'New pharma policy alone can't make healthcare affordable'

The new National Pharmaceutical Pricing Policy approved by the Indian government and which will come into effect within 45 days has drawn mixed reactions from the pharmaceutical industry. While many have hailed the policy, they parallelly said that reducing prices of drugs alone will not be enough to make healthcare affordable.

The new policy envisages to regulate the prices of a little over 650 essential medicines in India, an increase over the 74 bulk drugs and their formulations that are currently under price control. "Prices are expected to drop by 20-25 per cent across 27 areas, while prices of some of the cancer drugs may fall by upto 80 per cent," industry analysts noted.

Kiran Mazumdar Shaw, CMD, Biocon: "Any move that makes healthcare affordable for patients is welcome, but drug price controls aren't the only solution. "The government can't expect the industry to bear the full burden of making medicines affordable, while abdicating its responsibility towards public health. The government should speedily come out with a policy for universal healthcare coverage to address the needs of the poor," Ms Shaw said.

According to her, the pharma industry is a highly regulated one and drugs account for only 15 per cent of total healthcare costs, which means there are other costs that also need to be regulated. "Apart from drug price control, the government needs to also address other more serious issues like the sale of spurious and sub-standard drugs in the country. The price ceiling formula should have been based on a weighted average of prices and not a simple average as has been done. The simple-average formula fails to create a level playing field between integrated companies with end-to-end infrastructure and others that are virtual companies that hardly have any overhead costs. The government in fact, needs to incentivise investment in manufacturing and R&D," she urged.

The move to regulate prices, comes at a time when the margins of the Indian pharma industry are under pressure owing to an uneven playing field in the face of imports, rising costs and competition. According to Sujay Shetty, Leader Pharma Life sciences, PwC India, the impact on the pharmaceuticals industry revenues will be limited for around 12-18 months. Post which, the product portfolio will evolve to overcome the dip in the revenue.

"For consumer this pricing policy would help, to some extent, with the issue of affordability. Overall this is a solution which the Industry and Government can live with as opposed to the alternative price control formulas based on cost of production among others," Shetty said.