India's generic drugs could face new price controls as early as next year, as the prime minister's office pushes for an investigation of what one official in press reports called "astronomical" markups by drugmakers, suppliers and retailers.
The office reportedly ordered the Department of Pharmaceuticals to look into the large markups that occur on generics that are sold through distributors. LiveMint cited a senior official in the department who said it expects to place limits on the trade margins within two months.
The official said a panel already has been established to include the department, the National Pharmaceutical Pricing Authority and the Competition Commission of India, as well as industry groups.
For several years, the government has attempted other ways to make generics more affordable to Indians, including the establishment of its own drug store chain, Jan Aushadhi. By the end of the year, the group expects to have more than 400 generics for sale, compared with the 225 now available. Within two years, the government expects to have 3,000 Jan Aushadhi stores throughout the country.
The pharmaceutical department said it was concerned about the supply process through which distributors have caused a string of markups on some drugs and medical devices so high that by the time they reached the customer, the manufacturer's price was increased by as much as 4000%.
The government move is opposed by the Indian Drug Manufacturers Association, which said regulating generic prices would hurt most the rural and semirural areas of the country where some pharmacies would have to close.
Proponents argue that under current markup prices for generics, which comprise as much as 6% of India's drug market, the manufacturing price can be jacked up by 20 times as it moves through the system to the retailer and then to the customer.
One cause of the higher prices allegedly stems from distributors who have medical representatives sell the drugs directly to rural physicians as well as to retailers, adding an additional markup to the series.
The NPPA has authority to regulate 348 essential drugs, limiting retail markups to 16%. The government's control of drug prices in general has drawn criticism by the Supreme Court, which as late as July called its process "unreasonable."