Unreasonably high prices of drugs, introduced by companies such as Dr Reddy's Laboratories Ltd,

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Ranbaxy Laboratories Ltd, Cipla, Switzerland-headquartered F Hoffmann-La Roche Ltd and Novartis AG, have triggered a change in the drug policy. The government is planning to introduce a clause in the Drugs and Cosmetics Act, whereby every company would need to negotiate the price before launching any drug.

The drugs that are under scanner include Doxobid (Dr Reddy's), Synasma (Ranbaxy), Tarceva (Roche), Gleevec (Novartis) and i-pill (Cipla) for their high entry price. The move would herald a tough time for domestic and multinational companies, as they would have to justify the price to the government before launching new drugs in the Rs 40,000-crore Indian drug market.

“The proposal is necessitated by the fact that companies introduce the drugs at higher prices as they deserve to ensure that they can easily accommodate the rule, where government does not allow over 10 per cent increase for drugs within a year,” a senior official in the ministry of chemicals told Financial Chronicle.

Every year drug companies launch about 6,000 medicine packs in the Indian market for which there is no mechanism to fix prices and pharmaceutical companies till date have prospered piggy-backing on new drug launches, said the official.

“Recent launches such as Doxobid (DRL), Synasma (Ranbaxy), Tarceva (Roche), Gleevec (Novartis) and i-pill (Cipla) are launched at high prices keeping the 10 per cent rule in mind. Launching a drug at a higher price provides the company a cushion against government's restriction of not increasing the price over 10 per cent on an yearly basis,” editor of Monthly Index of Medical Specialities C M Gulati said.

Both Doxobid and Synasma are used to treat asthma and chronic obstructive pulmonary disease, while Tarceva is indicated for the treatment of lung cancer. Novartis’ Gleevec is used to treat blood cancer and Cipla's i-pill is an emergency contraceptive.

Meanwhile, the health ministry has received over hundreds of applications from companies wanting to launch drugs in the lucrative Indian market. Applications include New Jersey-headquartered Johnson and Johnson, as they plan to introduce their drug Prezista that is indicated towards the treatment of HIV infection, Spain-based Dipharma SPA has applied to launch its anti-allergic medicine Pemirolast in the Indian market. Among other products, GE Healthcare and Life Sciences company listed on the New York Stock Exchange plans to introduce its gel Omnipaque that is injected into the patients to get better results for CT scans.

When contacted, an Indian Drug Manufacturers Association official said, “The pharmaceutical industry has matured to such a level that even if certain products are not under price control, the market forces would keep a check on the prices.”