“Competition Issues in the Pharmaceutical Sector in India’(The Hindu, PIB, GS-3,2, Economics, Infrastructure)

Context:- The Competition Commission of India (CCI) organised a workshop on ‘Competition Issues in the Pharmaceutical Sector in India’ on August 27, 2021. The daylong workshop was conducted by the CCI in pursuance of its mandate of protecting and promoting competition in markets, and as a part of its ongoing market study for better understanding of the competition landscape in the pharmaceutical sector in India, focusing on the specific realms of the distribution architecture for drugs, trade margins, prevalence of branded generic drugs in India and its implications for competition.

    • Referring to the critical role that drugs play in health delivery and access to drugs without financial hardship and assurance on quality of drugs as the two pillars for achieving the public policy goal of universal health coverage. 

    • In view of the fact that spending on drugs accounts for 70% of out of pocket expenses on healthcare in India it is important to improve affordability of drugs. 

    • CCI plays in addressing market distortions that can affect access and appreciated the Commission’s effort in conducting a market study on these aspects. 

    • margin rationalization led to 90% price reduction in certain drugs. Trade margins being one of the focus areas of the ongoing CCI market study and the CCI could join efforts in this area. 

    • Feedback received from stakeholders during the course of the market study on the issue of trade margins and margin rationalization would be useful

    •  To bring in trust of prescribers and patients on pure generic drugs, he suggested introduction of quality mark on generics in India.

    • underlining the importance of well-functioning markets in the pharmaceutical sector for firms to compete on merits, innovation to thrive and consumers to benefit from competitive market outcomes. 

    • The atypical economics and distinctive features that characterise the sector can however attenuate competitive forces and the ongoing CCI market study is an attempt to take a close look at the factors that influence competition

    • In the context of price competition in pharmaceuticals, the role that generic drugs can play in creating the competitive pressures required for bringing down prescription drug prices, thereby reducing healthcare costs and improving access. 

    • Despite the presence of several players in generic formulations, consumers in India ostensibly pay a premium for brands.

    • On this issue of prevalence of branded generics in the pharmaceutical retail market in India, he pointed to the key role that quality expectations and a perception of variation in efficacy across drugs play in fueling brand competition and in diluting the price-reducing effect of generics in India. 

    • Besides the quality aspect, he alluded to the significant role that Janaushadhi and the emerging private generic retail chains in the country can play in increasing availability and improving uptake of generic generics. 

    • Speaking with reference to the trade association practices in the distribution segment, such as the mandatory requirement of No objection certificates for appointment of stockists and mandatory charges for Product Information System which have been found to be in contravention of the provisions of the Competition Act, 2002 in the past.

    • Brought forth the core issues in the pharmaceutical sector from the consumers’ perspective. 

    • Given the information asymmetry that characterizes the sector, he emphasized on the criticality of protecting consumers from market imperfections and the role that CCI can play in this regard. 

    • Referring to industry practices such as camouflaged competition between brands, marked variation in pricing of same drugs etc., Dr Reddy said that there was a great need for promoting generic competition through quality-assured unbranded generics. He further highlighted the significance of large-scale public procurement in bringing down drug costs. 

    • how biosimilar drugs and its market expansion would be significantly beneficial and that India had the potential to become a global leader in biosimilars.                                                                                                                                           

  • The Inaugural Session was followed by three technical sessions on:-

      •  Pharmaceutical Distribution

      • Trade Practices and Competition 

      • Generic Competition In Indian Pharmaceuticals: Price and Non-Price Issues and

  • Competition in the Pharmaceutical Sector: 

    • Role of Regulation and Antitrust. In the first two sessions, stakeholders shared their views on the focus areas of the study. The third session brought together sector experts, antitrust practitioners and regulators to deliberate on the regulatory pathways for promoting competition in the pharmaceutical sector.

Plutus IAS Daily Current Affairs 31st August 2021