The generic drug push needs fur­ther clar­ity

Utkarsh Pal­nitkar

BioSpectrum (India) - - BIO CONTENT -

Part­ner and Head, In­fra­struc­ture, Govern­ment and Health­care, Life Sci­ences, KPMG in In­dia

The gener­ics busi­ness is fac­ing chal­lenges both in the do­mes­tic as well as the in­ter­na­tional mar­ket; on ex­ports, In­dian phar­ma­ceu­ti­cal com­pa­nies are fac­ing a sharp de­cline in re­turns as a re­sult of in­creas­ing prod­uct price ero­sion, largely due to the con­sol­i­da­tion of dis­tri­bu­tion chan­nels and in­crease in com­pe­ti­tion in the U.S. This, cou­pled with re­duced value of prod­uct patent ex­pi­ra­tions over the next five years, im­plies lower growth po­ten­tial for the phar­ma­ceu­ti­cal sec­tor.

On the do­mes­tic front, the en­vi­ron­ment for phar­ma­ceu­ti­cal com­pa­nies re­mains chal­leng­ing with more prod­ucts com­ing un­der price con­trol, in­crease in scru­tiny by global reg­u­la­tors, high ac­tive phar­ma­ceu­ti­cal in­gre­di­ent (API) im­port de­pen­dency and com­plex process for ap­proval of new prod­ucts.

In the midst of these grow­ing con­cerns, the Depart­ment of Phar­ma­ceu­ti­cals (DoP) in­tro­duced an ac­tion plan to strengthen the In­dian phar­ma­ceu­ti­cal in­dus­try and has re­leased the ‘Draft Phar­ma­ceu­ti­cal Pol­icy – 2017’ to make es­sen­tial drugs ac­ces­si­ble at af­ford­able prices, pro­vide a sta­ble pol­icy en­vi­ron­ment, achieve self-suf­fi­ciency in drug man­u­fac­tur­ing, en­sure qual­ity drugs and cre­ate a favourable en­vi­ron­ment for R&D. The top five high­lights of the pro­posed pol­icy are as fol­lows:

En­cour­age do­mes­tic API man­u­fac­tur­ing

It has been pro­posed that for­mu­la­tions pre­pared us­ing in­dige­nously pro­duced API and its in­ter­me­di­ates will be given pref­er­ence in govern­ment pro­cure­ment. Such for­mu­la­tions will be taken out of price con­trol for five years with prices linked to the indige­nous con­tent of these for­mu­la­tions. The APIs which can be in­dige­nously man­u­fac­tured will be im­ported at peak cus­toms duty.

The pol­icy en­cour­ages indige­nous pro­duc­tion of APIs and Key Start­ing Ma­te­ri­als (KSMs) in sev­eral ways. How­ever, a more thor­ough ap­proach is re­quired to once again en­able the do­mes­tic API in­dus­try to be­come com­pet­i­tive. The In­dian govern­ment needs to fo­cus on de­vel­op­ing the lo­cal chem­i­cal in­dus­try which can then in turn sup­port API man­u­fac­tur­ing.

The pol­icy also sup­ports set­ting up of mega bulk drug parks hav­ing com­mon fa­cil­i­ties.

The pol­icy en­cour­ages indige­nous pro­duc­tion of APIs and Key Start­ing Ma­te­ri­als (KSMs) in sev­eral ways. How­ever, a more thor­ough ap­proach is re­quired to once again en­able the do­mes­tic API in­dus­try to be­come com­pet­i­tive. The In­dian govern­ment needs to fo­cus on de­vel­op­ing the lo­cal chem­i­cal in­dus­try by pro­vid­ing a favourable man­u­fac­tur­ing ecosys­tem, which can then in turn sup­port API man­u­fac­tur­ing the way it has hap­pened in China. This could be an im­por­tant step to­wards self-suf­fi­ciency in APIs and can go a long way in pro­vid­ing af­ford­able drugs to the do­mes­tic as well as the in­ter­na­tional mar­ket.

Pric­ing - Na­tional Phar­ma­ceu­ti­cal Pric­ing Author­ity (NPPA) re­struc­tur­ing

The Na­tional List of Es­sen­tial Medicines (NLEM) will re­main the ba­sis for medicines brought un­der price regulation. The govern­ment in con­sul­ta­tion with the Depart­ment of Phar­ma­ceu­ti­cals will pre­pare the list of medicines for price regulation and trans­mit them to the NPPA for fix­ing price ceil­ings; the NPPA will be as­sisted by an ad­vi­sory body for pric­ing, nom­i­nated by the govern­ment in the NPPA. All strengths and dosage forms of a chem­i­cal en­tity un­der NLEM will be un­der price con­trol; the NLEM list will be amended through an ad­di­tion and dele­tion list; ceil­ing prices will be linked to WPI; DPCO will in­clude only off-patent drugs. Patented drugs will not be sub­ject to price con­trols, but would be reg­u­lated through the CL (com­pul­sory pric­ing) mech­a­nism of the patent act or by use of emer­gency pow­ers un­der para­graph 19 of DPCO-2013. The draft pol­icy pro­poses some fun­da­men­tal changes in con­trol­ling prices for generic drugs with mod­i­fi­ca­tions in the Drugs (Prices Con­trol) Order. It fur­ther states

that the DoP will play a more ac­tive role in pric­ing re­lated mat­ters by tak­ing charge of the list of medicines for price regulation and trans­mit­ting it to

NPPA for fix­ing the price ceil­ings. These measures go be­yond the re­mit of the DoP and would ne­ces­si­tate leg­isla­tive changes.

Fur­ther, the draft pol­icy men­tions that patented drugs will not be sub­ject to price con­trol and their prices will be reg­u­lated through com­pul­sory li­cens­ing; this, along with the fact that the draft pol­icy is also look­ing to phase out loan li­cens­ing has cre­ated a level of un­cer­tainty among MNC phar­ma­ceu­ti­cal com­pa­nies. For ex­am­ple, if a multi­na­tional holds a patent for a cer­tain drug and does not man­u­fac­ture that prod­uct in In­dia, the com­pany will not be able to man­u­fac­ture the same through loan li­cens­ing any more. In such a sce­nario, In­dian phar­ma­ceu­ti­cal com­pa­nies can file for com­pul­sory li­cens­ing for such prod­ucts. The move is likely to de­ter phar­ma­ceu­ti­cal multi­na­tion­als to launch patented prod­ucts in the In­dian mar­ket.

The draft pol­icy pro­poses some fun­da­men­tal changes in con­trol­ling prices for generic drugs with mod­i­fi­ca­tions in the Drugs (Prices Con­trol) Order. It fur­ther states that the DoP will play a more ac­tive role in pric­ing re­lated mat­ters by tak­ing charge of the list of medicines for price regulation and trans­mit­ting it to NPPA for fix­ing the price ceil­ings. These measures go be­yond the re­mit of the DoP and would ne­ces­si­tate leg­isla­tive changes.

Loan li­cens­ing curb

Third-party man­u­fac­tur­ing or loan li­cens­ing will be dis­con­tin­ued, ex­cept for bio­phar­ma­ceu­ti­cal man­u­fac­tur­ing as it raises many qual­ity main­te­nance and as­sur­ance is­sues. The pro­vi­sion to dis­con­tinue loan li­cens­ing could di­rectly im­pact con­tract man­u­fac­tur­ing and the MSME sec­tors in In­dia, which have devel­oped generic man­u­fac­tur­ing ca­pa­bil­i­ties over the last few decades; this pro­vi­sion can how­ever make these in­stalled ca­pac­i­ties re­dun­dant. Fur­ther, bio­phar­ma­ceu­ti­cal man­u­fac­tur­ing is very dif­fi­cult and the coun­try has lim­ited ca­pa­bil­ity and ca­pac­ity in this area; that the pol­icy al­lows loan li­cens­ing in this area is there­fore con­fus­ing.

Trade mar­gin cap

The level of trade mar­gins will be pre­scribed to cre­ate a level playing field for the in­dus­try and to bring down prices. Even in­sti­tu­tions re­ceiv­ing sup­plies di­rectly from man­u­fac­tur­ers/dis­trib­u­tors or re­tail­ers will be cov­ered un­der trade mar­gin re­forms. The pro­vi­sion to cap trade mar­gins is ex­pected to im­pact the phar­ma­ceu­ti­cal in­dus­try di­rectly, cover­ing al­most 95 per cent of the; how­ever im­ple­men­ta­tion may prove to be an oner­ous task for the govern­ment.

Generic drug push - óne com­pany - one drug - one brand name - one price'

Pub­lic pro­cure­ment and dis­pens­ing of drugs will be of generic drugs in their salt names; to fa­cil­i­tate this, the govern­ment will pur­sue the pol­icy of sale of sin­gle in­gre­di­ent drugs by their phar­ma­copeial name/salt name. For patented drugs and Fixed Dose Com­bi­na­tion (FDCs) drugs the brand names may be used. The generic drug push through ‘one com­pany – one drug – one brand name – one price’ needs fur­ther clar­ity as many In­dian phar­ma­ceu­ti­cal com­pa­nies man­u­fac­ture drugs for their sub­sidiary com­pa­nies and whether the un­der­line sub­sidiary com­pany comes un­der the def­i­ni­tion of ‘one com­pany’, is cur­rently not clear.

(*The views and opin­ions ex­pressed herein are those of the au­thor and do not nec­es­sar­ily rep­re­sent the views and opin­ions of KPMG in In­dia.)

Utkarsh Pal­nitkar

Part­ner and Head, In­fra­struc­ture, Govern­ment and Health­care, Life Sci­ences, KPMG in In­dia

Newspapers in English

Newspapers from India

© PressReader. All rights reserved.