India scraps generic drug price controls

India has scrapped plans to impose price controls on a range of branded generic drugs made by western multinationals and leading Indian drugmakers, as it seeks to defuse rising tensions with the pharmaceuticals industry.

The climbdown comes days before a scheduled court hearing in a lawsuit challenging price controls imposed by the National Pharmaceutical Pricing Authority in July on 108 diabetes and cardiovascular drugs, including Novartis's blockbuster drug Diovan, used for hypertension, and hypertension and diabetes drugs by Sanofi.

The lawsuit was filed by the Organisation of Pharmaceutical Producers of India - the industry body representing multinational drug companies in India, which argued that the July price caps were arbitrary and imposed with no prior warning, or consultation with industry.

The NPPA said this week that it was withdrawing guidelines issued in May that aimed at reducing the "inter-brand price variations" for a range of medicines used in cancer, malaria, tuberculosis, HIV and other chronic ailments.

The guidelines allowed for price controls to be imposed on off-patent medicines priced more than 25 per cent above the average cost of other generic versions of the drug - a move seen as targeting both multinational companies, and India's best-known domestic drugmakers, which tend to charge premiums for their branded generics.

In a statement on Tuesday, Ranjana Smetachek, director-general of the OPPI, cautiously welcomed the government rollback, although it was not clear whether the July price controls - imposed on the basis of the now withdrawn May guidelines - would now be lifted.

"We are still trying to understand the precise impact of this order on our member companies," Ms Smetachek said.

Abhishek Sharma, a pharmaceuticals industry analyst with India Infoline, a Mumbai-based brokerage, said he believed that the batch of price controls imposed in July were likely to remain in force - unless struck down by the courts.

But he said that the policy rollback was positive for the pharmaceuticals industry's future prospects in the Indian market. "It's a big positive, but my sense is it will only have an affect on things which are to come," he said.

India has a long history of price controls on medicine, dating back to the socialist era, when nearly 90 per cent of medicines were under price caps. In the mid-1990s, India dramatically pared price controls, which were confined to just 76 medicines, mostly those deemed "essential medicines" required for acute, life-threatening situations.

But over the past two decades, authorities have been gradually widening the ambit of price controls, partly by adding more and more medicines to the essential medicine list, much to the chagrin of large drugmakers.

Multinational pharmaceuticals companies in India have also been agitating against what they say is the Indian government's disregard for their intellectual property rights, after a series of court decisions that have overturned or rejected patents on a series of cancer drugs.

© The Financial Times Limited 2014. All rights reserved.
FT and Financial Times are trademarks of the Financial Times Ltd.
Not to be redistributed, copied or modified in any way.
Euro2day.gr is solely responsible for providing this translation and the Financial Times Limited does not accept any liability for the accuracy or quality of the translation