Budget impact: Drug firms may be forced to market generics, not brands

The Union Health ministry plans to make prescription of generic medicines mandatory by amending the Drug and Cosmetic rules. The plan to amend the Drugs and Cosmetics Rules to make generic drugs affordable was announced by Finance Minister Arun Jaitley in the Budget.

A senior Health Ministry official told Business Standard that once the amendment is in place, drug companies will have to market generic version of drugs instead of brands.

The official said: "Doctors will have to prescribe only generic medicines. They will not be allowed to specify brands."

For instance, rather than prescribing Crocin, the doctor will be obligated to mention Paracetamol, the official explained. This will be ensured by Medical Council of India by way of a notification to all doctors. Typically, doctors prescribe branded products to their patients and there is a view within the government that the cost of healthcare could be reduced by promoting generic medicines.

Industry, however, is not enthused with the idea and believes this will be difficult to implement. This proposal will complicate things for doctors while prescribing combination drugs or drugs with multiple ingredients, according to analysts.

Meanwhile, the government plans to make changes in labelling norms by amending the Drugs and Cosmetic rules. A senior Health Ministry official told Business Standard that generic names have to be prominent in the label while the brand name should be mentioned in small letters.

This is not the first time that the government is trying to ban use of brand names. In 1978, there was a similar attempt which the pharmaceutical industry challenged in court.

"We do not think making generic prescriptions mandatory will make drugs cheaper. A drug manufactured by a top company will still carry a premium over a lesser known firm. While the budget does not make it very clear, we believe amendment could be for making generic prescriptions mandatory. Prima facie it is a negative step. I think the government can introduce it in its hospitals but how will it be implemented at a countrywide level," asked D G Shah, secretary general of Indian Pharmaceutical Alliance.

Organisation of Pharmaceutical Producers of India (OPPI), however, said rules are already in place to mandate generic prescription."   A Medical Council of India notification of September 2016 mandates every physician to prescribe drugs with their generic names. Further the Drug Technical Advisory Board has also recommended amendment of the Drugs & Cosmetic Rules requiring mention of generic name of the drug on the label in a font size that is two sizes bigger than the trade name. It is in the paramount interest of the patients that stringent quality control systems for manufacturers and effective regulations for the pharmacists are put in place before amending any other law," said Kanchana T K,  Director General, OPPI.

"I would have expected some pro-pharma industry measures in terms of incentives to research and some tax relief. Quality healthcare for India would be better served with a greater focus towards accessibility and availability of healthcare services and infrastructure," said Murtaza Khorakiwala, Managing Director of Wockhardt.

Bitter PIls

Once the amendment is in place, drug companies will have to market generic version of drugs instead of brands
 

There is a view within the government that the cost of healthcare could be reduced by promoting generic medicines
 

According to analysts this proposal will complicate things for doctors while prescribing combination drugs
 

In 1978, there was a similar attempt which the pharmaceutical industry challenged in court