CCI Recommends National Digital Drugs Databank, Price Regulation

admin November 26, 2021
Updated 2021/11/26 at 3:40 PM

To improve price competition among generic pharmaceuticals in India, the Competition Commission of India (CC) has advocated the construction of a National Digital Drugs Databank and strong enforcement of drug quality standards. We look at the findings and recommendations from the CCI’s market study of the Indian pharmaceutical industry.

Despite the fact that generic drugs are functionally and chemically similar, the CCI discovered that brand competition, not price competition, drives the market for generic pharmaceuticals. Generic drugs are chemically equivalent to pharmaceuticals that were previously protected by a patent.

According to the CCI survey, pharmaceuticals, including generic drugs, account for 43.2% of out-of-pocket healthcare expenditures in India and 62.7% of overall health spending.

Brand differentiation in terms of perceived levels of quality and trade margins supplied to incentivize chemists were found to be important drivers of brand rivalry in India’s generics marketplaces, according to the research.

Patients who are unaware of the attributes and substitutes for drugs simply purchase medications prescribed by physicians and dispensed by chemists, according to the report. Manufacturers who focus their efforts on the creation of brand image and brand loyalty have been able to command a price premium on chemically identical drugs by striving “for the patronage of prescribing physicians,” adding that patients who are unaware of the attributes and substitutes for drugs simply purchase medications prescribed by physicians and dispensed by chemists.

The CCI also said that the perception of differences in medicine quality across manufacturers contributes to brand differentiation.

As indicated by formulation-level statistics on pricing and market shares, brands that demand the highest or considerably higher prices often enjoy market leadership, the competition authority stated. According to the report, the most popular anti-diabetic medicine costs Rs 9.97 per tablet, more than six times the price of the chemically equivalent drug with the smallest market share, which costs Rs 1.53 per tablet.

Other manufacturers, according to the research, concentrate on raising sales volume by bidding up trade margins for retailers, incentivizing them to strive for brand sales.

Effective price competition in generics, according to the paper, may benefit consumers and enhance access to affordable healthcare.

The CCI highlighted that quality regulation enforcement and interpretation differed by state, and that diverse regulatory and testing capacity resulted in different quality standards being followed.

Under the aegis of the CDSCO (Central Drugs Standard Control Organisation), a mechanism could be devised to raise awareness of quality issues, build capacity, and harmonise training and practise across the country in order to ensure uniform and consistent application of quality standards, the CCI suggested. The CCI also advised that drug testing be done more often and that drug testing lab capacity be increased.

To address information asymmetries in the sector, the regulator also suggested that a National Digital Drugs Databank be formed and made accessible to regulators, industry, doctors, and consumers.

The commission also took notice of internet pharmacies’ growing market dominance and the concerns raised by brick-and-mortar pharmacies about the concentration of patient data. While online pharmacies had a 2.8 percent market share in 2018, the CCI highlighted that the sector’s reach grew to 8.8 million homes during the pandemic, up from 3.5 million households prior to the outbreak.

“In the areas of data collection, usage, sharing, and privacy, online pharmacies should establish self-regulatory mechanisms. However, until the government passes a data protection law, essential restrictions must be implemented to protect patient privacy and sensitive personal medical data, according to the research.


Source: The Indian Express

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