Recently, the Department of Pharmaceuticals ("DoP"),
in its effort to fix the prices of patented drugs in the country
has constituted an inter-ministerial committee of joint secretaries
of different ministries to look into the issue. This is the second
round of DoP after facing failure in its previous efforts. The
announcements in the pharma FDI has brought some cheers to the
local players but the proposal has not given heed to the advises
proposed by the Health and Commerce Ministries.
1. DoP's constant efforts to fix patent drugs'
Even after facing utter failure in fixing the prices of patented
drugs in the country DoP is back in action, this time with an
inter-ministerial committee of joint secretaries of different
ministries to look into the issues and suggest ways and means
to fix the prices of patented drugs. The inter-ministerial
committee has been constituted in light of the diverse opinion of
different stakeholders received on DoP's earlier report on
patented drugs. In its past report on the issue, DoP committee had
recommended a formula on price negotiation of patented drugs,
linking it to the per capita income in the country and had also
suggested that the price of patented drugs should be frozen before
the drugs are marketed.
PSA view -A patient's interest can be
protected in a better manner if the rates of drugs is well
regulated. Recently MCI had also asked the doctors to prescribe
drugs with generic names so as to minimize usage of drugs of very
high end brands. It is praiseworthy that DoP has not left the
matter in lurch and is doing constant efforts to fix the prices of
patented drugs. Once the move is successful, it is surely
going to benefit the customers who sometimes end up spending
more than their spending capacity on drugs alone. Secondly, once
the rates are regulated, the drugs makers will not be able to
exploit the market with their patented drugs.
2. Revised FDI policy in pharma
Cabinet Committee on Economic Affairs had decided in November
2013 and conveyed its decision to the Department of Industrial
Policy and Promotion ("DIPP") regarding
the changes in the FDI policy in pharmaceutical sector. The
announcements to continue with the same FDI limits were taken
earlier this year. The current position is that 100% FDI is allowed
in both Greenfield (new) Brownfield (existing) segments and the
investments under the Brownfield is subject to approval by the
Foreign Investment Promotion Board
("FIPB"). However, DIPP has said that a
"non-compete clause" will not be allowed except in
special cases and that too with the prior approval of FIPB.
PSA view -Though Health and Commerce Ministry
had suggested to lower the FDI cap but Cabinet Committee decided
not to do that but in order to give some respite to the local
players they have suggested the "non-compete clause"
deletion. Now the sellers will not have to agree regarding not
competing with the buyers and in launching of similar products in
the same or relevant markets. This can allow the local players to
start afresh in the same segment, in the same market and hire its
old employees from the entity it has just sold.
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