The government is mulling over excluding medicines made from locally manufactured active pharmaceutical ingredient (API)—the key raw material for the production of a drug—from price control. The move, according to a Mint report, is aimed at pushing manufacture of APIs in India to reduce import dependence. The move, if implemented and to the desired effect, would be a boost for Indian pharma. In FY19, Indian pharma companies imported bulk drugs and intermediates worth $2.4 million from China. The irony is the government had all along known how price control was affecting domestic manufacture. Indeed, Indian manufacturers had gotten more and more export focused, with their offerings in India accounting for an increasingly smaller portion of their revenues over the years.
In the Draft Pharamaceuticals Policy 2017, the government had noted that PSUs were doing a good job of producing raw materials/intermediates in the 1950s-60s, and accepted that import dependence had grown because of its price controls—“the Drug Price (Display & Control) Order 1966 put 18 APIs (raw materials) under price control … from 1996 … imported APIs and Intermediates started becoming hugely lucrative as a price cap on drugs forced the manufacturers … to obtain the cheapest raw material with the basic minimum efficacy/quality”. And yet, it had called for price controls to stay citing high out-of-pocket costs for drugs. The government, in the draft policy, also rued the fact that pharma companies were more focused on generic formulations than R&D. It should have long realised that, unless price controls go summarily and companies’ profits grow, investment in R&D will remain thin. If the government is serious about Make in India for APIs and boosting R&D spending by pharmaceutical companies, it must shun price controls as a policy measure. To keep medicines affordable for the masses, it must subsidise through bulk purchases for its Jan Aushadhi and other outlets.
