India. Pharmaceutical Market Access Barriers
However, India has thousands of manufacturers of pharmaceuticals who operate in a very competitive environment, and as a result, India has some of the lowest prices of medicines in the world. Despite decades of government price controls in India, the objective of which has been to improve access to medicines, essential medicines are still not easily accessible; for example, essential medicines may only be available at government pharmacies 20 percent of the time.
Expansion of price controls to a larger range of medicines will not substantially improve access to medicines in India because lack of access is more a function of insufficient healthcare financing systems and inadequate healthcare facilities. For example, medicines and vaccines which are offered free of charge often do not reach the patients who need these medicines. Further, a considerable body of evidence demonstrates that price controls contribute to lower investment in pharmaceutical research and development, ultimately harming patients who are in need of improved therapies.
The Department of Pharmaceuticals (DoP) Committee on Price Negotiation for Patented Drugs released a report in February 2013 which recommends an international reference pricing scheme with a purchasing power parity adjustment for government procured patented medicines, those patented medicines provided through health insurance. The Committee is also considering whether the price negotiation of a patented medicine should be linked with its marketing approval. PhRMA members are highly concerned that this proposal represents an effort to significantly reduce the benefits of patent protection, will discriminate against importers of patented drug products, and will create an unviable government pricing framework and business environment.
Last year, the DoP notified and began implementing the Drug Price Control Order (DPCO) 2013, which sets ceiling prices for 348 essential medicines by taking the simple average of all drugs with a market share of 1% or more. PhRMA advocated for a market-based policy, rather than a cost-based policy, in order to balance the need for affordability and industry competitiveness. The DPCO has faced ongoing challenges by NGOs before the Supreme Court, which has been monitoring the Government‘s progress through public interest litigation, as well as questions about accuracy of ceiling price calculations. Finally, the DPCO 2013 also includes Section 32 that exempts from the pricing formula, for a period of five years, new medicines developed through indigenous research and development that obtain a product patent, are produced through a new process, or involve a new delivery system. This section creates an unlevel playing field that favors local Indian companies and discriminates against foreign pharmaceutical companies.
PhRMA members believe that competitive market conditions are the most efficient way of allocating resources and rewarding innovation; however, the researchbased pharmaceutical industry recognizes the unique circumstances in India and is committed to engaging with the Government to discuss pragmatic public policy approaches that will enable the development of simple and transparent government pricing and reimbursement mechanisms that provide access to medicines, reward innovation, include the patient perspective, and encourage continued investment into unmet medical needs.
Foreign Direct Investment (FDI) in Pharmaceutical Sector
The Indian government recently decided that the current policy in brownfield and greenfield projects in the pharmaceutical sector will continue, subject to the additional condition that in all cases of FDI in brownfield pharmaceutical projects, non-compete clauses will not be permitted in any of the agreements. Per this policy, outright purchases of brownfield projects require prior approval from the Foreign Investment Promotion Board. The new restrictions on the use of non-compete clauses have the potential to significantly undermine FDI in brownfield investments, given that without such clauses a local company may sell its business to a foreign investor only to use its knowledge, expertise and former goodwill (on which such sales are typically predicated) to immediately compete with the foreign investor. In short, these ongoing changes lead to an atmosphere of uncertainty for potential investors.Clinical Trials
New clinical trials were halted after the Indian Ministry of Health and Family Welfare adopted rules that require broader compensation for participants who claim to have been injured due to a clinical trial. The tougher regulations, coming in response to public protests over reported deaths in clinical trials last year, have stopped or delayed a number of studies. The Indian government and Supreme Court had begun a process working with trial sponsors to modify the rules. The Court previously held that, rather than the Drug Controller, the Secretary of Health shall be accountable for the approval of all clinical trials related to Investigational New Drugs (IND), which had caused a significant decline in the number of approved trials. In response to public interest litigation, the Indian Supreme Court instituted a full moratorium on clinical trials, asking the Ministry of Health to justify its recent approvals and put forward an appropriate framework for approval of clinical trials. In November, the Drug Controller General of India (DCGI) ordered that, in addition to obtaining written informed consent, audio-visual recording of the consent of each subject is mandatory in a clinical trial and effective immediately. Such uncertainty in the regulatory process for clinical trials threatens the overall clinical research environment in India, as well as the availability of new treatments and vaccines for Indian patents.Import Policies
Despite the stated intention by the Government to lower pharmaceutical duties, PhRMA member companies operating in India face high effective import duties for active ingredients and finished products. Though the basic import duties for pharmaceutical products average about 10 percent, additional duties commensurate with the excise duty applicable on the same or similar product, even when there is no such product manufactured in India, as well as other assessments, bring the effective import duty to approximately 20 percent. In fact, India collects more in taxation on pharmaceuticals than it spends on medicines. Broad analysis for 2011 indicates total annual Government expenditure on drugs in India around $1.15B in comparison to the $1.22B it receives in taxation of pharmaceuticals. Moreover, excessive duties on the reagents and equipment imported for use in research and development and manufacture of biotech products make biotech operations difficult to sustain. Compared to the other Asian countries in similar stages of development, import duties in India are very high.Counterfeit Medicines
India is a major channel for the export of counterfeits to consumers worldwide. In cases where counterfeit pharmaceutical products bear a deceptive mark, civil and criminal remedies are available under India‘s trademark statute. However, the effectiveness of such remedies is undermined by judicial delays and, in criminal cases, extremely low rates of conviction.Beyond these trademark-related deficiencies, weaknesses in India‘s drug regulatory regime can contribute to the proliferation of counterfeit pharmaceuticals and their global export. Even though pharmaceutical counterfeiting is first and foremost a drug safety violation, India has yet to enact drug laws that expressly address all aspects of drug counterfeiting, or to provide the kind of remedies and enforcement resources necessary to combat this growing problem. In India, criminal liability appears to be conditioned upon proof of adulteration or harm. This burdensome evidentiary requirement not only precludes criminal prosecution of many counterfeiters, it fails to acknowledge the inherent dangers of any deceptively mislabeled drug. Anticounterfeiting enforcement is further undermined by poor interagency coordination and India‘s failure to provide administrative remedies for drug safety violations.
Source: PHARMACEUTICAL RESEARCH ANDMANUFACTURERS OF AMERICA(PhRMA)SPECIAL 301 SUBMISSION 2014
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