IPA punches holes into drug pricing policy implementation

New Delhi : A body of major domestic pharma firms, IPA has hit out at the government over drug price control issue, wondering if the country followed rule of law for the sector.

Expressing concern about future of the pharma industry in India, the Indian Pharmaceutical Alliance (IPA) said pharma companies have become a victim of "unbridled turf war" between the Department of Pharma and drug price regulator NPPA.

In a letter written to Niti Aayog Vice-Chairman Arvind Panagariya, the IPA said the last couple of years have been unsettling for the domestic pharma industry due to "arbitrary and imaginative" implementation of the drug pricing policy.

The alliance, which has members including major home-grown companies such as Sun Pharma, Dr Reddy's, Lupin, Glenmark, Cipla and Cadila, among others, further questioned the government's measures "that do not help customers nor the industry".

"The industry is perplexed by the propriety, not just legality, of several recent decisions of the government. It has begun to doubt if the country follows rule of law for the pharmaceutical industry," IPA Secretary General D G Shah said in the letter.

He regretted that many decisions are neither in the interest of consumers nor will they promote growth of industry.

Hitting out at the turf war between the Department of Pharma (DoP) and the NPPA, the letter said it has become a nightmare not because the pricing policy is defective.

"The problems have cropped up because of imaginative and arbitrary implementation of the pricing policy and unbridled turf war between the government (DoP) and the regulator (NPPA)," it said.

According to the body, this has resulted in unwarranted price fixation, open defiance of the government's corrective orders by the regulator and frustrating litigations for the industry.

"In the last one year, more than 400 MNCs and Indian companies have moved courts to resolve their grievances relating to price change implementation, haphazard banning of fixed dose combinations (FDCs), non-compliance with law in price fixation, etc," the IPA said.

"This is not a good sign. It is indicative of trust deficit in the regulatory mechanism and administrative machinery, be it the NPPA or CDSCO," it added.

The IPA also made a case for initiating a meaningful dialogue between the government and the industry to find amicable solutions and move forward. "A volatile domestic market cannot sustain exports," it said.

Shah said India's pharmaceutical industry is the third largest exchange earner (USD 10 billion in 2013-14) in the goods category, after apparels and cereals.

He called on Panagariya to help find a stable, predictable and transparent regime for the pharmaceutical industry.

"We believe that such a regime is essential for the development and growth of the pharmaceutical industry, job creation for educated youth, and ensuing abundant availability of quality medicines," Shah reasoned.

As stipulated under the Drugs (Prices Control) Order (DPCO) 2013, the NPPA fixes ceiling price of essential medicines of Schedule I.

The government had notified the DPCO 2013, which covers 680 formulations, with effect from May 15, 2014, replacing the 1995 order that regulated prices of only 74 bulk drugs.

The IPA further said the last couple of years have also been "very unsettling" due to repeated attempts in some quarters within the government to introduce patent linkage and data exclusivity.

The alliance alleged that multinational drug companies have adopted certain unethical practices while seeking judicial intervention.

"Their practices have significant adverse impact on the development, growth and exports of pharmaceuticals. Their actions are aimed at thwarting the future growth by delaying entry of generics and biosimilars and prolong high-priced regime in the absence of generic competition," the IPA contended.

Their actions will deprive patients of access to affordable generics and biosimilars on the expiry of patent protection, it argued.