Industry Trend Analysis - Effective Implementation Of Price Reforms To Shore Up Drugmakers' Prospects - OCT 2017

BMI View: Multinational pharmaceutical firms will continue to be challenged by India's pharmaceutical pricing regime. Unilateral and frequent price revisions enacted by the National Pharmaceutical Pricing Authority (NPPA) present a key threat to business certainty in India With the goal of improving the business environment and giving an impetus to Make in India programme, the new draft policy announced in August 2017, proposes the restructuring of the NPPA from a price-controlling regulator to a price-monitoring authority.

India's pricing regulations for pharmaceuticals continue to undergo significant changes which will create high levels of uncertainty for multinational drugmakers. This is in part due to the approach adopted by the National Pharmaceutical Pricing Authority (NPPA), which have sought to expand access to medicines without significant investments into healthcare. The Medical Technology Association of India has raised concerns that overly aggressive price regulation will stifle innovation and impede industry development, warning that the country's ambitious 'Make in India' programme needs multinational input to enable development of high tech product manufacturing. In light of this, in August 2017, the Department of Pharmaceuticals (DOP) drafted a new pharmaceutical policy with the aim to monitor the prices of medicines and medical devices to prevent profiteering and deliver affordable healthcare to patients. In addition, the policy seeks to improve manufacturing quality and create an ecosystem to support innovative new drugs, thus shaping the opportunities for drugmakers in the country.

Upon implementation, the Union government will gain a greater role in deciding the prices of medicines and medical devices whereas the NPPA will lose substantial powers to impose price caps on patented medicines. Moreover, the prices of drugs still under patent will be regulated mostly by compulsory licensing and the NPPA will step in as an exception only when instructed by the government. Once the drug pricing authority fixes the prices, it will not be able to revise these prices unless directed specifically by the government or a higher court to do so. Commenting on this, Malini Aisola, a member of the All India Drug Action Network, said 'On pricing, it seems to propose broad changes to the functions and processes of NPPA. The draft appears to impose greater oversight on NPPA such as review of all its decisions, which could mean greater say over NPPA's ability to cap prices in public interest also.' The overarching concern is that the draft policy does not address the issues around patient accessibility and quality of medicines. Additionally, a key challenge will be to implement the policy in the shortest possible time.

India: A Low Reward, Low Risk Market
Innovative Pharmaceuticals Risk/Reward Index
Note: Scores out of 100; higher score = lower risk. Source: BMI's Innovative Pharmaceuticals Risk/Reward Index

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