Protect the patient
But even with patents, governments can control prices to ensure that drugs are affordable by people. Governments across the world do this. In different ways.
In India, the Drug Price Control Order regulates a certain number of drugs under price control. The Drug Policy of 1994 brought in the National Pharmaceutical Pricing Authority and reduced the coverage of drugs to 76, which was estimated then to be roughly 50 per cent of the domestic pharma turnover. In February 2002, the government announced the Pharmaceutical Policy, which would bring down the coverage even further. According to a locost analysis, this would have left between 30-40 drugs on the drug control list. This policy never made it through.
The existing criteria, for what is included in price control, is based on the moving annual total value, which indicates the turnover (Rs 25 crore annually) and competition, determined by the percentage of the market share (50 per cent or more) or if the value is more than Rs 10 crore, but less than Rs 25 crore and the market share is 90 per cent or more. In other words, the order was aimed to control prices in situations of monopoly. On the other hand, the National List of Essential Medicines, regulates a list of drugs to ensure that they are available in the health system (see box: Defining what is essential). But as there is no real relationship between what is essential and what is price-controlled, it has lead to litigation. In 2003, Supreme Court directed the government to ensure that essential and life-saving medicines do not fall out of price control.
Other countries also used price control mechanisms to check the price of patented drugs. For example, Canada's Patent Act of 1997 created the Patented Medicine Prices Review Board (pmprb). While the board has no jurisdiction over generic drugs, it has a clear mandate to protect consumers by "ensuring that prices charged by manufacturers for patented medicines are not excessive'. The board enjoys independence and autonomy, and the government has no power to direct it or review its decisions and orders. Its decisions are subject to judicial review only on jurisdictional and procedural grounds. The Canadian experience has been so successful, that many consumers in the unregulated and steep priced market of the us, actually shop for drugs from Canada.
In the uk as well, the Pharmaceutical Price Regulation Scheme regulates profits within a band of 17-21 per cent. The question now is what will India do?
Licence to cure
Another approach to limit the impact of monopolies is to allow more licenses for the same drug to be manufactured and sold. Licenses could come in three varieties
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