Centre forms committee to introduce reforms in medical devices’ pricing framework

The Centre Tuesday formed a high-level panel to introduce reforms in the pricing framework for drugs and medical devices, ThePrint has learnt.

The committee will be chaired by the secretary, Department of Pharmaceuticals (DOP) and will have the chairman of the National Pharmaceutical Pricing Authority (NPPA) and the economic adviser to the DOP among its core members.

Representatives from two major pharmaceutical organisations — Indian Pharmaceutical Alliance (IPA), a network of research-based Indian drugmakers, and Indian Drug Manufacturers Association (IDMA), a group of generic drugmakers — have also been included in the panel as special invitees.

A circular on the constitution of the committee said the panel needs to submit its report within the next three months. ThePrint has a copy of the circular.

The terms of reference for the panel include institutional reforms within the NPPA and how to balance price and availability of essential medicines, while providing incentives to the industry to sustain growth and exports.

Also, the panel will suggest a price moderation framework for medical devices, while providing incentives to the industry to sustain growth and minimise imports, and for emerging and precision therapies to facilitate their timely reach to needy patients.

The last time the pricing mechanism for drugs was revised was in 2013, when the Drugs (Prices Control) Order (DPCO 2013) was introduced.

Some of those who work for increasing access to medicines in the country have protested against the composition and terms of reference of the panel, saying it was shocking that the pharmaceutical industry has been invited openly to “capture policymaking”.

“The idea behind introducing a pricing mechanism for drugs has been to raise affordability and access to medicines, but the way this committee has been constituted is a testament to the growing influence of the industry on policymaking and on crucial issues such as drug pricing,” Malini Aisola, co-convenor of All India Drug Action Network (AIDAN), told ThePrint.

AIDAN is an independent network of several non-government organisations that works to increase access and improve the rational use of essential medicines.

“It’s shocking to see the bias — how can those being subject to regulation be part of framing the regulations? This is a case of conflict of interest, even if the industry representatives are special invitees and may be there in (only) some of the meetings,” Aisola added.

She also alleged that ahead of the general elections, the Centre seemed to be preparing to undermine access to essential health products rather than reiterating commitments towards improving health outcomes.

ThePrint reached out to DOP secretary Arunish Chawla for his comments on the constitution of the committee but got no response. This report will be updated if and when a reply is received.

Benefit to patients or industry?
Pharma industry representatives ThePrint spoke to hope that the review will allow the government to look at issues around drug pricing in a “holistic manner”.

“There are several issues that the industry has been raising over the past several years. I am glad the government has taken a step in the right direction,” IPA secretary general Sudarshan Jain told ThePrint.

IDMA president Viranchi Shah said the exercise was a periodic task undertaken by the government and expressed satisfaction at the terms of reference for the committee. “The DPCO in use now is a decade old. We are hoping that our long pending demands such as prospective batch pricing are permitted in the new policy.”

Under DPCO 2013, drugs are categorised either as scheduled or non-scheduled.

Scheduled drugs, and some medical devices such as condoms, cardiac stents and knee implants, are included in the National List of Essential Medicines (NLEM) based on their utility and the diseases prevalent in the country.

Drugs under the NLEM include those that are widely used — such as analgesics, anti-infectives, anti-diabetes and anti-hypertension — and also those used in government programmes.

Scheduled drugs as of now include 384 drugs and more than 1,000 formulations across 27 therapeutic categories, and comprise nearly 18 percent of the total drugs sold in India.

The prices of scheduled drugs are fixed by the government every year based on the Wholesale Price Index.

In case of non-scheduled drugs, drugmakers are permitted to fix the initial price — after informing the NPPA — but are not allowed to raise the price by over 10 percent every year.

The current pricing policy requires drugmakers to sell scheduled drugs at prices fixed by the NPPA immediately after they are notified, but pharma industry associations have been demanding that the new pricing schedule should be applied only on new batches, and not on the ones already in the supply chain — through prospective batch pricing.

Meanwhile, those working for patients’ rights insist that the new pricing mechanism should fix the flaws in the existing system — in the interest of patients.

“DPCO 2013 is a market-based pricing regime, unlike the DPCO 1995, which was based on costs,” a Delhi-based health economist, who did not wish to be named, told ThePrint.

Under the DPCO 2013 pricing regime, ceiling prices of essential medicines are decided by taking the simple average prices of brands with more than 1 percent market share, with a mark-up of 16 percent retailer commission also taken into account.

This, the health economist pointed out, means that pricing of essential drugs is also determined by inflation in the prices of commodities that are not directly linked with medicine production.

Aisola, too, said that the simple average pricing methodology of DPCO 2013 legitimises irrationally high selling prices to consumers of essential medicines, especially of those drugs that were not under price regulation before 2013.

“The whole system needs an overhaul and the answer is a prior cost-based pricing regime with modifications, for which AIDAN has been fighting a case in the Supreme Court since 2013,” Aisola added. ThePrint