India poised to cut margins on foreign meds

India is tightening up the rules on foreign drug-price increases. The National Pharmaceutical Pricing Authority says drug importers have to jump through more hoops to hike their prices, aiming to keep foreign drugmakers from taking advantage of a production-cost loophole.

In the past, prices for imported drugs included a 50% margin over production costs for products with no generic equivalents in India and a 35% margin for those with just one domestically produced generic. If production costs rose, prices rose, too. But the NPPA says it's noticed a pattern of production costs rising just as generic competitors near launch. In a case cited by PharmaTimes, additional production costs claimed by one drugmaker exactly matched the amount the company would lose once the Indian-made generic hit the market.

So, the NPPA says price increases will no longer be automatically approved based on production-cost reports, but that genuine increases in costs will be recognized. But as The Economic Times points out, NPPA doesn't have the authority to verify production costs, but it can cut allowed margins, as it did last year with some of Eli Lilly's ($LLY) insulin brands.

Meanwhile, a Pfizer ($PFE) official warned the Indian government against extending its new price controls beyond the 348 medicines on the National List of Essential Medicines. By setting prices on those drugs, Indian officials have already broadened controls to 75% of the industry, Pfizer's India managing director Kewal Handa said (as quoted by the Business Standard). Handa also recommended that the government cut taxes on those essential drugs.

- see the PharmaTimes story
- read the Economic Times piece
- get more from the Business Standard

Also: Pfizer warned the Indian government against extending price controls beyond the National List of Essential Medicines. Report