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Centad extended a warm welcome to all the participants. Yogesh Pai, Centad, briefed that the main objective of the consultation meeting was to discuss and deliberate upon the proposals of the Committee on Price Negotiations for Patented Drugs and Medical Devices. He was of the opinion that most of the points discussed by the Committee need to be closely analysed and responded. He then presented a brief description of discussion points of the committee meeting that was held on 20th April 2009 at the Department of Pharmaceuticals.
In 2007, the Government of India set up a Committee to examine the possibility of Price Negotiations for patented drugs and medical devices. The Committee headed by a Joint- Secretary (Department of Pharmaceuticals), comprises doctors, representatives of the pharmaceutical companies, medical experts as its members. The Committee has been meeting for the past two years. In the past meeting held by the Committee, a ‘model’ for price negotiation of patented drugs was proposed by the Ministry. The Committee invited views of the Civil Society Organizations and Individual Experts on this issue.
The proposed price negotiations are targeted for those drugs that are patented and without therapeutic equivalents. According to this, price negotiations will be undertaken for those patented drugs that are launched in India and will be negotiated on the basis of international reference pricing system. The prices of the identified drugs were to be fixed at the lowest in the international market. The mechanism proposes two types of prices, one of which would be for the open market and the other would be for prescriptions generating from the public health facilities, which would be 40- 70 per cent lower than the negotiated market price in India. The committee had identified 10 such oncological drugs for the purpose of price negotiations.
At the very outset of the meeting the participants discussed about the impact of product patent regime on medicines. Since the introduction of the product patent regime in India in 2005, there have been a number of high priced medicines introduced in India, viz., Valganciclovir (priced @ Rs. 1040/450mg tablet), Erlotinib (priced @ Rs. 3841/100mg tablet), Pegylated interferon alfa-2a (priced @ Rs.18,200/180mg PFS). Patent holders are importing these and many other patented medicines into India for sale. However, as of date, there is no information made available by the Department of Pharma about the price of patented drugs in India. Without this reliable information, it is indeed difficult for stakeholders to know the impact of the proposed mechanism and exact prices charged on pharmaceutical products in India.
During the discussion on price control of patented medicines, one of the participants suggested that the price control of patented medicines be brought under the mandate of the NPPA which is presently meant to control the prices of scheduled drugs and to monitor the prices of non-scheduled drugs. And also added that it was clearly within the NPPA’s mandate to closely monitor the prices and make all related information available in the public domain as well to the Committee members for timely action.
Participants were of the opinion that the price negotiations proposed in the current format would help only a very small fraction of the Indian population. In the Indian context, it is an unfortunate fact that the majority of the drug costs are privately paid for (out of pocket), in the absence of an effective health insurance system that provides universal access and availability. As per the World Health Organization data, only 21.3 percent of the total expenditure on medicine in India is accounted for by the government or insurance, with the balance of nearly 78.6 percent paid for privately.
Further, the participants briefly discussed about the anomalies in the composition of the committee. Participants held the view that the present proposed Committee did not include all relevant stakeholders. They also pointed out that many other institutions and government functionaries whose expertise on assessing health impact of high pricing is well known, are not being involved within the committee. Therefore participants urged that the committee should include known medical experts, inter alia, from institutions such as the ICMR, CDRI, AIIMS, NACO, and RNTCP, to determine which patented drugs are essential and have/do not have therapeutic equivalents. Furthermore, the Ministry of Health and Family Welfare should also be closely monitoring this matter among others. The meeting also reiterated that concern over the possible “conflict of interests” that may arise due to the presence of representatives from pharmaceutical companies and medical doctors recommended by the industry on the proposed Committee. Their presence would limit the role of the Committee in objectively assessing before them i.e. the measures that are needed to make patented medicines affordable. They also proposed that the Department should also consider and include, among others, representatives from patient organisations, viz., PLHA networks, cancer patient organisations, public health groups and other experts from academia and expert research organizations working on the economics of drug pricing.
Participants were of the view that negotiating directly with pharmaceutical companies for price reductions can be effective only if the Government is in a strong bargaining position. Factors that strengthen the Government’s position include reliable information on cost of production, generic pricing, quality, on prices in other countries, bulk purchasing and most importantly a credible compulsory licensing mechanism that will be invoked if the price negotiations fail. As the proposed mechanism of price negotiations does not include an initiative to include such reliable information for members of the Committee and also completely rules out the implementation of compulsory licensing mechanism, this will make the Committee ineffective and in fact could then seriously delay the implementation of compulsory licensing provisions under the Patents Act. The examples of Brazil and Thai experience were cited in this regard. While initial discounts on patented drugs may appear attractive, participants were of the view that in the long-term that the current mechanism described by the Department that is solely dependent on price negotiations would only prolong or delay the use of compulsory licensing.
Majority of the participants felt that a price negotiation mechanism that does not include the possibility of recommending and implementing compulsory licensing will not only undermine the government’s authority to negotiate prices effectively but also its willingness to use and implement key public health safeguards, under India’s patent law. The experiences of the Governments of Brazil and Thailand show that while a government may undertake price negotiations with pharmaceutical companies, it will need, in certain cases, resort to compulsory licensing On 4th May 2007, Brazilian Ministry of Health, issued a compulsory license that would allow for the import and production of generic versions of efavirenz. Before the compulsory license, Brazil had been paying Merck USD 580 per patient per year for efavirenz, which comprised about 18 per cent of the ARV budget that year. As a result of the compulsory license, the procurement price came down to USD 165 per patient per year, a considerably lower price than Brazil had been able to obtain through negotiations with Merck.
Participants were of the view that by failing to include within the mandate of the Committee compulsory licensing as an important measure, the Department is overlooking the importance of generic competition. Well-evidenced Studies have showed that the generic price was on average 60per cent of the originator brand when there was one generic competitor; 29per cent with ten competitors; and 17 per cent with 20 competitors. Such findings highlight the importance of stimulating vigorous generic competition among drug producers, which will require legal measures to overcome patent barriers.
Thereafter, the discussion was centered on the issue of international reference pricing. Many felt that the proposed price negotiation for patented drugs on the basis of lowest reference market price in the developed countries is not an effective way to reduce costs of these expensive drugs. It is not only arbitrary, but also an unscientific way of engaging in the issue of optimal pricing. It is arbitrary and unscientific because lowest MRP, based on international reference prices of few developed countries, cannot be the starting point for having optimal pricing policy in India. Furthermore, the concept of market price in many developed countries is largely a myth, since indirect mechanisms for health care cost reimbursement are at play.
Most participants felt that during the meeting on price negotiations civil society organisations were being made to understand that the Committee will negotiate the prices for patented drugs only to the extent that they are marked as the lowest based on international market reference pricing. Lowest in the world need not mean that such pricing will suit the pockets of Indian patients. This is the most unscientific way of looking at pricing as it is not related to purchasing power parity of the majority of Indian patient populations. By denying the possibility of considering generic reference pricing and cost-based system of referencing, such price negotiations are bound to be inflated. Moreover, in the absence of an international price monitoring body, the proposed negotiation also appears to be futile.
One of the participants suggested that if the companies do not move forward and register their patented medicines in India, a crucial step necessary for patients to access the negotiated price, then an immediate recommendation for the issuance of a CL should be made automatically.
On the discussion on import duties, it is reported that exemption to duties, tariffs, local or national taxes on medicines and control over distribution mark-ups are also avenues for decreasing prices for patients paying out of pocket in the private sector. In other words it is suggested that governments should not impose high import duties and taxes on essential patented medicines imported into India that are effecively taxes on the sick.
The meeting was concluded with the request from the particiapnts that the proposed negotiations on prices of patented drugs, devices and vaccines should at no point prove detrimental to the existing safeguards that enable the government to authorize generic competition where the patentee fails to price make the drug affordable and available. They also suggested that the proposed recommendations by the Committee, in its current form, will seriously undermine these safeguards for public health and should therefore be reconsidered. The participants also strongly recommended that the mandate of the Committee should be to adopt a combination of approaches including price negotiations, compulsory licensing, and bulk procurement for achieving equity pricing.
List of Participants
1)K M Gopakumar, TWN, New Delhi
2)Pritibha Siva, Lawyers Collective, New Delhi
3)Dr.Hegde, Professor, JNU, New Delhi
4)Leena Menghaney, MSF- India
5)Reji K Joseph, IIFT, New Delhi
6)Mira Shiva, AIDAN
7)Divya George, NUJS Kolkata (Summer Intern)
8)Anne Singh, NLIU, Bhopal (Summer Intern)
9)Aman Abhinav, NUJS Kolkata (Summer Intern)
10)Kajal Bharadwaj, Lawyer, New Delhi
11)Yogesh Pai, Centad, New Delhi
12)Tina Kuriakose, Centad, New Delhi
13)Santhosh M.R, Centad, New Delhi
14)Abhilash Gopinath, Centad, New Delhi
15)Linu Mathew Philip, Centad, New Delhi
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