India’s government could become the country’s only purchaser of patented drugs and medical devices, under new proposals currently being discussed by ministers. While other nations operate central medicines buying for their public health care systems, this would be the first instance of a government also becoming the sole supplier for private health care providers.

Innovative new medicines remain financially well out of reach for the vast majority of India’s 1.13 billion population, and even for most of its large and growing middle class, which currently numbers 325-350 million people, according to new estimates issued by the US Department of State last month. Earlier this year, a number of multinational drugmakers announced moves to make their new treatments more affordable in the country by launching them at substantially lower prices than those charged in western markets; for example, Merck & Co’s diabetes drug Januvia (sitagliptin) is on sale in India at about one-fifth of its US price, a policy which the company says it will adopt for further launches in the country.

Some observers say that monopoly purchasing of patented drugs and devices at single negotiated prices in India would bring enormous benefits to both sides; not only would many more patients gain access to effective new treatments because of the massive price discounts that government negotiators would be able to demand by dealing directly with manufacturers, but the firms themselves would benefit from vast assured bulk contracts and very significant cost savings, as they would no longer need to promote their products to retailers, private hospitals and pharmacies. The proposal is understood not to involve the central government taking on any distribution responsibilities; the purchased patented drugs and devices would be released directly to the country’s state governments, Indian Railways (the world’s biggest employer), private hospitals and other health care providers.

However, other commentators warn that the scheme could actually lead to treatment worsening for patients, due to the difficulties of ensuring continuous supplies and also because monopoly purchasing of one product from a range of equivalents could deny them the treatment that is right for them. Permitting large providers to also negotiate directly with manufacturers would keep the market competitive, they add.

Moreover, while Research and Markets recently forecast that India’s domestic drug market will increase from a current value of $12.2 billion to $17.8 billion by 2012, the share accounted for by patented products will continue to decline, and many observers expect it to be less than 10% by 2015. Therefore, they say, the proposal would have very little impact on improving access to medicines for India’s population.

Indian drug launches down

Meantime, 4,700 new drugs were launched onto the Indian market in the two-year period ending March 2008, down from 4,830 in the two years to March 2005, according to market research firm ORG IMS. Moreover, the majority of products launched in the most recent period were combination products and new forms of existing molecules, it says.