Please Stop Pharma Companies from selling generic medicines at exorbitant prices!!

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Typically, pharma companies charge different prices because they can! (*as long as there is no price control imposed on that drug).

Recently I received a whatsapp forwarded message about this which was as follows:

Medicines are prescribed (by doctors) by brand name & not by the generics (Ingredients). Hence we end up paying more money for the same medicine.

Follow these few steps to know more & start saving on your medical bills.

1. Simply go to (Medicines and Doctors online) go to medicines section

2. Search the medicine name

3. Type the medicine name which you are using (e. g. Lyrica 75mg (Pfizer company)

4. It will show u medicine company, prices and Ingredients

5. Don't be surprised to see that same drug is available at very low cost also. And that to by other reputed manufacturer. e. g. Lyrica by pfizer is for Rs. 768.56 for 14 tab (54.89 per tab). Whereas same drug by Cipla (Prebaxe) is available ONLY @ Rs. 59.00 for 10 tab (5.9 per tab)

The prices for prescription drugs available in India are charged differently by pharma companies. Example, Lyrica by Pfizer is for Rs. 842 for 14 tabs (60.14 per tab). Whereas the same drug manufactured by Cipla (Prebaxe) is available only @ Rs. 61.67 for 10 tabs (6.16 per tab)

I decided to test this myself & the results were alarming. I checked the names of some medicines that my parents have been prescribed by a registered medical practitioner & found that I can easily save up to Rupees. 5000 per month if I were to buy the cheaper substitutes with the same salts.

When a drug is introduced into the market, it is usually under a patent that has a life of about 10 years remaining. During this period, the company that holds the patent for the drug can charge whatever price they want for the drug (the price covered by insurance especially in more developed markets like the US is usually "negotiated" lower price because the insurance providers have more leverage). In India, any drug that is not deemed critical and isn't under price control, is also allowed this freedom. 

Now the part that is often missed: The reason why the patent holding pharma company charges high prices (>90% gross margins) for such a drug is related to the R&D costs that go into drug discovery. In order to obtain a "blockbuster" drug (often defined as a drug with potential >$1 bn annual sales), the pharma company has to suffer multiple misses; IIRC a success rate of <10%. In order to break even on these misses, the pharma company has to price at what seems like high margin prices.

Post the patent expiry, any pharma company can manufacture and sell the drug. Such a drug is then called a generic and the companies that produce only generics (and do limited drug discovery) are called generic manufacturers/producers. With lower R&D, generic producers can charge lower prices for the generic drugs than the price charged during the patent period. Now, theoretically, pricing is competitive and determined by market forces and hence should correct over time.

This is where we get to the question: why then are prices ranging such a spectrum and not converting to a single (lower) price?

My guess is that drugs that have created a name/brand for themselves during the patent period will capitalize on this and charge higher than competitor products, even if the constituents are the same. Similar to any other branded product? I guess, except the brand awareness is more at the doctor level rather than the consumer level! How many of us know which drug is patented and which is generic, let alone what options exist, if any? We rely mostly on our doctors' prescriptions.

So, are some pharma companies at fault for pricing higher than generic producers? Legally, no for sure but ethically, maybe but more likely no IMHO. Not surely yes because if free markets are trusted then the price should correct to the "right" level. The information asymmetry that is only somewhat under the pharma company's control skews the free market correction. So maybe it is the Government's role to fill in this void by awareness building or as in the SMJ episode by setting up generic pharma retailer outlets.

PS: What about doctors who prescribe and pharma retailers that sell higher priced drugs when cheaper exist?

In a letter to Prime Minister Narendra Modi, the Alliance of Doctors for Ethical Healthcare (ADEH) said that drugs and implants are also charged "exorbitantly" like coronary stents.

We applaud the government's decision to put a cap on the prices of coronary stents and credit goes to the Prime Minister for this "revolutionary" measure which was much needed.

"The ADEH urges the Prime Minister to put a cap on the prices of drugs, particularly generic and cancer medicines, and on intraocular lenses and knee and hip replacement implants as these are also charged exorbitantly like coronary stents," the letter written by ADEH core committee members G S Grewal and Arun Mitra said.

The ADEH also attached documents to show how suppliers of the drugs, particularly those for cancer, and knee and hip replacement implants are exorbitantly priced, sometimes 200 per cent more than the actual price.

"There is a dirty trend prevailing in the healthcare system where the drug manufacturing companies, including the leading and prominent ones, are supplying drugs and medicines to the hospitals at far less a price than the MRP mentioned on the drugs," they said in the letter.

There is a practice of special 'hospital rate' and 'MRP' which is not only "unethical but criminal", they said.

They said an unsuspecting patient has no reason or way not to pay MRP mentioned on drugs or implants, which is highly "inflated and exorbitant" and asserted that MRP on drugs and implants must be meticulously monitored and regulated.

Prices should be fixed after full assessment of the cost and that should be mentioned on the drugs, they said. The MRP mentioned on the drugs is sometimes even 200 per cent more than the actual price. Like in the case of coronary stents a cap has been put on the prices, the same is needed to be done for the medicines and implants.

This will go a long way in providing much needed relief and succor to the millions of patients who either cannot afford the treatment because of exorbitant prices or are made to pay through their nose.

 Supreme Court turned down a lobby of pharma companies to stop generic medicines in the interest of the common man, see this article from April 2013:

The price caps imposed by the Indian government on 348 drugs in 2013 have created only an illusion of control, keeping many medicines for conditions ranging from asthma to diabetes and heart disease beyond price regulations. As reported by The Telegraph on November 23, 2013, see link:

I urge the regulatory authorities to standardize pricing on generic medicines & not allow pharma companies to charge as they please.

In the interests of the common man!

Pushkar Sachdev