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