The Hindu Business Line : To make drugs affordable — Pharma companies moot differential pricing

THE big daddies of the domestic drug industry have tried to meet the Centre's efforts to make medicines affordable to consumers by suggesting differential pricing.

For consumers below poverty line (BPL), the Government could procure generic drugs directly from the manufacturer, the Indian Pharmaceutical Alliance (IPA) has suggested in its week-end meeting with the task force on affordable medicines.

Wockhardt's Mr Habil Khorakiwala, Sun Pharma's Mr Dilip Shanghvi, Dr Reddy's Mr Satish Reddy, Torrent Pharma's Mr Sudhir Mehta, besides representatives from Ranbaxy and Glenmark participated in this meeting.

The Government already subsidises medicines in Government hospitals, for instance, but the IPA official pointed out that the Centre needs to formalise its procurement and distribution mechanism, besides plugging the leaks.

Procuring directly from the manufacturer would make medicines almost 60 per cent lower than the market price, the representative said, provided the Centre waived taxes on these supplies - including excise duty, octroi and value-added tax.

Taxes paid to the Government and margins to the trade add up to about 60 per cent of the medicine cost and if waived, this benefit gets passed onto the BPL consumer, the IPA representative said.

For consumers outside the BPL category, competition is the best check on prices, the official pointed out. The IPA has suggested a price monitoring of medicines, as opposed to price control.

The task force on affordable medicines was set up at the behest of the Prime Minister's Office and a recent discussion paper circulated by it had suggested that doctors prescribe medicines sans brand-names in select segments.

The Centre's aim was to also nip unethical promotions by drug companies to doctors.

But the proposal did not cut much ice with the drug companies for various reasons.

A representative with the Indian Drug Manufacturer's Association said that it would shift the decision making from the doctor to the trade. While a doctor may have a medical consideration in prescribing a medicine, the trade will only be interested in the margins they get, he observed.

Another representative with a multinational drug company pointed out that drug companies support their medicines by providing literature on these drugs to the doctors.

This could stop, if me-too products end up getting the benefit of the research work put behind the original medicine, he said.

Since the country has about 20,000 drug companies making medicines, the task force also suggested a quality certification on the lines of the ISI or Agmark seen on other products such as food. But a task-force representative told Business Line that the initiative needs to be implemented by the Health Ministry through its existing regulatory mechanism. The feasibility was being examined, he said.

A representative with an Indian drug company nursing plans for the export market said that domestic manufacturers were investing in research and making their mark in the global market.

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