Drug makers can now launch their innovative products in the Indian market without fearing the possibility of price caps. India’s drug price regulator is not going to slap any restraint on the pricing of the drug for a period of five years starting from the day of commercializing the product in the country. But the firms are supposed to fulfill one criterion: The drug product should be patented in India.

This is due to the new Drug Price (Control) Amendment Order (DPCO) 2019, the government announced through a notification, released at the beginning of January this year. The order, which has been brought about through amending the provisions in the existing DPCO 2013, now reads: “a manufacturer producing a new drug patented under the Indian Patent Act, 1970 (39 of 1970), [will be exempt from price control] for a period of five years from the date of commencement of its commercial marketing by the manufacturer in the country.” Earlier, such exemption was provided exclusively for the drugs developed indigenously.

Many see the DPCO 2019 as a clear departure from the country’s stated policy of ensuring availability of good quality medicines at reasonable prices to all. Historically, a market highly-sensitive for pricing, India keeps a basket of medicines under a National List of Essential Medicines, known as Schedule-I of DPCO. The medicines that are included in the Schedule-I list automatically qualify for price control.

DPCO, which lays down the procedures for regulating the prices of drugs, achieves the objective through the National Pharmaceutical Pricing Authority (NPPA), under the Ministry of Chemicals and Fertilizers. The drug-price watchdog fixes and revises the prices of pharmaceutical products through rigorous monitoring of their price points. Apart from the formulations of the drugs listed under statutory price control, NPPA can regulate the prices of other ‘de-controlled’ drugs as well, “if warranted in public interest.”

An increasing number of ‘life-saving’ medicines like the ones meant for treating cancer as well as medical devices are being brought under the ambit of price control. Presently, the government has capped the prices of 855 medicines, according to reports quoting chemicals ministry officials. Drug makers often describe the ever-widening jaws of the price-control regime as “draconian.” Many of the firms either withdrew their innovator products or exited the market altogether on previous occasions blaming the unsustainable prices.

The new exemptions for the drugs that allow them to be produced, developed and manufactured anywhere across the world by the patentee is expected to encourage new drug manufacturers, analysts say.

Another category of drugs excluded from the price control regime by the DPCO 2019 is orphan drugs. This provision is likely to incentivize research into drugs that treat rare diseases where the R&D investments are comparatively less.

Further, the new amendment brings in certain flexibility for fixation and revision of prices of drugs. The notification says “the source of market-based data shall be the data available with the pharmaceutical market data specializing company as decided by the government.” This means the NPPA can consider the data provided by any pharmaceutical market data specialized company. Also, it allows the said statistical data for any month and does not necessarily require such data to be of the preceding months. This is a step to get rid of the ongoing practice of relying upon a one-stop data source and analysis of the data from preceding months as they posed practical problems.

According to the ministry, the DPCO 2019 would pave way for Indian patients getting access to drugs which are, otherwise, available only abroad. The move is meant to incentivize companies, to encourage them to manufacture drugs for rare diseases. And the most powerful incentive is to grant exclusive marketing rights to them.

Meanwhile, healthcare NGOs and civil rights activists slammed the initiative as being “against the interest of the patients.”

The policy change can only lead to monopolistic practices leaving the patients at the mercy of pharma giants who charge exorbitant prices. It also contravenes the agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS), to which India is a signatory. India always stood for stronger implementation of TRIPS flexibilities.

Freeing up orphan drugs from price control went against the National Policy for the Treatment of Rare Diseases. NPTRD itself was an outcome of orders passed by the judiciary in cases filed by patients struggling to access highly priced drugs. The policy was framed on the basis of recommendations of three expert committees, which noted the prohibitive costs of treatments. NPTRD 2017 India lists 450 such rare diseases, including hereditary cancers, congenital malformations and autoimmune disorders, they argue.