines that are to be kept out of price
control.
The Department of Pharmaceuticals, under the Ministry of Chemicals and
Fertilizers, has been looking to bring in amendments to the 2013 DPCO.
In a bid to incentivize innovation, the new Indian government notification
says new drugs patented under the Indian Patent Act are to be exempted from
the price control order for five years from the date of their marketing.
The DPCO fixes the prices of scheduled formulations and monitors maximum
retail prices of all drugs, including all non-scheduled formulations.
Escalating costs
In order to make drugs more affordable and accessible to patients, the
National Pharmaceutical Pricing Authority (NPPA) has been capping the price
of essential drugs, which has created turmoil in the pharmaceutical sector,
with many drugmakers witnessing a hit on their profit margins.
Officials say the most challenging part in the fight against orphan
diseases is access to affordable treatment. Prices are usually very high,
with some costing as much as $400,000 annually.
Most of these drugs are rarely available in India, and Indian patients
suffering from rare diseases have to import these drugs directly.
Prices tend to vary, officials added. For example, the cost of treatment
with enzyme replacement therapies may reach more than $150,000 per
treatment per year. Officials add the affordability of orphan drugs has
become a major issue for payers and is thus a strong driver of tensions
between different stakeholders.
High cost of other medicines too has been an issue. Anxiety is a common
symptom seen in various psychiatric disorders such as phobia, OCD and panic
disorder for which anxiolytic drugs are commonly prescribed.
In a study aimed at assessing the price variation amongst different brands
of anxiolytic drugs in India, a massive variation in prices was revealed.
Out of 26 single drug formulations analysed, maximum percentage variation
in prices were seen with diazepam (5 mg) 371.42% followed by clonazepam
(0.5mg) 350%, lorazepam (1mg) 328.57%, alprazolam (0.25mg) 320% and
clobazam (20mg) 318.18%.
Out of seven combination drug formulations analyzed, maximum percentage
variation in prices were seen with the combination of chlordiazepoxide +
amitriptyline (10+25mg) 230.07%, followed by trifluperazine +
trihexyphenidyl (5+2mg) 150%.
Officials also cited internal reports to the Health Ministry which show
that there has been a decline in R&D, resulting in fewer new introductions
in India. Post DPCO 2013, the average number of new introductions in DPCO
molecules has declined, which also indicates increasing concentration and
reducing competitive intensity.
Domestic need
Though the new legislation is set to provide a major fillip to
multinationals operating in India, the government has also decided to give
preference to domestically-produced drugs for public procurement.
Aiming to push 'Make in India" in the pharmaceuticals sector, the
Department of Pharmaceuticals (DoP) has notified another policy measure.
For formulations that are not manufactured in India, the minimum local
content has been capped at 10% in 2018-19.
Preference for public procurement programs in the pharmaceutical sector is
to be given to domestically-produced drugs with minimum of 75% local
content in the ongoing fiscal, which will go up to 90% by 2023-25, the DoP
said in a notification.
The move is likely to benefit the micro, small and medium enterprises
(MSMEs) in the drug sector.
The Department of Industrial Policy and Promotion (DIPP) had identified DoP
as the nodal department for implementing the provisions related to goods,
services or works related to the pharmaceutical sector in promoting '˜Make
in India'.
The DoP said for formulations that are not manufactured in India, the
minimum local content will be 10% in 2018-19.
An order by the DoP said that this will go up to 15% in 2019-21, 20% in
2021-23 and up to 30% in 2023-25 for formulations not manufactured in the
country.
The DoP further said "purchase preference shall be provided by all
government procuring entities to local suppliers of pharmaceutical
formulations in various dosages forms."
High drug prices have been an issue not just in India, with a new report
suggesting that in 2019, drug pricing pressure from regulators, patients,
politicians and payers is set to remain and aggressive negotiation tactics
to drive down drug prices are expected.
GlobalData, a leading data and analytics company, in its annual outlook
report shows that 51% of global industry respondents surveyed by the
company insist that drug pricing and reimbursement constraints will have
the greatest negative impact on the pharmaceutical industry this year.
Ruth Lopert
Health Policy and Management
George Washington University
Ruth Lopert <ruth.lopert@gmail.com>