Medicine price regulator National Pharmaceutical Pricing Authority (NPPA) has proposed the formation of a centralised agency to negotiate the prices of patented medicines. The NPPA said the agency should estimate the market potential of the patented products and negotiate the prices on the basis of a reference pricing system.
The NPPA’s suggestion is being considered by an official committee assigned with the task of recommending a system of price negotiation for patented medicines to make the prices reasonable for Indian patients.
According to official sources, the NPPA has suggested that the reference prices should be calculated after comparing the prices of the same medicines in other countries with comparable per capita incomes or purchasing power parity. The reference price should be either the lowest of, or an average of the prices prevalent in comparable markets, the NPPA said.
The agency also wanted a nodal agency to be nominated for the bulk purchases of patented medicines to ensure that supplies are delivered at the negotiated price. An NPPA note to the committee suggested that the nodal agency release the medicine for retail sales through normal trade channels at the procurement price.
The suggestions also included a proposal to exempt all patented drugs from duties and taxes and linking the marketing approval for the drug to the negotiated prices. The idea is to keep such medicines under restricted a list for imports and provide the import clearance only after the approval of negotiated price.
India, which switched over to a product patent regime which allows patent protection to individual drugs instead of a method of manufacturing that drug, is yet to see a major inflow of patent protected medicines. Industry experts feel more such products, which would not have any low-cost drug equivalent in the market, would make their way into India in the coming years.
“We are entering a phase where most future drug approvals would be those for patented products. The price negotiation will turn crucial at that time, since most patented medicines are extremely expensive in countries where they are marketed,” said a ministry official.