[Commons-Law] Drug firms in a fix over govt`s new pricing plan

[Prashant Iyengar]

http://www.business-standard.com/common/storypage_c.php?leftnm=10&autono=320556
Drug firms in a fix over govt`s new pricing plan
Joe C Mathew / New Delhi April 19, 2008

Multinational pharmaceutical firms planning to introduce
patent-protected medicines in the domestic market may find it
difficult to price their products at will.

A government committee is looking at going beyond mere economic
considerations and recommend an essentiality-linked pricing structure,
it is learnt.

A government committee is looking at going beyond mere economic
considerations and recommend an essentiality-linked pricing structure,
it is learnt.

The move may upset the industry's plans as it favours the system of
reference pricing under which the Indian prices will be an average of
the prices at which the multinational firms sell the same product in
developing nations with similar economic level or purchasing
capacities.

Experts have already warned against such a system and advocated the
need to consider the "essentiality" factor.

According to the experts who were part of a recent conference
organised by the National Pharmaceutical Pricing Authority (NPPA),
reference price system may not truly reflect the purchasing power of
the patients of that country.

They caution about the possibility of the companies putting high
maximum retail price even in low-income countries with
country-specific agreements to sell the medicine at discounted rates.

"I would not support a reference pricing system where you pick up the
prices of five countries on the same economic level and arrive at an
average price. These prices may not be indicative of the actual
purchasing capacity of the patients of that country," said Richard
Laing, medical officer (policy, access and rational use), World Health
Organisation.

"There are several methods to fix the prices of medicines. All OECD
(Organisation for Economic Coopeartion and Development) countries,
except the US, regulate patented medicine prices. The Australian
model, where a Pharmaceutical Benefits Advisory Committee (PBAC)
evaluates the merit of each new medication before assigning it a
price, perhaps has much to offer. While marketing approval for the
drug is given by the drug regulator, the prices of the medicines are
recommended by the PBAC," Laing added.

According to experts, Germany is another country where prices of
patented medicines are decided on the basis of the therapeutic
importance of the medicine.

"This is hugely unpopular with the industry as many new drugs do have
effective alternatives in that country and the authority may not
approve high prices for such medicines," said an expert.

The official committee, set up by the Department of Chemicals and
Petrochemicals, is in the process of identifying the best model for
the country. The committee, which has gone through the price
regulatory systems in countries like Germany, Canada and South Africa,
is scheduled to meet on April 29.

The timing of the meeting is also significant as an interministerial
committee headed by Agriculture Minister Sharad Pawar is expected to
take a final view on the new national pharma policy, which includes a
suggestion for a price control mechanism for patented medicines.