The government has proposed that all patented drugs be taken up for compulsory price negotiations prior to the grant of exclusive marketing rights. The move, if finalised, will affect all drug MNCs planning to introduce patented drugs in the country.
Failure of such negotiations may lead to either compulsory licensing or price control, as permissible under the trade-related intellectual property rights.
There are also proposals to de-brand select drugs to "establish the role of true generics" and create countervailing forces -- such as bulk procurement and retailing of medicines by public agencies, cooperatives and consumer organisations -- as an antidote to the market power of drug companies.
The proposals have been mooted in a note circulated by a task force constituted by Prime Minister Manmohan Singh to look into the pricing of pharmaceuticals.
The taskforce, chaired by advisor to the Planning Commission Pranob Sen, hasn't stopped at that. It notes that bringing all patented drugs under price negotiations will limit future price increases. However, it leaves open the question of further moderation of prices of existing essential drugs. It has therefore proposed a price monitoring mechanism.
As the reference price, it has suggested the prices quoted in bulk procurement by the government and its agencies. Since such prices are likely to vary from order to order and location to location, an average would need to be used. In addition, 50 per cent margin can be allowed to cover trade margins and distribution costs.
Coming down hard on the generics, the note says they have failed to serve consumers not having much choice in pharmaceuticals. Drugs sold on the basis of the name of the active pharmaceutical ingredient name are practically non-existent, it says, pointing out that the "so-called" generics in India are pushed directly through retailers rather than doctors' prescriptions. Consequently, they provide huge trade margins.
To make matters worse, even these generics typically have specific brand names and not the name of the API. "The state of affairs tends to obscure the fact that true generics have no role at present in the Indian drug scene. In order to bring about consumer choice, it is necessary to establish the role of true generics through a process of compulsory de-branding of selected drugs," says the note.
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