The government is scrutinising prices of vaccines and drugs used to treat cancer, viral infections, asthma, tuberculosis and malaria after having slashed prices of expensive anti-diabetic and cardiovascular medicines.
"We identified eight therapeutic categories where the incidence of disease is high and medicines are widely used. Notifications have been issued for anti-diabetic and cardiac drugs. Others are in process. Wherever the maximum retail price of a brand of a particular formulation exceeds 25 per cent of the simple average price, it will be capped at 25 per cent," said a National Pharmaceutical Pricing Authority (NPPA) official.
The regulator last week capped the prices of 108 formulation packs of 50 anti-diabetic and cardiovascular medicines. Selling prices of some of them were cut by up to 35 per cent. An official source said the price cuts for anti-cancer and anti-retroviral drugs could be steeper because profit margins were higher in these medicines.
The regulator has invoked a rarely used provision under the Drugs Price Control Order to lower prices of widely used medicines in the public interest. It is of the view the inter-brand price difference even for generic medicines shows market failure. The move is aimed at levelling price differences where medicines are equal in therapeutic value.
Multinational drug makers like Sanofi, AstraZeneca, Merck, Pfizer and Abbott will be affected most by the price caps. These will also hurt major Indian drug makers like Cadila Healthcare, Ranbaxy, Dr Reddy's Laboratories, Lupin, Cipla and Torrent.
Indian Pharmaceutical Alliance (IPA), which represents 18 domestic drug makers, has written to the pharmaceutical department secretary for intervention in the matter. Secretary-General D G Shah said, "We have asked the government to keep the order in abeyance. It will never stand the scrutiny of a court. The regulator's decision amounts to modifying the policy."
Prices of 348 essential medicines are under direct price control of the government. With the latest NPPA order, the total market of cardiac medicines under price control, including earlier ones, stands at 58 per cent, while 21 per cent of the anti-diabetic drug market faces price caps. Around Rs 5,500 crore of the drug market will be affected, with prices being reduced from 10-15 per cent to 35 per cent. The average reduction is around 12 per cent. Drugs that immediately become cheaper include Gliclazide, Glimepiride, Sitagliptin, Voglibose, Amlodipine, Telmisartan and Rosuvastatin, Heparin and Ramipril.
However, the total impact of price controls will be clear once the regulator fixes price in all eight categories it is examining.
The drug sector has opposed the move. "The NPPA's notification goes beyond the mandate of DPCO 2013, which addresses pharmaceutical pricing based on the 'essentiality' criteria and clearly states the 'intention of the policy is to bring the essential medicines under price control and not to control the Indian pharmaceutical sector," said Shailesh Ayyangar, president of the Organisation of Pharmaceutical Producers of India.