India Is Said to Stall Drug Price Proposal as Industry Balks
India’s proposal to remove brand names from generic medicines to curb drug prices has stalled.
(Bloomberg) -- India’s proposal to curb drug prices by stripping generic medicines of their brand names has stalled after the plan faced pushback from the country’s pharmaceutical companies, according to people with knowledge of the discussions.
The Draft Pharmaceutical Policy circulated last summer by the Department of Pharmaceuticals has made no progress since opposition emerged from the industry and among some government agencies, according to the people, who asked not to be identified as the discussions are not public. While the department has been ordered to redraft the policy, a new one is not expected through the rest of the current government’s term ending in 2019, one of the people said.
Officials at the Department of Pharmaceuticals, responsible for drafting the policy, did not offer comment despite multiple emails and phone calls.
The government’s draft policy also called for sweeping changes to improve India’s manufacturing standards and enforcement, increased oversight of the drug price regulator and new rules covering how drugs are marketed. The Indian Pharmaceutical Alliance and other industry bodies argued these changes would increase drug prices, cost jobs and hamper innovation.
Industry Win
The push to curb the branding of generic formulations was a risky one for India’s local drug industry, which last year derived about 80 percent of its $30 billion revenue from so-called branded generics. The shelving of the policy is a win for drug makers, including the local unit of Abbot Laboratories and Sun Pharmaceutical Industries Ltd., the two with the biggest domestic market share.
Shares of Abbott India Ltd. climbed as much as 2.8 percent in Mumbai on Friday, Dr. Reddy’s Laboratories Ltd. rose as much as 1 percent, and Sun Pharma declined as much as 1.4 percent. The benchmark S&P BSE Sensex gained 0.2 percent as of 3 p.m.
Around the world, generic drugs -- cheaper copies of brand-name medicines that have lost patent protection -- are key to keeping health-care costs low. India has emerged as the biggest exporter globally of generics, and the country’s generics have won favor with health authorities from the U.S. to Japan. But in their home market, the Indian pharmaceutical companies often sell those same copies under their own brand names and charge more for them.
Generic drugs stamped with brand names command a 96 percent premium over equivalent generics sold at state-run pharmacies, the government said in response to a query in parliament earlier this month.
Sun, the country’s largest drugmaker, gets 26 percent of its global revenue from branded generics in India. A spokesman for Sun Pharma did not immediately have comment on the company’s stance on the government proposal, while an Abbott spokeswoman declined to comment.
Modi Target
The industry argues that in a weakly regulated market like India, where the regulator can’t guarantee the quality of all the medicines sold, and brand names on generic drugs are markers of quality valuable to both doctors and consumers. Critics say they are a way to charge more to people who don’t know any better.
The industry argues that in a weakly regulated market like India, where the regulator can’t guarantee the quality of all the medicines sold, and brand names on generic drugs are markers of quality valuable to both doctors and consumers. Critics say they are a way to charge more to people who don’t know any better.
Prime Minister Narendra Modi’s government last year seized on reforms to the country’s pharmaceutical market, particularly the domestic industry’s practice of branding generic drugs, as the best way to boost health care access for the poor. India’s public health spending is among the lowest in the world.
Modi targeted the branded generics market in April when he said that doctors should prescribe a drug by its generic name rather than a brand. The draft policy advanced on this idea by proposing to prohibit generic drugs from being sold under a brand name, instead the packaging would only bear the chemical name and the name of the manufacturer.
To contact the reporters on this story: Ari Altstedter in Mumbai at aaltstedter@bloomberg.net, Abhijit Roy Chowdhury in New Delhi at achowdhury11@bloomberg.net.
To contact the editors responsible for this story: K. Oanh Ha at oha3@bloomberg.net, Subramaniam Sharma
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