INDIA PLANNING NEW DRUG PRICING SYSTEM

A new drug-pricing regime is expected to be introduced in India this year, which will include a new Drug Pricing Control Order (DPCO). Under the proposed regime, the government is expected to change its stance from one of price-control to one of price negotiation. Currently drug prices are kept as low as possible and the profits of drugmakers are restricted to 8–13% of pre-tax sales. There is also the possibility that the National Pharmaceutical Pricing Authority (NPPA), which is responsible for drug pricing in India, could be reformed and strengthened.

The new pricing regulations are expected to form part of a larger pharmaceutical policy framework being planned for the country. With the recent introduction of Good Manufacturing Practice (GMP) standards, many small drug producers are facing closure. Legislation is therefore being considered that would create a fund to provide loans for up-grading and modernising production facilities. Also, as part of the proposals, an 'illness assistance' scheme could be introduced to provide free health care to below poverty line (BPL) families. Further, a 200% 10-year tax rebate is being proposed for R&D expenses incurred by drugmakers. This is deemed essential after the recent introduction of patent protection laws in India has sent domestic R&D investment soaring.