In the third round of drug price cuts resulting from February’s industry-friendly Union (federal) Budget, the Indian government has announced that the prices of more than 150 life-saving drugs in over 1,000 formulations are to be reduced.

The budget’s reduction in countervailing duty (CVD) rate from 16% to 8% has lowered the prices of 36 of the 64 price-controlled bulk drugs which are imported into India, and for 21 of these the price cut has been more than 1%, which means it has to be passed on to the consumer, says the National Pharmaceutical Pricing Authority (NPPA).

The newly-announced measure, which will also reduce the prices of imported drugs marketed by multinational drugmakers including Eli Lilly, Pfizer and Sanofi-Aventis, includes products such as betamethazone, carbamazapine, insulin, ranitidine, rifampicin and salbutamol. The affected drugs’ combined local market share is estimated to be worth around 40 billion rupees.

The 2008-9 Budget announced by Finance Minister Palaniappan Chidambaram on February 29 reduced customs duty from 15% to 10% for certain live-saving medicines and the bulk drugs used in their manufacture, and exempted them from excise and CVD. It also cut the excise duty on the Maximum Retail Price of all products manufactured by the pharmaceutical industry from 16% to 8%. However, the prices of drugs manufactured in India’s tax-free zones, which account for about 30% of the country’s total production, are not reduced.

International drug pricing seminar this week
Meantime, on April 12 the NNPA is to hold an international seminar to discuss its ongoing examination of the drug pricing systems and policies of a number of major overseas nations. India’s Business Standard newspaper, quotes the NPPA’s chairman, Ashok Kumar, as stating that agency officials had visited France, Israel and the UK. They had also conducted country profiles of: South Africa and Egypt, which have, he said, “well-functioning medicine price control mechanisms;” the USA, whose pricing model “needs to be studied for lack of price regulation;” and Canada, whose Patented Medicines Prices Review Board “needs to be understood for its effectiveness.”

The seminar, which is being organised with the aid of the UK Department of International Development, will look at issues including how to assure that medicines will be affordable to all consumers under India’s new product patent regime.