Imports weaken Indian pharma
Relevance: GS Paper II & III
Why in News?
Ensuring the affordability of pharmaceuticals is essential for controlling healthcare costs, especially in India, where out-of-pocket health expenditures accounted for nearly 47.1% of the total health expenditure in 2021.
More about the news:
- While the Drugs Price Control Order, 2013, aims to regulate the prices of existing medicines, promoting local production and establishing a competitive environment for critical medicines may present a more sustainable option.
- However, the government has recently taken two initiatives to meet domestic requirements through imports, which could have a negative effect on the domestic pharmaceutical industry.
Recent Government Initiatives and Their Impact:
Department of Expenditure Order:
- The Department of Expenditure (DoE) issued an order allowing the Ministry of Health to procure 120 medicines through global tenders for Union government schemes.
- This list includes several top-selling anti-diabetes medicines and anti-cancer drugs.
- Many of these medicines are currently monopolized in India due to patent protection or regulatory barriers.
- Additionally, the DoE order specifies the procurement of specific brands for over 40 of these medicines, further entrenching the monopoly of foreign companies.
Customs Duty Waiver on Cancer Medicines:
- The 2024-25 Union Budget proposed removing the 10-12% customs duty on three cancer medicines marketed by AstraZeneca to reduce their prices.
- However, given the high prices of these medicines, this reduction in import duty is unlikely to make them significantly more affordable.
Challenges for Domestic Producers:
- These government measures could discourage domestic pharmaceutical producers, increasing dependency on imports.
- More critically, they may exacerbate two significant entry barriers faced by the domestic industry: the product patent regime and stringent regulatory guidelines for marketing approval of bio-therapeutics.
Product Patent Regime:
- New medicines are often under patent protection, preventing Indian companies from producing affordable generics or biosimilars.
- Although the Patents Act includes provisions to promote local production, such as compulsory licenses (CL), these have been underutilized.
- For example, a CL was issued only once when an originator company charged nearly three lakh rupees for a medicine, which an Indian company later produced for ₹8,000.
- Despite the high cost of medicines, the Patent Office has not issued CLs for any other drug, even during the pandemic.
Regulatory Barriers for Biosimilars:
- The regulatory guidelines for biosimilars in India are outdated and impose unnecessary burdens on domestic producers.
- For instance, the current guidelines require mandatory animal studies, which are no longer required in many developed countries.
- Moreover, while the WHO and U.K. guidelines consider clinical trial requirements as exceptions, Indian guidelines still mandate them, creating an additional barrier for Indian producers.
Legal Provisions and Potential Remedies:
Public Interest Provisions in the Patents Act:
- Section 83 of the Patents Act states that patents are granted to encourage inventions and ensure that they are worked in India on a commercial scale without undue delay.
- Patents are not meant to enable monopoly for importation.
- If a patented medicine is not available at a reasonably affordable price, compulsory licenses can be issued to any company willing to produce the medicine in India.
Government-Use Licences:
- Section 100 of the Patents Act allows the Central government to take measures to protect public health, including granting government-use licenses to enable domestic production of generic versions of patented medicines.
- This provision could be effectively utilized to enhance the availability and affordability of essential drugs.
Conclusion:
The proposed duty waiver on cancer medicines and global tendering for critical medicines contradict Parliament's directives to improve access and affordability of medicines through domestic production. These measures risk weakening the domestic pharmaceutical industry's relevance by increasing reliance on imports. The government must review these decisions and realign its policies to support the growth and competitiveness of India's pharmaceutical sector.
Beyond Editorial:
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Compulsory Licenses:
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