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Does the pharma sector need more regulation?
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January 23, 2008
The industry is under a cloud with the process of patent grants under question and a Group of Ministers examining pricing issues.

Leena Menghaney
India co-ordinator
Campaign for Access to Essential Medicines (MSF)

"With the price control list reducing, prices are spiralling - Roche's drug for Hepatitis C costs Rs 200,000 for a six-month treatment"

As a medical aid organisation providing treatment in developing countries, Medecins Sans Frontieres (MSF) is often faced with the issue of the unaffordability and unavailability of essential medicines.

In fact, in the treatment of HIV/AIDS, these concerns are raised not only by our doctors but also by patients and governments themselves. Pharmaceuticals is a sector of vital importance for any government as it is directly related to the public right to access affordable medicines (an essential commodity). It is regulated and monitored in Canada, Europe and, for the past three decades, in India.

In India, access to affordable medicines has long been dependent on government regulation of the patent system and pricing of essential drugs in the domestic market.

This has made India self-reliant in the manufacture of drugs, and not only benefited Indian patients but also increased access to essential medicines for patients in developing countries. In the last decade, however, India has been slowly changing its policy of government regulation of the pharmaceutical sector. While measures to control the prices of drugs have decreased drastically in the last decade, a product patent regime that establishes a market monopoly to sell a patented drug has been implemented in 2005.

Therefore, Roche remains unchecked when it prices peginterferon alfa-2a (Pegasys), a new generation Hepatitis C therapy patented in 2006, at about Rs 200,000 ($5,000) per six-month treatment course.

The excuse - the National Pharmaceutical Pricing Authority cannot regulate the prices of essential medicines, unless they are included in the price control list of essential medicines. The list, of course, is in decline and has not been reviewed in the past few years.

More recently, a Task Force was set up for 'Making Available Life-saving Drugs at Reasonable Prices' in April 2005. Pronab Sen, member of the Planning Commission, submitted the Task Force report to the Department of Chemicals & Petrochemicals. Since then the government's policy document on pharmaceutical regulation and pricing, the 'National Pharmaceutical Policy, 2006' has been under review. In the meantime, essential drugs continue to be patented and become unaffordable.

To address such pricing barriers to treatment, patients and public interest groups have been advocating for a revival and reform of the government's policy on price monitoring and regulation. They believe that a number of strong measures to make drugs affordable and available can be immediately taken which include price control, revival of public sector manufacturing and issuance of compulsory licenses under the patent law.

Such measures and government regulation are not uncommon in other countries as well. While Canada negotiates the price of medicines at the time of marketing approval, Thailand and Brazil have invoked compulsory licensing provisions to make drugs more affordable.

Gajanan Wakankar
Executive Director
Indian Drug Manufacturers' Association

"Reducing price control spurred growth in production, and so, prices here are the lowest in the world. Don't reverse this."

In the case of patents, our law is adequate. The necessity is to hold it and resist the attempts of MNCs, which are trying to change the patentability criteria to their advantage. Although our law can be made even more people-friendly by simplifying compulsory licensing and pre-grant opposition procedure by using all available TRIPS flexibilities, we do not want to go in for any change at this stage till we have sufficient experience of the law as it stands. Application procedure and records, however, need to be digitised to make patent examination easier and quicker.

Indian drugs have acquired a good reputation the world over. This is evident from the fact that our exports are rising, that too to developed countries. We have the largest number of firms with US FDA registration and this shows that our quality is of the highest grade. Our exports of drugs and pharmaceuticals have risen from almost nil in 1960 to Rs 31,000 crore in 2006-7.

The current R&D spend, which is 2-3 per cent of the turnover, is expected to go up to 5 per cent by 2010. Quality-wise, there is no let-up and new regulations such as the new Schedule 'M' ( good manufacturing practices), Schedule 'Y' (clinical trials regulations) and the latest regulations on 'good laboratory practices' have been accepted by the industry.

However, the pricing issue in pharmaceuticals is causing worry. It is well-known that due to progressive de-control in this industry, our production of drugs and pharmaceuticals has grown tremendously. From a meagre Rs 5,700 crore (Rs 57 billion) in 1991-92, production has gone up to Rs 68,598 crore (Rs 685.98 billion) in 2006-07.

Indian prices are already low, perhaps the lowest in the world. For example, a pack of 10 tablets of 500 mg Ciprofloxacin (an antibiotic) is available in India for less than Rs 25 as against an equivalent of 90 in Pakistan and 480 in the US. This has happened because the span of  price control has been progressively reduced from 345 drugs in 1979 to 74 today. And the result is an all-time high growth rate with the lowest possible prices and best quality.

With this background, is it not surprising that the government is now insisting on cost-based price control and increasing regulation in the name of reducing prices of medicines? We are not against increasing efficiency which results in lower costs and the resultant lower prices, but the government's insistence on bringing them down forcibly through regulation  may actually kill the proverbial golden goose. This is also against the present trend towards liberalisation and de-control the world over.

In conclusion, I would like to emphasise that the government should only try to monitor prices to check any abnormal price rises, rather than imposing a blanket cost-based price control. A policy of such wide-ranging price control would result in a reduction in R&D and investment, and affect the industry adversely.

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