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ASSOCHAM reacts to pharma pricing policy

Posted on Nov 19, 03:22PM | IBNS

The Associated Chambers of Commerce and Industry of India (ASSOCHAM) on Monday reacted to the National Pharmaceutical Pricing Policy.

In its submission for National Pharmaceutical Pricing Policy, the chamber said: "ASSOCHAM apprehends the Supreme Court ruling (3/10/2012) will result in 70 per cent of the Indian pharmaceutical market put under the inconsistent and inefficient cost based price control mechanism of Drug Price Control Order (DPCO) 1995 and all the 348 molecules will be crippled by the disastrous repressions."

On the contrary, the Weighted Average Price (WAP) of all brands, having greater than 1pc market share formula recommended by the GoM, will result in over 20pc price reduction in 60pc of the NLEM medicines, it said.

The order, the chamber spokesman said, will severely impact the availability of essential medicines for patients as it will be nearly impossible for industry to supply essential medicines.

In a memorandum submitted to Union Finance Minister P. Chidambaram, the ASSOCHAM said the weighted average price (WAP) mechanism to control the price of essential medicines recommended will achieve twin objectives of public health and industrial growth.

The chamber further said the existing cost-based policy reveals its lack of relevance in current market conditions, significant limitations and adverse impact on the industry and patient access.

"For one, it has shifted bulk drug production out of India to countries like China, escalated prices for select medicines, reduced the number of industry players, reduced innovation in cost control medicines and limited new introductions, and above all, failed to help medicines reach patients located in rural areas," it said.

The cost-based policy has created an inefficient and inconsistent mechanism of price calculation not aligned with India's needs, said ASSOCHAM.

"A drug price control policy must be carefully calibrated to avoid adverse trade-offs in achieving key drug policy objectives of striking a balance between ensuring quality, affordable and reasonably priced to patients and enabling industry growth and competition."

The ASSOCHAM memorandum says given the severe handicaps of cost-based pricing, a market-based pricing policy would best suit India's needs as it would not only improve affordability but also availability and encourage competition, innovation, and growth and help harness the export potential.

The pharmaceutical industry understands that access to essential medicines is a critical component of an effective health system, and it is imperative that good quality and safe medicines remain accessible, available and affordable to beneficiaries, it said.

"Market-based pricing will encourage investment in quality and hence patient safety. This is extremely important given the problem of counterfeit drugs plaguing the country and the lack of confidence in generic drug quality in the medical community and amongst patients.

"Besides, marked-based pricing would be based on widely available information in the public domain as against individual manufacturer level production costing data would result in more transparent and fair pricing," said ASSOCHAM.

This new policy will also ensure continuous availability of price controlled medicines by preventing medicines from going off the market on account of an unviable manufacturing environment which happened in the case of cost-based pricing, it said.

The ASSOCHAM said this methodology will allow patients to benefit from access to innovation and introduction of new medicines as players will continue investing in research and development (R and D) which ultimately helps provide patients with innovative and more effective medicines, as opposed to cost-based pricing which does not factor in the R and D and innovation efforts and costs undertaken by pharmaceutical players and patient access to good quality medicines will significantly improve as manufacturers will be encouraged to invest in quality raw material and processes

Moreover the new policy recommended by the GoM will harness export potential and help the Government achieve its target of USD 25 billion worth of exports in the pharmaceutical sector, it said.