On 13 April, a day before the Easter weekend, many drug manufacturers went on their breaks feeling a little agitated but mostly helpless. It was the day, the spokesperson of the Indian Pharmaceutical Alliance (IPA), representing its (invite only) members—over 20 large companies including Sun Pharma, Dr Reddy’s, Lupin and Cipla—went public with his anger.
Dilip G Shah referred to the pricing policy roll-out as “arbitrary”, and compliance to guidelines “difficult”. Shah claimed these two factors were adding to the “woes” of the drug industry.
With their morning coffee, manufacturers and the drug regulator read Shah’s opinion piece. They made calls, exchanged texts and shared tweets asking each other: Was the regulatory mechanism for the price control of essential medicines hurting the industry so much?
The answer was lurking in their own backyard. The IPA’s internal report, ‘Pharmaceutical Sector Challenges and Opportunities – 2017’, was short. Just 21 pages. But it provided the answer. Price control was the least of the sector’s woes.
The chatter to disband the drug pricing regulator—National Pharmaceutical Pricing Authority (NPPA)—under industry pressure, which began six months ago, was grave enough. The NPPA’s recent claim to fame in controlling the prices of stents by treating them as essential medicine in the prime minister’s speeches has intensified the conflict.
In hushed tones, senior executives of some of the largest pharmaceutical companies say that they want to work with the regulator and abide by the law but Shah has taken the conflict very personally. He has scapegoated the regulator for unrelated ills.
The public posturing of the IPA, which is in sharp contrast to its own report, shows the extent of the misinformation being floated. Instead of working out mechanisms to keep the prices affordable and the industry healthy, not mutually exclusive goals, the anti-price control drumbeating has diverted the attention from the real challenges of the drugmakers. Even creating doubts in the minds of foreign investors.
The real culprits
The piece in The Economic Times and the letter that the IPA sent earlier this month to think-tank NITI Aayog’s vice-chairman Arvind Panagariya, both authored by Shah, point that the industry’s growth rate is declining. From 15% in 2015 to 11% in 2016 and further to 9% ending in February 2017. And why is that so? Because of the “‘arbitrary and unimaginative’ implementation of the drug pricing policy” by the NPPA and the policy initiatives of the Central Drugs Standard Control Organisation (CDSCO), Shah argues.
