Cheap medicine myth busted

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  • Published 7.03.14

New Delhi, March 6: The rules for price caps on 348 medicines imposed by the central government last year provide drug companies “escape routes” and promise little relief to consumers, a report released today has warned.

The report from the Public Health Foundation of India (PHFI), an academic institution, has also cautioned that the Drug Price Control Order (DPCO) rules will encourage the growth of irrational combinations of drugs that remain outside price control.

PHFI researchers had in November last year presented preliminary results of their study at a conference, indicating that the DPCO covers drugs that account for only 17 per cent of the annual domestic sales worth Rs 72,000 crore.

The new report, described as a comprehensive analysis of the DPCO, has estimated that absolute decrease in the money spent on drugs in India is less than 2 per cent of baseline sales before the price caps came into effect.

“The price control rules do not seem to be the result of genuine intentions to provide relief to consumers,” said Malini Aisola, a research associate and health policy analyst at the PHFI, and one of the authors of the report.

The PHFI analysis has found that 18 of the top 20 new drug formulations — ranging from anti-diabetes and anti-cancer medications to vitamins — introduced by pharmaceutical companies in India over the past two years are outside price control.

The top-selling new brand, based on 2013 data from the pharmaceuticals industry, was a fixed dose combination of sitagliptin and metformin, used to treat diabetes, but outside price control. Examples of other drugs outside price control are those used to treat cancers, formulations containing vitamin D and calcium, a drug used to treat skin warts and drugs against HIV.

“We expect this trend to only grow — companies are likely to migrate to formulations not covered by the DPCO,” Aisola said. “The meagre 2 per cent relief that consumers seem to be getting now could shrink even more.”

A network of health activists called the All India Drug Action Network has challenged the DPCO in the Supreme Court, contending that price caps should be imposed by taking into account the actual production costs of drugs instead of market prices as the DPCO does.

Sections of the pharmaceutical industry and government officials favouring the current form of the DPCO had said in the past that a shift to price caps based on actual production costs would hurt the pharmaceutical industry.

The PHFI report has also cautioned that the DPCO “paradoxically” punishes drug companies that have priced their products below price caps by forcing them to freeze their prices.

“This seems designed to kill the small and medium pharma industry,” said Aisola. “These rules punish those who charge less than the ceiling prices. Small companies often don’t have deep pockets and could be badly hurt by increases in raw material prices or currency fluctuations.”

“There is nothing surprising,” said Chandra Gulhati, editor of the Monthly Index of Medical Specialities, India. “But I don’t think the report’s release has been timed well,” said Gulhati. “Who in the government is going to listen to this at this point of time?”