[Ip-health] Pharma price control has stunted innovation, study finds

Malini Aisola malini.aisola at gmail.com
Fri Jul 17 01:22:00 PDT 2015

This study was funded by the Organization of Pharmaceutical manufacturers and research based companies (OPPI). OPPI primarily represents transnational corporations in India. 

> On 17-Jul-2015, at 1:36 am, Tahir Amin <tahir at i-mak.org> wrote:
> http://timesofindia.indiatimes.com/india/Pharma-price-control-has-stunted-innovation-study-finds/articleshow/48077550.cms
> NEW DELHI: Consumers may be happy at a cut in medicine bills but the
> government's price control measures have forced many brands out of the
> "unviable" pharmaceutical market, resulting in a drastic slowdown in new
> launches in the last five years.
> From an average of four new drugs being launched in any specific category
> in 2011, the number has dropped to a mere one in 2014-15, implying a 75%
> decline in new launches, according to estimates by IMS Health — a leading
> healthcare market research agency.
> Not just that, data collected since 2013, when the new pharmaceutical
> pricing policy came into place, show a sharp decline in consumption of
> price-controlled medicines.
> <http://timesofindia.indiatimes.com/india/Pharma-price-control-has-stunted-innovation-study-finds/articleshow/48077550.cms#>
> That's because of a growing push for alternative options outside price
> control.
> With lower margins in price-controlled medicines, there is also less
> incentive to reach out to rural markets. "For low-income households that
> are reliant on the government system for healthcare, DPCO (Drugs Price
> Control Order) would not improve the patient's ability to purchase drugs.
> This is supported by the fact that no significant penetration of
> price-controlled molecules in rural markets is visible...," says a latest
> report 'Assessing the Impact of Price Control Measures on Access to
> Medicines in India' by IMS Health.
> According to the report, consumption of price-controlled medicines in rural
> areas dropped by 7% in past two years, whereas sales of other medicines
> increased by 5%. It says even in Tier-II and III cities or in places
> outside metros, such medicines have witnessed a muted growth.
> While the objective behind price control of medicines was primarily to
> increase affordability and accessibility, the industry argues that the move
> has failed to achieve these objectives because policy measures have
> impacted tail-end brands more than the leading players.
> "When you try to bring in artificial intervention, there can be distortion
> in the market," says DG Shah, secretary general of Indian Pharmaceutical
> Alliance. Shah said price control has increased the market share of leading
> brands in particular segments because doctors are now prescribing them more
> since their prices have come down. As a result, these brands have eaten
> into the share of smaller ones, making it unviable for many small and
> medium-sized companies.
> "The DPCO 2013 has resulted in an increase in market concentration (fewer
> brands are now listed) and a decrease in competitive intensity (the average
> number of new brands have gone down since 2013)," the report said.
> Drug manufacturers also blame price regulations and policy uncertainty for
> making India an unattractive destination for both domestic as well as
> multinational pharmaceutical companies.
> However, public health experts brush aside such concerns saying companies
> manufacture one medicine under several brands with different compositions
> and regulations are aimed at bringing them at par in terms of pricing.
> -- 
> Tahir Amin
> Co-Founder and Director of Intellectual Property
> Initiative for Medicines, Access & Knowledge (I-MAK)
> *Website:* www.i-mak.org
> *Email:* tahir at i-mak.org
> *Skype: *tahirmamin
> *Tel:* +1 917 455 6601/+44 771 853 9472
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