Price cap likely for 348 drugs

In March 2012, when Natco Pharma Ltd offered to sell its anti-cancer medicine, Nexavar, at rock bottom prices, more than one lakh cancer patients in India heaved a sigh of relief.  Thanks to the Indian Comptroller General of Patents, Designs and Trademarks, which ruled in favour of Natco and granted a compulsory licence to manufacture and sell a generic version of multinational firm Bayer Corporation’s patent protected—Nexavar—at less than 90 per cent of what Bayer was offering.

While Bayer’s 120-tablet pack is priced Rs 2,84,428, Natco priced it `8,800. Following suit was Cipla, which slashed the price from `28,000 to `6,800. “All life-saving drugs should be made affordable to the common man,” reasons Bhaskar Narayana, Finance Director & CFO, Natco.

Nexavar’s differential pricing by multiple companies, perhaps, signifies the government’s intent to bring all 348 medicines in the National Essential Medicines List (NEML) under price control to ensure they are available at reasonable prices to needy patients.

The first NEML list covering 76 medicines was prepared in 1996. It was later revised in 2003 (covered 354 drugs) and subsequently in 2011 covering 348 medicines (after deleting some drugs listed in 2003).

Now, an inter-ministerial panel headed by Agriculture Minister Sharad Pawar is attempting to cap prices of all 348 essential medicines and is holding discussions with all the stakeholders to determine a pricing mechanism. “The intent is good and will benefit the common man. But even after months of deliberations, there has been no consensus so far to finalize the pricing,” says P V Appaji, Executive Director, Pharmaexcil.

The proposed price regulation is expected to reduce costs to consumer, improve the quality of drug management, information, monitoring and utilization. Currently, only 74 of the 348 essential drugs are under price control and represents only 20 per cent of the total `60,000 crore pharma market.

A section of the industry cautions that if the government succeeds in regulating all the 348 essential medicines (representing 60 per cent of the market), there’s an impending threat that companies may cease production of some of the drugs as they may not fetch enough profits.

“In the past, companies have abandoned marketing 27 of the 74 drugs under price control as they didn’t find them profitable,” says an official from a pharma company.