Indian drug price cuts up for Cabinet approval

India's government has rubber stamped a plan to boost the number of medicines covered by the national pricing controls mechanism as part of a bid to expand access to drug treatment.

The country is said to be one of the fastest-growing drug markets in the world - tipped to reach $54bn by 2020 with compound annual growth of around 15 per cent - but there has been concern that rising drug prices were excluding vast swathes of the population from access to treatment.

In July, the Indian government announced a $5.4bn plan to provide free medicines to 52 per cent the country's 1.2 billion people by 2017.

The latest announcement adds almost 350 new medicines to the current 74 drugs included in the pricing scheme, with between a quarter and a third of all medicines sold in India now subject to government-mandated controls.

A number of drug classes on India's essential drug list are featured in the proposal, including anti-diabetes agents, painkillers, antibiotics and cancer treatments, although price controls will not be levied on combination products, according to news reports.

A Times of India report notes that the plan will go for approval by India's Cabinet later this week and if implemented will reduce the price of drugs by an average of 11 per cent, rising as high as 75 per cent in some cases.

The newspaper notes that a cap will be placed on medicine prices by taking the weighted average price of all brands which have at least 1 per cent market share.

Analysts have said that the proposals will have a disproportionate effect on multinational drugmakers who tend to sell medicines at premium pricing levels, while low-cost generic producers will be less affected.

A Bloomberg report has suggested that the Indian operations of GlaxoSmithKline and Abbott Laboratories will be particularly hard hit by the plans.

The news comes as another blow to the Big Pharma sector which is looking to emerging economies like India to provide the sales growth that has been missing from traditional core markets such as the US, Europe and Japan.

Multinationals have also suffered a string of defeats in Indian courts over intellectual property for branded drugs of late, with Bayer failing to block a compulsory license for its Nexavar (sorafenib) product last month and Roche losing a patent battle with Cipla over a generic rival to its Tarceva (erlotinib) brand.