New Indian price caps would raise another hurdle to Big Pharma

Here's another chapter for the growing treatise known as Emerging Markets Are Tougher Than We Thought, by Big Pharma. India's newly proposed price controls would put another damper on drugmakers, extending caps to branded meds for the first time.

As The Wall Street Journal reports, India already sets prices for 74 generic drugs. It's now considering capping the cost of 348 drugs in all. The details of controls on branded prices haven't been determined yet. But any government-set prices would no doubt be significantly lower than companies would choose to charge.

Meanwhile, the country's National Pharmaceutical Pricing Authority is seeking the power to demand foreign drugmakers' rationale for setting prices on imported drugs. Domestic drugmakers' prices are set by the NPPA based on actual production costs, but foreign drugmakers' prices are based on a capped profit margin, The Economic Times reports.

The NPPA says that approach might allow foreign drugmakers to report prices that are "much higher" than the actual cost, so that the fixed-margin approach yields bigger sales. Understandably, multinational companies don't want to deal with cost-based pricing--and they're objecting to NPPA's request on the grounds that it violates the government's own policies.

This is all further complicated by the fact that foreign drugmakers are feeling the pressure on their intellectual property. Novartis ($NVS) is fighting in court for patent protection on its cancer drug Glivec, which authorities say doesn't deserve market exclusivity. And Bayer has formally balked against the government's move to usher generic Nexavar onto the market, via India's first compulsory license.

After compelling Bayer to allow Natco Pharma to produce and sell a copycat version of the drug, Natco launched its much-cheaper product--and Cipla slashed prices on its own copy, which it's been selling despite a patent dispute with Bayer.

Some foreign drugmakers have already cut their own prices in India, perhaps to forestall forced cuts and compulsory licensing for much-cheaper rival products. Roche ($RHHBY) recently slashed the prices on several products, while GlaxoSmithKline ($GSK) has been using a "tiered pricing" approach, with prices at 25% to 40% cheaper than elsewhere.

- read the WSJ piece
- see the Times article

Suggested Articles

With generics at the gates, Novartis’ Gilenya secured a breath of fresh air—and protection for its blockbuster sales—with a federal injunction.

Akorn has been slammed with another FDA warning letter even as it is in the process of renegotiating its loans with lenders.

Horizon Therapeutics is preparing for the potential launch of inflammatory eye drug teprotumumab with team building.