New Indian policy for Patented Drugs – No more compulsory license agreements?

February 28, 2013 | By Márcio Barra

The Indian Department of Pharmaceuticals has issued a new draft policy that might be a bit (and just a bit) of good news for pharma companies struggling with the country compulsory license agreements, a clause under the Trade Related Intellectual Property Rights. These agreements saw drugs patents being rendered meaningless, in favor of licenses to generic drug makers when the Indian Government deems that the price of a drug is beyond the reach of the patients. Bayer’s kidney cancer drug Nexavar is a good example, a $5,000 a month drug that was licensed to Natco Pharma, and Indian generic drug maker who began selling the drug for $170 a month, and later Cipla, who sells it at $130 a month.

This new draft policy is for price negotiation for patented drugs and price regulation by the Indian government. In essence, it states that a patented drug can have its price regulated by a government appointed Committee, and once regulated, the provision to issue that drug a compulsory license on the basis of it being too expensive will no longer be possible.

In short, the draft policy goes on to say that if a government appointed Committee regulates the price of a patented medicine, and gives it a price that the Indian Government deems acceptable, no Compulsory License can be issued. The pricing formula would take into account the per-capita income of Indians, and the prices paid by governments in the U.K., Canada, France, Australia and New Zealand are to be used for reference. However, a Compulsory License can still be issued on other grounds apart from price, like for example drug shortages.

Now, while this might seem like good news for Pharma companies who are seeing their patents rejected, it’s still far from a satisfactory conclusion for them. If the policy is implemented, it could lead to multinational drug companies being forced to sell their drugs at a third of their current prices. Price control is already in place in India for 348 generic medicines, but this is the first time that patented drugs could be affected as well.

However, it isn’t clear when this could happen. Seeing as the panel took six years just to come up with the draft, it could be a while before price regulation starts hitting patented drugs in India.

Drug price control has been a topic of debate in India. The authorities argue that price controls are necessary to ensure that expensive drugs are available at affordable rates to the poor. This is surprising move from Indian government to try and relieve the burden of drug expenditure costs of the Indian population. It’s worth noting that Indians pay almost 70% of health-care expenses out of their own pockets, and most of this spending is on medicines. And the general awareness is that the Indian Government cares little for their populace wellbeing.

India, with a population of more than 1 billion, has the highest number of sick people in the world for any disease, due to the extreme poverty of the population. But Central and State governments don’t even acknowledge more than 20% of the diseased.

Adding up to all this, the health sector in India is dominated by an unregulated private sector, as the Government neglected the Health Ministry and subsequently, the public health sector.

The question remains if the Indian population, even after price regulation hits, will be able to start affording medicines.

The report is out for comment until March 31.


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