MUMBAI – India is likely to raise the number of drugs deemed essential and therefore subject to price caps to improve affordability, said people directly involved in the process.
A panel convened by India’s health ministry met for the first time on Tuesday to consider adding more drugs to the list of essential medicines, all of which would then come under price caps, one of the people said.
The move would make the drugs more affordable in a country where 70 percent of the 1.2 billion people live on less than $2 a day and less than 20 percent are covered by health insurance.
Bringing more drugs under price controls would dash hopes for an easing of the populist drug policies of the previous federal government by the new, business-friendly Prime Minister Narendra Modi, industry analysts said.
“It is surprising that yet another committee is being formed (on price control),” a top executive at the Indian unit of a large global pharmaceutical company said, declining to be named due to the sensitivity of the issue. “This (is) quite the antithesis of what is the purported philosophy of the new government.”
The panel aims to finalize within six months the expanded list of essential drugs that will be subjected to price controls, and it would take two months to make it public, another person said, after the committee’s meeting.
Making more drugs subject to price caps will draw the ire of global drugmakers like Pfizer Inc (PFE.N), GlaxoSmithKline Plc (GSK.L) and Abbott Laboratories (ABT.N), all of which have a large presence in India’s $15 billion pharmaceutical industry.
The global drugmakers have already been hit by wide-ranging government-imposed price reductions and a legal system with a history of disallowing patent protection in recent years in an emerging market that is a vital growth driver for the firms.
The move, if implemented, will also affect local drugmakers including Ranbaxy Laboratories Ltd and Wockhardt Ltd, who are relying on domestic sales after being hit by several U.S. regulatory bans due to poor production quality.
India last year raised the number of drugs that are subject to price controls to 348 from 74 earlier, covering up to 30 percent of the total drugs sold in the country, according to industry officials.
India’s pharmaceutical sector share market index extended its loss after Reuters reported the panel’s meeting and it ended down 0.3 percent on Tuesday, while the main Mumbai market index .BSESN closed 1.4 percent higher.
Shares in GlaxoSmithKline Pharmaceuticals Ltd, the Indian unit of GlaxoSmithKline Plc, reversed their early gains to end flat, while Lupin Ltd (LUPN.NS), India’s fourth-largest drugmaker by revenue, ended down 0.2 percent.
The panel will seek the views of the pharmaceutical industry and other stakeholders before finalizing the list and will review drugs covering all therapeutic areas, said the person, who spoke to Reuters after the meeting.
Anti-infective drugs command the largest share in the Indian pharmaceuticals market, followed by gastrointestinal disorders, cardiac and respiratory diseases, according to some industry reports.
All the participants of the 13-member panel are government officials, mostly from the health ministry, though the head of the panel can nominate five industry experts including doctors, according to a government document obtained by Reuters.
“I can only hope the government would take a consultative approach and get the views of all stakeholders before taking any decision on this issue,” said a senior executive at a lobby group familiar with the development.
India’s Health Minister Harsh Vardhan and Secretary for the Ministry of Health and Family Welfare Lov Verma did not respond to requests for comment on the panel meeting.
Healthcare activists say that India needs to expand its list of medicines in the so-called National List of Essential Medicines (NLEM) to improve access as the drugs that are under price caps now don’t adequately address healthcare needs.
Many medicines, such as the anti-infection agent amikacin, and the antibiotic cycloserine, which are included in the World Health Organisation’s essential medicines list, are not included in the Indian NLEM, said Chinu Srinivasan, member of the All India Drug Action Network, which has been campaigning for drug price caps.
The pharmaceutical industry, however, has primarily blamed such price controls for declining profit margins in India with companies still struggling with last year’s expansion of the price cap list.