India reins in agency's ability to cap drug prices

Narendra Modi

Price caps on "essential drugs" in India have been a sore point with domestic as well as Big Pharma players. The industry was further enraged when an Indian agency in May assumed the authority to add other products to the 350 already restricted. But the government of Prime Minister Narendra Modi is reining in the National Pharmaceutical Pricing Authority (NPPA), suggesting he may have a less populous approach to the industry than his predecessor.

The NPPA on Monday announced that it had lost the authority to unilaterially add drugs to those that will be capped, Reuters reports. No explanation was given as to what prompted the action but the industry protested in July when the NPPA added 108 drugs to the list and then followed up last week with three dozen more, which were put on the essentials list. The Organisation of Pharmaceutical Producers of India protested the action and lawsuits were filed, Reuters reports.

There has been a strong support for keeping prices low in a country where 70% of the population gets by on less than $2 a day and 80% has no health insurance. But the industry, which includes large Indian drugmakers like Ranbaxy Laboratories and Sun Pharmaceuticals, as well as Western drugmakers like Sanofi ($SNY), Abbott Laboratories ($ABT), Pfizer ($PFE) and Merck ($MRK), has argued that drug prices in India are already among the lowest in the world and that it should not have to assume the cost of a government responsibility.

An NPPA official who declined to be named told Reuters the action affects pricing going forward, but the past is the past, at least for now. "The basis to proceed further has been withdrawn. We are not saying anything on the past," the NPPA official said. "The government always has an overriding power."

While there was no explanation for the government tamping down the NPPA's authority, Reuters notes that it came days before the Indian Prime Minister makes his first trip to the U.S. since being elected. Relations with India have been strained for awhile and one of the issues that has been has been adding pressure is the aggressive approach India has taken toward pharmaceutical patents. The country issued a compulsory license to Indian drugmaker Natco to produce Bayer's Nexavar and is considering others. Pfizer, and others, complained to Congress after Indian officials in 2012 revoked Pfizer's IP protections on cancer drug Sutent. That and other patent fights helped land the country on the U.S. Priority Watch List, a distinction reserved for countries whose IP protection practices it believes need close monitoring.

- read the Reuters story

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