[Ip-health] Pricing of patented drugs may not be easy for the Indian govt

[Ram]

>From The Economic Times

Multinational drug firms seem to have scored a pre-emptive strike on
those in the government pitching for controlling the prices of
patented drugs.

A delicately worded provision in the patent law is likely to see them
through a serious move by the chemicals ministry to empower its drug
pricing arm, the National Pharmaceutical Pricing Authority (NPPA), to
limit the price of a patented drug.

Sources told ET the chemicals ministry is writing to the health
ministry to ask all companies seeking marketing approval for a
patented drug to negotiate the price with NPPA, before marketing nod
is given. Besides changing the Drug Price Control Order (DPCO)
executed by the NPPA, the chemicals ministry is asking the health
ministry to amend the Drugs and Cosmetics Act.

However, the criteria for negotiating the price of drugs is difficult
to decide so long as the patent holder chooses not to manufacture it
in India. The state can decide on a reasonable profit margin if it
could inspect the manufacturing plant and find out the actual cost of
production.

For imported drugs, the NPPA will have to take at face value the
figure provided by the company. The government is still studying the
modalities, sources said. Though commerce minister Kamal Nath said
recently that "mere importation would not suffice" for the working of
a patent, the fine print is open to interpretation.

The Patent Ordinance '04 and Patent Rules '05 remain silent, while the
Act says that "regard shall be given to the general consideration that
patents are not granted merely to enjoy a monopoly for importation of
patented article."

The government has, in the past, noted that when the price of a drug
manufacured here by an MNC is controlled, the firm chose to stop
production in favour of importing. An example cited by the government
is Aventis' hypertension drug Trental. This puts the state in a
dilemma over controlling the price of domestic manufacturers as well.

"We can't say to the domestic industry that since we are helpless in
controlling an imported product's price, we control your price," said
an official. One way of addressing this tricky issue is to enable the
domestic industry to reach the level of a multinational firm, so that
competition brings down prices.