India's National Pharmaceutical Pricing Authority (NPPA) has told the government that the prices of patented medicines should be negotiated by a central agency and based on a reference pricing system.

The new agency should provide estimates of the market potential of new patented drugs and negotiate their prices based on levels in markets where consumers' per capita incomes and purchasing powers are comparable to those in India,the NPPA proposes. It should then set a reference price based on an average - or the lowest - of the reference countries' prices, it adds. 

The Authority also recommends that, once the price has been agreed, bulk procurement of patented drugs should be conducted through a central agency to ensure that the products are actually delivered at the negotiated price through the existing distribution networks.  Moreover, patented drugs should be exempt from all duties and taxes, and their marketing approval should be linked to the pricing negotiations, so that import licenses for the product will only be granted after the price has been agreed, it says, according to a report in India's Business Standard newspaper.

If the central government accepts the NPPA's recommendations, this could lead to more than 50% of the Indian market coming under official price control, and the abolition of duties and taxes would reduce the prices of patented drugs by over 30%, thus increasing access and driving up demand, according to analysts at IHS Global Insight.

However, adoption of the proposed new system would also cause further problems for multinational drugmakers relating to India's position on patents, say the analysts, who note that this "is seen as a hindrance by major pharma to gaining entry into the Indian patented product market, and comes at a time when the Indian Patent Office has refused to include any Trade-Related Aspects of Intellectual Property Rights (TRIPs)-plus measures and make any changes to the patent law."

Meantime, from this month, working details on patented drugs which manufacturers are required to submit each year to India's controller general of patents, designs and trademarks are being made available to the public.

The details include information about the quantity and value of the product's manufacture and import levels and a statement from the supplier relating to how far domestic demand for the product is being met at a reasonable price. Making this information public will be valuable for both patients and generic drugmakers seeking to make compulsory license applications, say local reports.