Proposed Drug Price Controls in India

In 2007, India’s Department of Pharmaceuticals (DOP) formed the Committee on Price Negotiation for Patented Drugs. In February 2013, the Committee unveiled a new draft drug pricing policy that would affect granting of compulsory licenses for some manufacturers.

Currently, compulsory licenses may be granted to local drug manufacturers in cases where the drug is deemed necessary but is supplied at a prohibitively high price by the drug’s patent holder. The Committee suggests in the new draft policy that issuing compulsory licenses for very expensive patented drugs may no longer be possible.

For new patented drugs with no therapeutic equivalent in India, the draft policy uses a formula based on the drug’s prices in other countries to determine a reasonable price in India. Prices for the drug in the UK, Canada, Australia, France and New Zealand will be used for the formula.

The proposed pricing policy would affect all patented drugs that have entered the Indian market since 2005. However, compulsory licenses can still be issued for other reasons specified in India’s Patent Act of 2005, such as shortages of necessary drugs.