Ministry of Chemicals and Fertilizers
Workshop on “Competition Issues in the Pharmaceutical Sector in India’
Posted On:
27 AUG 2021 7:10PM by PIB Delhi
The Competition Commission of India (CCI) organised a workshop on ‘Competition Issues in the Pharmaceutical Sector in India’ on August 27, 2021. The daylong workshop was conducted by the CCI in pursuance of its mandate of protecting and promoting competition in markets, and as a part of its ongoing market study for better understanding of the competition landscape in the pharmaceutical sector in India, focusing on the specific realms of the distribution architecture for drugs, trade margins, prevalence of branded generic drugs in India and its implications for competition.
Dr. Vinod K Paul, Member, NITI Aayog delivered the Keynote Address at the workshop. The Inaugural Session of the workshop was also addressed by Mr. Ashok Kumar Gupta, Chairperson, CCI and Prof. K Srinath Reddy, President, Public Health Foundation of India. Mr. S Ghosh Dastidar, Secretary, CCI delivered the Welcome Address.
Referring to the critical role that drugs play in health delivery, Dr. Vinod K. Paul, Member, NITI Aayog, in his Keynote Address, highlighted access to drugs without financial hardship and assurance on quality of drugs as the two pillars for achieving the public policy goal of universal health coverage. In view of the fact that spending on drugs accounts for 70% of out of pocket expenses on healthcare in India, he emphasized on the importance of improving affordability of drugs. He pointed to the critical role that the CCI plays in addressing market distortions that can affect access and appreciated the Commission’s effort in conducting a market study on these aspects. On the issue of drug prices and access to drugs, Dr Paul discussed the regulatory instrument of trade margin rationalization implemented by the government for 42 anti-cancer drugs in India on a pilot basis in 2019. He apprised that cost saving of Rs 984 crores accrued for more than 500 brands across 42 formulations, on account of the capping of trade margins. He further mentioned instances where margin rationalization led to 90% price reduction in certain drugs. Trade margins being one of the focus areas of the ongoing CCI market study, Dr Paul said that the NITI Aayog and the CCI could join efforts in this area. Feedback received from stakeholders during the course of the market study on the issue of trade margins and margin rationalization would be useful, he added. He further sought suggestions from industry participants on ways for effective expansion of Janaushadhi. To bring in trust of prescribers and patients on pure generic drugs, he suggested introduction of quality mark on generics in India.
Mr Ashok Kumar Gupta, Chairperson, Competition Commission of India, started his address by underlining the importance of well-functioning markets in the pharmaceutical sector for firms to compete on merits, innovation to thrive and consumers to benefit from competitive market outcomes. The atypical economics and distinctive features that characterise the sector can however attenuate competitive forces and the ongoing CCI market study is an attempt to take a close look at the factors that influence competition, he added. In the context of price competition in pharmaceuticals, Mr Gupta highlighted the role that generic drugs can play in creating the competitive pressures required for bringing down prescription drug prices, thereby reducing healthcare costs and improving access. While discussing some of the key interim findings of the market study, Mr Gupta mentioned that despite the presence of several players in generic formulations, consumers in India ostensibly pay a premium for brands. On this issue of prevalence of branded generics in the pharmaceutical retail market in India, he pointed to the key role that quality expectations and a perception of variation in efficacy across drugs play in fueling brand competition and in diluting the price-reducing effect of generics in India. Besides the quality aspect, he alluded to the significant role that Janaushadhi and the emerging private generic retail chains in the country can play in increasing availability and improving uptake of generic generics. Speaking with reference to the trade association practices in the distribution segment, such as the mandatory requirement of No objection certificates for appointment of stockists and mandatory charges for Product Information System which have been found to be in contravention of the provisions of the Competition Act, 2002 in the past, Mr Gupta stated that the Commission would complement its enforcement with pro-active engagement with associations across India to create awareness and prevent violation of the Act.
Dr K Srinath Reddy, President, Public Health Foundation of India, in his address, brought forth the core issues in the pharmaceutical sector from the consumers’ perspective. Given the information asymmetry that characterizes the sector, he emphasized on the criticality of protecting consumers from market imperfections and the role that CCI can play in this regard. Referring to industry practices such as camouflaged competition between brands, marked variation in pricing of same drugs etc., Dr Reddy said that there was a great need for promoting generic competition through quality-assured unbranded generics. He further highlighted the significance of large-scale public procurement in bringing down drug cost. Dr Reddy further discussed how biosimilar drugs and its market expansion would be significantly beneficial and that India had the potential to become a global leader in biosimilars.
The Inaugural Session was followed by three technical sessions on i) Pharmaceutical Distribution: Trade Practices and Competition ii) Generic Competition In Indian Pharmaceuticals: Price and Non-Price Issues and iii) Competition in the Pharmaceutical Sector: Role of Regulation and Antitrust. In the first two sessions, stakeholders shared their views on the focus areas of the study. The third session brought together sector experts, antitrust practitioners and regulators to deliberate on the regulatory pathways for promoting competition in the pharmaceutical sector.
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RM/KMN
(Release ID: 1749659)
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