Price control of patented drugs may hit MNCs like Pfizer, GlaxoSmithKline hard: Analysts

Mumbai: The government's decision to cap prices of patented drugs may hit the multinational pharma companies like Pfizer, GlaxoSmithKline and Merck hard, some analysts say.

The move is expected to hit the global drug makers, which are spending millions of dollars in researching new drugs, said an analyst with a city-based brokerage house on the condition of anonymity.

Affordable access to life-saving drugs has been an issue in the country. Price negotiation will hurt MNCs the most, as patentable drugs are monopolised by them, while domestic companies are yet to bring to the market a new molecule, said another pharma analyst.

Last Friday, pharma secretary Dilsher Singh Kalha had told the industry body OPPI here that "government is planning to control the prices of costly patented drugs with a view to make them affordable to poor, and a committee has already finalised a proposal and we will put it out in the public domain in a month".

The plan comes on the heels of government taking away patents of a number of life-saving drugs and giving licences to domestic companies to manufacture them.

"There could be reference pricing system (for patented drugs) or maybe fixed-pricing, but final decision has not been taken," Kalha said.

The government is planning to roll out an ambitious scheme to provide free drugs to all patients attending a government health facilities from October. The scheme, called free-medicines-for-all, has already received its first financial allocation of Rs 100 crore from the Planning Commission.

The entire programme is estimated to cost Rs 30,000 crore during the 12th Plan.

At present, the public sector health centres provide healthcare to 22 per cent of the population. The Health Ministry estimates that this will increase to 52 per cent by 2017, once medicines are provided for free from 1.6 lakh sub-centres, 23,000 primary health centres, 5,000 community health centres and 640 district hospitals.

At present, patented drugs are free of price controls, though there are restrictions on the prices of 348 life-saving and essential drugs, which includes anti-AIDS, analgesics, anti-ulcers, anti-psychotic, sedatives, anesthetic agents, lipid lowering agents, steroids and anti-platelet drugs.

Patented drugs are mostly imported by multinational drug makers and used to treat diseases like cancer and heart ailments.

Between 1995, when New Delhi signed the Trips agreement, and 2010, as many as 180 new drugs have come into the country, of which 33 are MNC monopoly, and many of them are life-saving and prohibitively expensive.

Early this year, German pharma company Bayer lost a legal battle in India and was forced to grant compulsory licence for its cancer drug Nexavar to Natco Pharma, a local generics maker, which sells the medicine for Rs 8,880 for a monthly dose, a price later undercut by Cipla. Bayer's Nexavar costs a whopping Rs 280,000 per monthly dose.