The new National List of Essential Medicines (NLEM), notified by the National Democratic Alliance (NDA) government on December 25, 2015, has added 106 drugs to the list and removed 70 from it. In contrast, the previous NLEM —prepared under the United Progressive Alliance (UPA) government in 2011 — added only 43 drugs and removed 47.
As drug pricing control policy is made according to NLEM, it is estimated that the pharma sector will take a hit of Rs 6,000 crore this year.
This is one of the many steps which shows the NDA government’s eagerness to cap drug prices is way more than the UPA government. “The previous government had kept just 400 drugs under pricing control.
On the other hand, Modi government has added another 450 drugs under the pricing control in 18 months, taking them to 850” said Ananth Kumar, Minister of Chemicals and Fertilizers, on Wednesday.
Last November, the Prime Minister's Office (PMO) expressed concern to the Department of Pharmaceuticals over exorbitant prices of unbranded generic drugs, which companies sell directly to distributors. After setting a committee under one of its joint secretaries — which has since submitted its report — the department is now planning to cap the prices this month itself.
“It is true that in the unbranded generic segment, the traders/middlemen have been making huge profits. There are reputable as well as dubious companies working in this area of production.
As these drugs are generally aimed at poor people, the government is moving in the right direction by capping the middlemen's prices - which at present are almost similar to branded generic prices in some cases,” said Sujay Shetty, leader (pharma), PwC India.
In July 2014, National Pharmaceutical Pricing Authority (NPPA), which formulates the drug pricing control policy, had issued guidelines to bring 106 non-NLEM drugs — used to treat cardiovascular diseases and diabetes — under the pricing control, calling them ‘essential’. However, NPPA withdrew these internal guidelines within two months, giving a major relief to the pharma sector, which believed considering non— NLEM drugs as ‘essential drugs’ could bring the entire pharma sector under pricing control.
“The government is truly trying some piecemeal measures such as these to make drugs affordable. However, the new NLEM is unlikely to give any major benefit to the patients as many life-saving drugs are still not included in it,” said a Delhi-based pharma expert.
In the recently notified NLEM, the government has added nine and 14 new anti-tuberculosis medicines and anti-viral medicines, respectively. Moreover, 25 new anti-neoplastic medicines, immunosuppressives and medicines used in palliative care have also been added. As a result, in the new NLEM, there are 384 drugs compared with 348 drugs in the old one.
“Due to new NLEM, a market of six to seven thousand crores - out of the total Indian Pharmaceutical Market of around Rs 90000 crore - would be affected . However, as the government is looking at the medicines from affordability and inflationary point of view, it is quite understandable that they have added more drugs to the list,” said Shetty.
“The current scenario is unique with an increase in the burden of non-communicable diseases and resurgence of certain communicable diseases either due to emergence of drug resistance, like in tuberculosis and malaria, or occurrence of certain co-infections like HIV,” said the committee which recommended the NLEM.
According to an analyst, the impact from NELM on the Indian pharmaceutical sector is estimated to be around Rs 6,000 crore. “Five to seven per cent of the companies would be affected. However, as the government is looking at the medicines from affordability and inflationary point of view, it is quite understandable that they have added more drugs in the list,” he added.