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Before Obama visit, US drug firms lobby for ease of doing business

Weeks before US President Barack Obama’s visit here, American drug companies with significant operations in India are learnt to be seeking easier rules for doing business in the country, especially with respect to pricing controls.

Several US-based firms, sources say, are lobbying with regulatory authorities over the price-control framework, which is hurting their margins. Obama’s imminent visit has increased the hopes of these companies, which have been wanting a stronger dialogue with Indian authorities on the issue.

Unlike India, the US is a free-pricing market. The United States International Trade Commission, in a recent report, mentioned India’s price control as one of the factors affecting the drug industry.

AILMENTS APLENTY
  • Recently, the National Pharmaceutical Pricing Authority (NPPA) added 52 drugs to the list of price-controlled essential medicines
  • NPPA is also planning to bring all life-saving medicines under price control, reports claim
  • Further price control could hurt margins of foreign players
  • The United States International Trade Commission report mentions pricing control as one of the factors affecting the pharma industry in India
  • Indian firms selling drugs in the US have faced the wrath of that country’s regulator in recent times

The National Pharmaceutical Pricing Authority (NPPA) recently added 52 drugs to its list of price-controlled essential medicines. “The American companies, like other foreign players in the sector, are apprehensive of NPPA bringing more drugs under price control. Obama’s visit is a good opportunity for US companies to put across their concerns to Indian authorities,” said an industry source who did not wish to be named.

Pfizer, Abbot Laboratories, Merck & Co, Mylan, Gilead, Baxter and Allergan are major US-based companies operating in India.

Earlier, ahead of Prime Minister Narendra Modi’s visit to the US in September, NPPA was asked to withdraw its order that brought a little more than 100 non-essential drugs under price control.

This had sent the prices of select medicines soaring. Now, there have been reports claiming NPPA is planning to bring all critical life-saving drugs under price control, a move that might further dent the margins of foreign companies.

“Companies are in a constant dialogue with regulators and authorities to build a better business environment. Issues like price control have been a matter of debate for long. Obama’s visit to India is a good time to take a shot at making further headway,” another industry official said.

The US ITC report mentioned earlier also pointed out that the intellectual property (IP) environment was the most problematic for pharmaceutical firms – 27.9 per cent of the companies surveyed were adversely affected by IP-related issues. The barriers vary on the basis of IP types – trade secrets, patents, trademarks, or copyrights.

Patents have been a controversial issue with Indian and US authorities, especially in the pharma and information technology sectors. In April last year, the US had brought out its ‘Special 301’ report, seen as a unilateral measure to pressure countries to accept IP rights protection beyond the World Trade Organization obligations. The report had classified India as a ‘priority watch list’ country.

More recently, Indian companies selling drugs in the US came under serious scrutiny – several import bans were imposed and warning letters issued. The Indian industry is also faced with an increasing number of enforcements and bans by the US drug regulator over quality concerns. India is the largest foreign supplier of generic medicines to the US.

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