Updated on 4 January 2013
An earlier judgment in the Glivec case in 2009 too, that was later appealed against, was famously decided against Novartis, the company in question, because the "the drug was too costly" for the general public.
However, pharma companies and analysts have warned that such an approach would impact India's stand in world trade. Dr Ajay Kumar Sharma, associate director, pharma and biotech, healthcare practice, Frost & Sullivan, South Asia and Middle East, says, "Such judgments are sending out the wrong signals and will kill the industry in the long run. They are short sighted in nature, since they do not account for the future. It raises the question that once pipelines dry up, where will the new drugs come from? Who will fund research for neglected diseases in emerging economies, if patent protection cannot be guaranteed? A variety of effects could be seen if this trend were to continue. Since India is not the only developing country, providing medicines at a cheaper rate in the global market, foreign countries might prefer other countries such as China. An increase in trade regulations and Food and Drug Administration (FDA ) checks could also be expected".
The way out?
Landmark decisions such as these, along with government's future plans for cost-based pricing, brings up the question of whether pharma companies need to re-evaluate their pricing mechanism in order to reduce the price gap between themselves and the existing generic companies. Whether such a step might prove to be beneficial for them in the monetary sense cannot be ascertained immediately, however the fact remains that some strategy needs to be outlined, on a collaborative scale by pharma companies for addressing this issue, such that the needs of Indian patients are met in an appropriate way. A general consensus remains, that such a step might prevent steps such as compulsory licensing being undertaken.
Mr Bhola adds, "Some mechanism for a win-win situation needs to be developed. Maybe the compulsory licensing model needs to be looked at again, wherein the innovator companies get some royalty or sizable profits, while allowing generic companies to provide drugs at an affordable rate."
Dr Ajay Kumar suggests that, "Some system for differential pricing needs to be enforced, so that the cost of innovation can be borne by the users. Just as the government provides heavy subsidies for petrol and kerosene, why not look into subsidizing certain medicines as well. It could change the dynamics of the economy, but at the same time, help India adhere to international laws."