Will NLEM balance patient interest with sector growth?

The “best-fit list” is how the latest version of the National List of Essential Medicines (NLEM) is defined by the government committee that worked on it. But will it indeed be the “best fit” in terms of walking the tightrope between patient interest and industry growth?

That’s a call that will be made much later this year depending on the implementation of the revised NLEM and its after-effects.

The latest version of the NLEM, unveiled late December, increased the number of essential medicines on the list from the original 348 to 376.

A total 106 medicines were added and 70 deleted, to arrive at the list. (Some medicines listed twice are now counted as one, the report clarifies on the mismatched numbers.)

As 2016 gets underway, the industry awaits the revised price notifications from the National Pharmaceutical Pricing Authority (NPPA).

The last time the industry had to revise medicine prices, after the Drugs (Prices Control) Order (2013) was notified, there was much heartburn.

A logistic nightmare revealed itself when the NPPA asked companies to take back existing stocks and roll out new medicine stocks with revised prices, in a limited time.

The issue eventually landed up in court. Even as fresh price notifications are awaited, the pharmaceutical industry also looks forward to the annual price increase it is allowed in April, pegged to wholesale price index.

Net impact But there is some anxiety in the industry on the net impact of this exercise, when viewed against the Centre’s policy direction to control and regulate medicine prices.

Adding to the industry’s anxiety is the increasing price of raw materials as well, says industry veteran Daara Patel.

For an industry expecting to be gradually freed from price control (with the Centre just monitoring irrational price movements), this is “not a happy state”, says Patel. “We are moving in the reverse direction,” he says, pointing to all drugs in the NLEM being in the Centre’s price grip.

Patel represents the Indian Drug Manufacturers’ Association (IDMA), a platform for medium and small drugmakers.

“The frequent changes on the NLEM cause a high degree of uncertainty and the pharmaceutical companies cannot strategically make their business plans,” observes Ranjit Shahani, former president of the Organisation of Pharmaceutical Producers of India, a platform for large and foreign drug companies. Ideally, the changes should come from the beginning of the financial year and be effective for the batches made from the day of the announcement, he points out.

Nevertheless, the revised NLEM has something to cheer, in that it is “cleaner, has little ambiguity, is not interpretative and leaves little discretionary power with the NPPA”, says DG Shah of the Indian Pharmaceutical Alliance, representing large domestic drugmakers.

Consistent methodology While some industry associations estimate that the present list covers about 18 per cent of the estimated ₹1 lakh-crore domestic drug industry, Shah pegs it at 22-24 per cent.

The methodology used to include and delete medicines is transparent and consistent, he says, adding that companies would benefit from both actions. “It is very rare that a company will be hit on both sides,” he says.

But even though the NLEM is looking to address cancer, hepatitis C and HIV drugs, for instance, the changes will be visible only once the Centre issues its price notifications.

And those details are something that pro-patient groups and industry will be watching with great interest.

jyothi.datta@thehindu.co.in

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