Pharma Price Control Has Stunted Innovation, Study Finds

Wednesday, July 15, 2015

Consumers may be happy at a cut in medicine bills but the government’s price control measures have forced many brands out of the “unviable” pharmaceutical market, resulting in a drastic slowdown in new launches in the last five years.

From an average of four new drugs being launched in any specific category in 2011, the number has dropped to a mere one in 2014-15, implying a 75% decline in new launches, according to estimates by IMS Health — a leading healthcare market research agency.

Not just that, data collected since 2013, when the new pharmaceutical pricing policy came into place, show a sharp decline in consumption of price-controlled medicines. That’s because of a growing push for alternative options outside price control.

With lower margins in price-controlled medicines, there is also less incentive to reach out to rural markets. “For low-income households that are reliant on the government system for healthcare, DPCO (Drugs Price Control Order) would not improve the patient’s ability to purchase drugs. This is supported by the fact that no significant penetration of price-controlled molecules in rural markets is visible…,” says a latest report ’Assessing the Impact of Price Control Measures on Access to Medicines in India’ by IMS Health.

According to the report, consumption of price-controlled medicines in rural areas dropped by 7% in past two years, whereas sales of other medicines increased by 5%. It says even in Tier-II and III cities or in places outside metros, such medicines have witnessed a muted growth.

Source: The Times of India (link opens in a new window)

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