Price control unlikely to improve access to medicines in India

Published: 17-Jul-2015

Price control is neither an effective nor a sustainable strategy for improving access to medicines for Indian patients, says to a new report by the IMS Institute India

According to a new report by the IMS Institute India, price control is neither an effective nor sustainable strategy for improving access to medicines for Indian patients. The study, 'Assessing the Impact of Price Control Measures on Access to Medicines in India,' is based on both extensive quantitative data analysis of growth and volume trends and in-depth qualitative interviews with industry stakeholders and policy makers.

Following the publication of the Drug Price Control Order (DPCO) in 2013, more than 652 unique formulations in India are now subject to a price ceiling in an effort to maintain affordability and increase access to drugs, particularly for low-income patient populations. According to IMS Health, however, such a strategy is ineffective at best and counter-productive at worst.

‘In my experience, the poor are the last to benefit from price control interventions,' said economist and author Dr Surjit S. Bhalla. 'Not surprisingly, this study shows that high-income patient populations have been the main beneficiaries of DPCO 2013. In addition to price control, tariffs on essential medicines completely defeat the goal of making such medicines available to low-income patients.’

Key findings include:

  • Primary beneficiaries of the DPCO 2013 price controls have been high income patient populations, rather than the low-income targets
  • The consumption of price-controlled drugs in rural areas has decreased by 7% during the past 2 years, while that of non-price controlled products has risen by 5%
  • The DPCO 2013 has resulted in an increase in market concentration (fewer brands are now listed) and a decrease in competitive intensity (the average number of new brands has gone down since 2013)
  • Price control has increased margin pressures for small and mid-sized companies, limiting both employment and investment opportunities in the sector.

‘Price control has limited impact on improving patient access and, furthermore, is not aligned with the requirements of a vibrant economy such as India,’ said Nitin Goel, General Manager, IMS Health South Asia. ‘Government's priority should be on strengthening India's healthcare infrastructure and extending universal insurance coverage.’

IMS Health's report goes on to provide recommendations for the Indian government to improve the overall strength and sustainability of its public healthcare model, suggesting that a combination of healthcare financing and non-financing measures be adopted to address the issues of access and affordability. 'India needs an all-encompassing healthcare model that is truly able to achieve the objective of improving healthcare access in India, with the government in a lead role and supported by all other stakeholders,' it says.

The full version of the report, including a detailed description of methodology, conclusions and recommendations, is available here and the IMS study on what constitutes access to healthcare is available here.

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