Challenges And Outcomes Of Pharmaceutical Price Controls In LMICS: Insights From India’s Drug Pricing Policy

Regan Kalate, Ph. D. Research Scholar, Dept. of Laws, Himachal Pradesh University, Summerhill, Shimla, Himachal Pradesh, India.

ABSTRACT

Medicines represent a large portion of healthcare spending, and many people struggle to afford essential treatments for non-communicable diseases (NCDs). In India, the National Pharmaceutical Pricing Authority (NPPA) manages drug prices through the National Pharmaceutical Pricing Policy (NPPP) and Drug Price Control Orders (DPCO). The NPPA sets ceiling prices for essential medicines included in the National List of Essential Medicines (NLEM) to ensure affordability. The DPCO, revised in 2013, covers a wide range of drugs and establishes maximum retail prices (MRPs). Globally, different pricing mechanisms are employed: the UK and Canada use value-based pricing, Germany and France use reference pricing, while the US relies on market dynamics. India’s approach focuses on setting price ceilings to manage drug costs, despite having relatively low health expenditures compared to substantial subsidies in other sectors.

Price controls can enhance medicine affordability but may also disrupt supplyandinnovation. Researchshowsthatwhileessentialdrugpriceshave decreased, the effects on market dynamics are mixed. Evidence indicates that price controls might lead to reduced sales and market exits by low-cost producers, potentially causing shortages and decreased access. Price controls can shift market share towards multinational companies, which may affect the availability of affordable drugs. While price controls have reduced costs for some drugs, they may also lead to market instability and shortages, particularly impacting rural areas.

Effective drug price regulation in LMICs and India requires a balanced approach, addressing affordability while considering the impacts on innovation and market stability. Policymakers need to ensure that regulations do not inadvertently disrupt access to essential medicines or undermine the healthcare system. Comprehensive strategies that include health system reforms, better health literacy, and collaboration among stakeholders are crucial to improving healthcare access and ensuring equitable distribution of medicines.

Keywords: Low- and Middle-Income Countries (LMICs), Drug Prices, National Pharmaceutical Pricing Authority (NPPA), National Pharmaceutical Pricing Policy (NPPP), Drug Price Control Orders (DPCO), National List of Essential Medicines (NLEM), Price Control Mechanisms, Pharmaceutical Industry, Essential Medicines, Pharmaceutical Regulation, Non-Communicable Diseases (NCDs).