Forty four US States have filed cases against a slew of pharma companies in the US district court in Connecticut, for alleged price collusion in generic medicines. US-based Teva Pharmaceuticals has been accused of colluding with about 20 competitors for ramping up prices on 86 drugs — a number of them by over 1,000 per cent — between July 2013 and January 2015.

This includes top Indian companies such as Taro Pharma (a subsidiary of Sun Pharma), Wockhardt, Dr Reddy’ Laboratories, Aurobindo Pharma, Glenmark Pharmaceuticals, Lupin and Zydus Pharma. The petition describes the general market behaviour: “Rather than enter a particular generic drug market by competing on price in order to gain market share, competitors in the generic drug industry would systematically and routinely communicate with one another directly, divvy up customers...and then maintain anticompetitively high prices.” The petition cites records of phone conversations and other documents to make its case. The question, of course, is whether this is happening in India.

In its website, the NPPA mentions 1,991 cases of overcharging between August 1997 and March 31 this year, with the amount due estimated at ₹6,285 crore, of which just 14 per cent has been realised, and over ₹4,000 crore dues are under litigation. With DPCO 2013 moving away from cost-based determination of what prices should be, the focus now is more on retailer margins. Inordinate margins on manufacturing should be curbed, while bringing more drugs under price control. Information flows on the cost structure too should be improved in the public interest. The NPPA should be accessible to consumers, who can draw its attention to episodes of sharp price rise in commonly used medicines.

While measures by the Centre and some States to step up public procurement are laudable, it is important to increase public spending in health in all areas to reduce overall costs.

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