‘Price control has outlived its utility in the current Indian scenario’ – Conversation – Express Pharma Pulse

‘Price control has outlived its utility in the current Indian scenario’

ph2002032831-4940718Bimal K Raizada, senior vice-president, Ranbaxy Laboratories, has held prime positions in finance, strategic planning and audit during his three decades long association with the company. Besides being the Regional Director – Asia Pacific based in Hong Kong, Raizada has been actively involved in setting up operations in China and represents Ranbaxy in major industry chambers and associations. In an interview with Jayashree Padmini, Raizada talks on policy matters ranging from the recent Union Budget to Drug Policy and Patents Bill. Excerpts:

Despite its claim of recognising the pharma industry’s contribution to the economy the government has ignored the segment in the Union Budget 2002. Your comments.
The finance minister has already stated at a FICCI meeting that some points of the pharmaceutical policy were deferred due to government’s final policy decisions and time constraints and these would become part of the final budget. The industry was seeking duty exemption on R&D inputs, 10-year tax holiday on income from sale of intellectual property and treatment of regulatory and clinical trial expenses as being entitled to weighted deductions. For providing duty exemption, Finance Ministry actually doesn’t need a budgetary provision as it is empowered under the appropriate legislation. Though they had issued a notification on February 8, the conditional custom duty exemption on 74 capital goods was announced along with the budget. The preconditions included certification to the effect that they are used for R&D, registration with the Dept of Scientific & Industrial Research and having an appropriate programme for undertaking research. All the relevant issues are being taken up through appropriate forums and hence we hope that the matter would be taken care of.

While the Policy regime is moving towards lesser price control has the government managed to strike a balance between addressing public health concern and economic prospects of individual companies?

The government has struck a balance. The Centre has announced three criteria that determine price control of which the first two are drug oriented and the third, minimum treatment cost per day, is manufacturer oriented. But is the system of price control valid today? Price control has outlived its utility in the current scenario in India. In the prevailing environment, it is advisable to have a self regulatory system like in the UK rather than a price control regime based on criteria.

Are you suggesting a price monitoring mechanism? For this, we need to have a strong monitoring authority…
That’s right. Although the government has outlined its intention to strengthen the monitoring mechanism, it failed to clarify it in the policy statement. Putting in place the monitoring criteria is imperative and highly relevant for the national health programme. Government has to clearly define the database required to be furnished. The UK model is not a regulatory system determined by any regulatory agency like the NPPA but formulated and controlled by the industry on its own. The pharmaceutical policy is silent on working out the complete mechanism of monitoring which is very crucial in the emerging scenario.

Do you think that this will work in India where the general trend is to wriggle out of any type of control?

It can, if done in good faith by both sides. The government and industry should jointly chalk out methodologies for an efficient price monitoring mechanism such as frequency reporting by industry associations and draw up the patterns on which companies have flexibility in determining price variations where government would not interfere while reserving the right to intervene when prices cross that limit. The government is actively pursuing the Patents (Second Amendment) Bill and Parliamentary Committee has already submitted its recommendations.

In the backdrop of Doha Declaration and the emerging product patent regime, what are the underlying issues that need to be addressed?
The first issue is on the patentability factor itself, and according to a section of the industry, only NCEs are patentable whereas the government interpretation of patentability extends to ‘‘any novel application that is capable of industrial usage.’’ This results in the phenomenon of “ever greening” of patents and smartly defeats the concept of 20-year limit for patent life. The Parliamentary Committee report is disturbingly silent on this aspect and could lead to a situation of life-long patent to any particular drug through various routes such as usage, indication, delivery mechanism, and the like. Internationally, this is emerging as a major concern and we do not want that to be repeated in India.

However, protecting the processing method by a process patent is not objectionable. The prevalent law gives room for indication patents becoming a norm in the country. For example Diazepam, originally patented as anti-anxiety drug, it has later obtained patent as muscle relaxant. Thus, the patent life extended when a new patent was granted in 1989 although the original patent of Diazepam expired in 1984. If we see prescription trends, it is clear that the drug has been in use for muscle relaxation from the beginning and it was always there in public domain. This scenario could lead to an array of litigation.

Secondly, we need to address the complex issue of compulsory licensing or, the grant of license for usage elsewhere. If some countries allow licensing to be granted in national/public interest when there is low availability of essential drugs or insufficient importation at reasonable price, why not India incorporate the empowering provision in its legislation.

The law today does not ensure modalities to assess the capability of a license holder to manufacture the particular drug in the country, which need to be clearly covered and the Patent Controller should have the discerning powers regarding this. Further, the proposed amendment does not define “abuse of monopoly” which would lead to numerous litigation involving the patent holder, licensee and the Controller of Patents defeating the whole purpose of legislation. The Committee report is silent on issues that were determined at Doha such as inclusion of specific exemption with regard to health crisis; we also have the issue of grant of a license to export a drug/product to a country which has either an additional 10-year period under the TRIPs provision (LDCs) or those who are not WTO signatories.

The Doha Declaration in its clause (6) specifies that TRIPs council would address the issue of the countries that do not have local manufacturing capability while declaring a public health crisis. Here, sourcing from a third country becomes imperative and the TRIPs committee has to deliberate and give their opinion on this issue before the end of 2002. However, we need not wait for them to come out with the required provision but can include it in our bill.

I feel that the Commerce and Industry ministries differ and is tied up in an endless debate. Commerce ministry is all for going ahead as the Minister himself has argued for it and suggests we can amend the bill if TRIPs goes against it whereas Industry ministry is insisting on waiting for final decision.

The most haunting issue is that the Government has not yet moved towards introducing changes to the existing norms under Patent Act 1970 that prohibits product patent on drugs. What the cabinet said was that changes proposed in the amendment bill that would permit product-patenting post 2005 might be included in the amendment to the patent bill.

The empowering provision to have product patent on Drugs & Pharmaceuticals in the country is missing. It is working against the interest of Indian companies that would remain unprotected in the country though they get protection overseas. Any application for product patenting will not be entertained till Jan 1, 2005 and the big list lined up when they open the mail box in 2005 would delay the process further by at least four years making the Indian product in the unprotected category for the next of seven years. This needs early attention and remedy by Government.