DRUG PRICING

Pricing of medicine has been a persistent issue

Introduction

rapaciously expanding private sector and prohibitive out-of-pocket (OOP) health expenditures

spiralling cost of therapeutics

two-fifths of the overall healthcare costs + more than half of the total private OOP healthcare costs - therapeutics

measures

new Drug (Price Control) Order (DPCO) of 2013 or the proposed expansion of the generic drugs scheme by increasing the number of Jan Aushadhi Kendras.

government loosely regulates prices of all medicines

Prices of around 850 essential drugs capped by the government,companies - raise prices by no more than 10% in a year

drug price regulator National Pharmaceutical Pricing Authority(NPPA) revises prices annually based - wholesale price index (WPI)


“price control,” - encompass even less than a quarter of the domestic pharmaceuticals market,drug price control have not been promising.

Supplies cut

ceiling price of Re 0.29 per unit for Furosemide ,industry retaliated by cutting down supply of the drug.


Structure of pharma market

highly concentrated with the top 10 companies accounting > two-fifths of the total sales

market-based price ceiling mechanism - new DPCO susceptible to the phenomenon of regulatory capture , as the price cap is a simple average of prices of all brands with more than 1% market share in a medicinal area

overestimation if firms, especially the big ones, collude to raise the price of the regulated formulation in the period preceding the regulation

Issues

crumbling status of the already existing Jan Aushadhi Kendras due to procurement delays ,errant supplies are rampant

Deficient supply chain management prevents the utilisation of low-cost generic drugs from picking up

Poor forecasts, archaic procurement systems, and small markets cause supply bottlenecks


lack of clarity on the quality of generic drugs.


drug regulatory systems in the country being controlled by the states, NO consistent standards for enforcement.


pharmaceutical manufacturers estimate that 20% of all drugs sold - substandard or counterfeit,government estimates - these account for almost 10% of the total pharmaceutical market

Way forward


licensing mechanisms, including medicine patent pool or tiered pricing models, - maximise public health benefits


Trade margin rationalisation - imposes a cap on the margins across the value chain, rather than capping price of devices, cap on upstream margins across the entire value chain, rather than imposing caps on prices of products downstream


building competency in health technology assessment (HTA) , taking into consideration evidence of safety, efficacy, patient-reported outcomes and cost-effectiveness

Centralised drug procurement has been effectively used in states like Tamil Nadu to bring down costs.

Drug firms - incentivised to innovate and invest in research , India - increase GDP on healthcare