Patented MNC drugs to face price negotiations

NEW DELHI: Multinational drugmakers may find this a raw deal from the Prime minister’s Office (PMO). The PMO has told the chemicals ministry that patented medicines of MNCs could be subjected to price negotiation and those of domestic companies could be exempted.

The logic is that, for MNCs India is only one of their many global markets to recoup the cost of research, while local firms could be given differential treatment to promote indigenous research. The price negotiation, however, has to be transparent.

Price negotiation will hurt MNCs most as patentable drugs are monopolised by them, while Indian companies are yet to bring to the market a new molecule. This also involves trade implications between India and the US as Indian drug makers rely on the American market to sustain their export-oriented growth.

The PMO has, therefore, told the chemicals ministry to see if such a differentiated approach would be consistent with the country’s international obligations.

However, the negotiation may not be based on the cost of production, but may be on the premium the product commands in any other market, applied to the price of a similar medicine in India, as recommended by the Pronab Sen task force. This premium would be the difference between the product’s price in its lowest priced market abroad and that of its closest therapeutic equivalent there.

The ministry has already decided to extend the price control exemption period of locally invented drugs from five year to 10 years. With the PMO’s recommendations, they are likely to get the additional exemption from price negotiations too when the policy is finalised in a few months.