Consumer concern over the price of medicines and medical devices found an echo in Budget 2017. But was the mention really old medicine in a new bottle?
The Finance Minister’s announcement to amend the Drugs and Cosmetics Rules to promote generic medicines and the mention of rules to reduce the cost of medical devices are both ongoing subjects of hi-decibel discussions between the Government and the pharma and devices industry.
But when it finds mention in the Budget it means the Government is making an unequivocal statement on the issue, says Pavan Choudary, Director-General, Medical Technology Association of India (MTaI). The industry concern is that price rationalisation measures should not be done at the cost of quality. It should be “nuanced” so that industry is encouraged to invest and the sector continues to be attractive, he says. The effort should not end up loading the medical device sector, when it is someone else who is making the money, he adds.
During recent discussions on capping the price on cardiac stents (used in removing heart blockages), the National Pharmaceutical Pricing Authority had put out data revealing the hefty margins given to hospitals that resulted in exhorbitant price increases on the final product. A price that was usually paid by the consumer.
On the medicines front, Wockhardt Managing Director Murtaza Khorakiwala points out that it was important the Budget kept the “continuity” factor and maintained the overall direction of the economy. It is important to get the full impact of these measures, he said, adding that it was wrong to expect a “big-bang” announcement every year. The Budget is really a reporting on various indicators of the economy, and this time did well to project a growth of 7.2 per cent despite “disruptions” like demonetisation and GST, he added.
Bhavik Narsana, Partner, Khaitan & Co agrees that the promotion of generic drugs through changes in the Drugs and Cosmetic Rules and getting doctors to prescribe them are part of ongoing efforts. It is part of the plan to make generic drugs available to people, especially in the lower economic strata. It remains to be seen if the Government will make it mandatory for doctors to prescribe only the generic name of the drug and not its brand name, he says, referring to another issue that divides the industry.
Generic drugs are medicines chemically similar to an innovator medicine and they are less expensive since it typically does not involve original research. However, the Indian market is populated with many generic brands at different prices and the concern is that certain high price brands were being pushed to patients. Mandating doctors to prescribe just the generic name could curb unhealthy marketing of brands. Again a contentious issue, as some industry representatives argue that such a move shifts the decision-making on which drug should be given from the doctor to the chemist.
Another Budget announcement affecting drug companies is the move to scrap the Foreign Investment Promotion Board. The FIPB is the gate-keeper for large buy-outs in the pharmaceutical sector, when local companies are acquired by foreign drugmakers. While some industry players wonder whether this means a relaxation of these investment benchmarks, Narsana says it is merely an administrative measure and not a removal of sectoral caps.