Price control unlikely to improve access to medicines in India: IMS study

Our Bureau, Mumbai Wednesday, July 15, 2015, 14:10 Hrs  [IST]

Price control is neither an effective nor sustainable strategy for improving access to medicines for Indian patients, according to a new report by The IMS Institute India. The study, 'Assessing the Impact of Price Control Measures on Access to Medicines in India’, is based on both extensive quantitative data analysis of growth and volume trends and in-depth qualitative interviews with industry stakeholders and policy makers.

Following the publication of the Drug Price Control Order (DPCO) in 2013, more than 652 unique formulations in India are now subjected to a price ceiling in an effort to maintain affordability and increase access to drugs, particularly for low income patient populations. According to IMS Health, however, such a strategy is ineffective at best and counter-productive at worst.

Noted economist and author, Dr Surjit S Bhalla formally released the IMS study. Commenting on the findings, Dr Bhalla said, “ln my experience, the poor are the last to benefit from price control interventions. Not surprisingly, this study shows that high-income patient populations have been the main beneficiaries of DPCO 2013. In addition to price control, tariffs on essential medicines completely defeat the goal of making such medicines available to low-income patients.”

Some key findings of the study are primary beneficiaries of the DPCO 2013 price controls have been high income patient populations, rather than the low-income targets; the consumption of price-controlled drugs in rural areas has decreased by 7% over the past two years, while that of non-price controlled products has risen by 5%; and the DPCO 2013 has resulted in an increase in market concentration (fewer brands are now listed) and a decrease in competitive intensity (the average number of new brands has gone down since 2013).

Price control has increased margin pressures for small and mid-sized companies, limiting both employment and investment opportunities in the sector. Price controls negatively impact internal capability-building and expertise-building initiatives, discourage local talent and undermine the government’s 'Make in India’ initiative.

These conclusions are corroborated by similar outcomes in China, the Philippines and South Korea, where price controls have consistently failed to improve overall access to medicines.  “Price control has limited impact on improving patient access and, furthermore, is not aligned with the requirements of a vibrant economy like India,” said Nitin Goel, general manager, IMS Health South Asia. “Government’s priority should be on strengthening India’s healthcare infrastructure and extending universal insurance coverage.”

IMS Health’s report goes on to provide recommendations for the Indian government to improve the overall strength and sustainability of its public healthcare model. It is recommended that a combination of healthcare financing and non-financing measures be adopted by the government to address the issues of access and affordability.

Some specific interventions could be strengthen healthcare financing and extend universal health coverage across population segments with focus on providing cover for  medicines; invest in healthcare infrastructure and capability building; promote joint and bulk procurement mechanisms, e.g. Tamil Nadu Medical Services Corporation; levy a cess on the tobacco and liquor industries to fund the healthcare sector and subsidize essential medicines from taxes; and introduce mechanisms to ensure availability of generics at lower prices, to improve affordability for patients i.e. set up dedicated generic medicine stores.

This study was sponsored by the Organisation of Pharmaceutical Producers of India (OPPI) and supported by other key stakeholders.