Indian linkage of drug reference pricing to per capita income could reduce patent medicine prices

In India, an inter-ministerial group formed in 2007 and tasked with regulating prices of patented drugs has recommended using a per capita income-linked reference pricing mechanism, a proposal that may reduce prices of several patented medicines by up to one-third, reports the Economic Times of India.

However, such a move would hit the profitability of foreign companies. Patented drugs account for 1% of the $13-billion domestic market. This share is expected to grow to 5% of the estimated $50-60 billion drug market by 2020.

The committee, headed by an official from the department of pharmaceuticals, has suggested fixing the price of patented drugs by comparing that at which these drugs are procured by governments in the UK, Canada, France, Australia and New Zealand. The committee has recommended that the retail price should be fixed by adjusting it to the per capita income of the country.