India brings diabetes, heart-disease drugs under price control

The government has imposed new price controls on 37 new drugs and 13 new dosage forms used for the treatment of diabetes and heart-disease, broadening the scope of medicines subject price controls amidst a skyrocketing of essential drugs and medicines across the country.

The government's move to expand the National Pharmaceutical Pricing Authority's ambit is expected to effectively cut the prices of over 100 drugs by 10-35 per cent, according to analysts.

The price curbs, intended to bridge the widening gap between actual costs (as measured by generic prices) and brand costs, will pinch profits of international pharmaceutical companies in one of the world's biggest markets for medicines.

A notice posted on the National Pharmaceutical Pricing Authority's web site on Friday said large gaps in prices between brand-name and generic versions of the same drug were "indicative of a severe market failure." It cited a regulation giving it the power to set prices in "extraordinary circumstances."

Industry officials say banded versions of medicines routinely sell for higher prices than generic versions in the US and other markets around the world. They say the same pattern exists in India and there was no sign of a market dysfunction.

However, the oversight on the market in India is poor unlike in the US and the US authorities approve any drug on its merit. On the other hand, the MNC drug companies in India collude with doctors to force their drugs on poor patients.

The drugs made subject to price controls Friday account for roughly 6 per cent of total sales in the country's $15 billion pharmaceutical market and include blockbuster drugs like Lipitor and Diovan, according to a research report from Nomura.

The pharmaceutical price controls, introduced in 1995, were designed to make lifesaving medicines affordable in a nation where a majority of people live on less than $2 a day.

Before Friday's announcement, the government had already set caps on 348 medicines, which account for about 30 per cent of drug sold in India.

Retail sales of price-controlled medicines have declined in the past 12 months, according to a study by drug-industry market research firm All Indian Origin Chemists & Distributors Pharmasofttech AWACS Ltd.

According to Dilip Shah of the Indian Pharmaceutical Alliance, the production cutback was a direct result of manufacturers cutting back on production.

The latest controls appear to interpret more broadly the government's ability to set prices, said Shah, potentially allowing the state to cap the price of any medicine.