In News
- The Competition Commission of India (CC) has recommended the creation of a National Digital Drugs Databank and strict enforcement of drug quality standards to boost price competition among generic drugs in India.
Major Highlights of the report
- Aim of creating National Digital Drugs Databank: It will be created and made available to regulators, industry, physicians and consumers to address information asymmetry in the sector.
- It will provide key inputs in mapping the regulatory needs of different states.
- Key findings:
- The CCI found that the market for generic drugs is driven by brand competition instead of price competition despite such drugs being functionally and chemically identical.
- Generic drugs are chemically identical to drugs that once had patent protection.
- Pharmaceuticals including generic drugs account for about 43.2 per cent of pocket healthcare expenditure in India according to the CCI study and about 62.7 percent of the total health spending in the country.
- Major issues:
- The study concluded that brand differentiation in terms of a perception of different levels of quality and trade margins offered to incentivise chemists were key drivers of brand competition in India’s markets for generics.
- Manufacturers that concentrate their efforts on the creation of brand image and brand loyalty have been able to command a price premium on chemically identical drugs.
- CCI also highlighted that the perception of differences in the quality of drugs by different manufacturers also feeds into brand differentiation.
- Manufacturers focus on increasing sales volume bidding up trade margins for retailers thereby incentivising them to push for the sale of their brands.
- Recommendations:
- Effective price competition in generics can benefit consumers and improve access to affordable healthcare.
- Enforcement and interpretation of quality regulations were not uniform across states and different regulatory and testing capacities had led to different quality standards being followed.
- A mechanism may be devised under the aegis of the CDSCO (Central Drugs Standard Control Organisation) to create awareness on quality issues, build capacity, and harmonise training.
- The CCI also recommended an increase in the frequency of testing of drugs and in the capacity of drug testing labs.
- National Digital Drugs Databank is created and made available to regulators, industry, physicians and consumers to address information asymmetry in the sector.
Suggestions
- Adopt self-regulatory measures: Online pharmacies should adopt self-regulatory measures in the areas of collection, use, sharing of data and privacy.
Need for regulations: However, for safeguarding patient privacy and protecting sensitive personal medical data, necessary regulations need to be enforced until the country legislates its data protection law.
