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Pharmaceuticals & Health Sector Study in India
CUTS Centre for
Competition, Investment & Economic Regulation
(CUTS CCIER) is implementing a project
entitled, ‘Competition Issues in
Pharmaceutical Industry and Health Delivery
Systems in India’ to assess the extent of
anticompetitive practices in the Indian
pharmaceutical industry and health delivery
systems. The project is being supported by the
Ministry of Health and Family Welfare,
Government of India and the World Health
Organisation (WHO).
Competition
concerns in the pharmaceutical industry and
the health delivery system have been
identified. These range from being
cross-border in nature to those that exist at
the local level. An analysis of India’s
experience with respect to addressing these
concerns is being done. This includes studying
the working of the MRTP Act, Indian Patents
Act, Drug Prices Control Order, functioning of
the National Pharmaceutical Pricing Authority
(NPPA) and so on. Also being analysed are the
experiences of other countries in addressing
the various competition concerns in this area.
Based on the experience of India and those of
other countries, the Competition Act 2002, the
Patents (Amendment) Act 2005, other related
Acts and policy documents such as the
Pharmaceutical Policy, 2002 are being examined
to develop an implementation strategy for
India to ensure increased access to medicines
and health delivery system. The project will
start in August 2005 and would conclude till
February 2006.
Background
-
The Indian
pharmaceutical sector has come a long way,
from being a small player in 1970, to
becoming a prominent provider of healthcare
products, meeting almost 95 percent of the
country’s pharmaceutical needs today. The
industry is highly fragmented, with over
20,000 producers. The individual market
shares of companies are small. However, this
does not necessarily mean that there is
intense competition in the market. This is
because pharmaceutical products are
non-homogenous in nature, and there are a
large number of “relevant markets” within
the pharmaceutical industry.
-
Currently, the
industry is on the verge of a major shift as
it prepares to meet the challenges of the
new patent law. In the new regime, lesser
number of players is expected with an
increasing focus on higher value areas like
drug discovery, drug delivery systems and
technology licensing. At the same time,
prices of vital medicines, under patent, are
bound to go up. The reduction in the number
of players and the increased coverage of the
patent regime is going to pose a challenge
for ensuring access to affordable medicines
and health delivery system.
-
As regards
health services, the market structure for
delivering health services is such that
consumers are most often not the
decision-makers, for instance, in most cases
it is not the consumer who decides which
medicines to consume– the doctors and
pharmacists typically make this choice. This
represents a unique case of market failure,
especially in view of the fact that
anti-competitive practices are prevalent
amongst certain doctors, pharmacists and
hospitals.
-
Competition
concerns include amongst others the
existence of collusive practices,
international cartels, the recent spurt in
mergers and acquisitions, the new patents
regime and cross border competition issues.
-
The current
structure of the drugs market and the health
delivery system raises several concerns and
needs further analysis in terms of its
impact on access to affordable medicines and
health delivery. What also needs to be
assessed is the extent to which competition
law and policy can be effective in
addressing this market failure and it is to
be determined after what reforms as regards
the existing legal and regulatory framework
might be necessary. Analysis of India’s own
experience and those of other countries
provide useful lessons.
Objectives
The overall
objectives to undertake the study are to:
-
Identify
competition concerns (both present and
probable) in the pharmaceutical sector and
health delivery system.
-
Examine the
scope of competition policy and law in
dealing with such competition concerns
-
Suggest an
implementation strategy in using competition
law/policy tools to enhance access to
medicines and health delivery system
-
Analyse relevant
countries’ position on cross border
competition concerns affecting the Indian
health sector.
Methodology
The research
primarily focuses on preparing a report on
competition concerns in the pharmaceutical
industry and the health delivery systems. A
doctrinal and analytical approach is being
adopted, duly complemented with necessary
fieldwork. This is being done by reviewing the
existing literature, laws and polices
pertaining to the proposed research as well as
analyzing data/information collected during
the course of the project.
Researchers
The team would
comprise of a core researcher (economics
background), a legal researcher and a research
assistant. The team will work under the
overall supervision of a team leader.
Team Leader:
Mr. Pradeep Mehta,
Secretary-General, CUTS
Core
Researcher:
Mr. Nitya Nanda,
Policy Analyst, CUTS
Legal
Researcher:
Ms. Joie Chowdhury,
Research Assistant (International Trade Law),
CUTS
Research
Assistant:
Vikash Batham,
Assistant Programme Officer, CUTS |
