India’s new drug pricing policy : will data be the stumbling block?

On December 7, India’s National Pharmaceutical Pricing Policy 2012 was finally tabled in Parliament. Assuming that this policy does get rolled out irrespective of a Supreme Court hearing on drug pricing playing out in parallel, the cornerstone of the policy i.e.data may create some vexing issues.

The Policy envisages fixing ceiling prices of specified strengths of 348 essential medicines. The ceiling will be calculated as a simple average of all brands of the specified drug owing one per cent or more of value market share.  Effective execution therefore rests largely on data on prices and market share.

India’s National Pharmaceutical Pricing Authority (NPPA) does not have its own sources of market data. It will therefore base its calculations on the database of IMS Health a private market research company. This is not without its own challenges some of which were clearly enumerated by the World Health Organisation in its feedback to an earlier draft of the Policy. It is pertinent to raise some of those issues at this stage.

One, the WHO observed that IMS Health’s pricing data has “severe limitations.” It pointed out that the data does not take into account discounts, rebates and bundling deals, a fact confirmed by an IMS spokesperson to Apothecurry. Such deals might become the preferred means by which companies compete once a ceiling price has been fixed, the WHO pointed out.  But the largesse thus dispensed ends up with the trade or hospital and does not get passed on to the consumer or payer (such as an insurer).

Two, in a googly of sorts, the Policy puts the responsibility of verification of all data squarely on the shoulders of the pricing regulator. “Wherever required this data would be checked by appropriate survey /evaluation by the National Pharmaceutical Pricing Authority,” it says.

However, this raises another ticklish point. How is this to be done? And will this verification be put in the public domain? If not, how are other organisations to check whether the regulator has correctly fixed the ceiling price?

Three, once the price is fixed, the Policy expects the regulator to survey and monitor implementation. However, echoing, once again, the WHO’s point, how is such a system to work? Would data that is used to set the price also be used to monitor the price? In which case would the survey be effective?

Four, and this was not raised by WHO, IMS Health does not have readily available data on several dosages that are part of the essential drugs list which will require separate data collection. For instance, if it may have data on the most frequently-prescribed strengths of a particular drug, such as generic aspirin, but not on the infrequently-prescribed strengths even though these are mentioned in the NLEM.

There is no clarity on how this data is to be got. The IMS spokesperson said there is no mandate currently from the regulator to collect this information.

Lastly, the WHO points out that data will be procured at considerable cost.  IMS Health currently deals with the government as with other customers and charges it for subscribing to its data with a a certain amount of client servicing thrown in. However, this is not a recent relationship and the government has been purchasing data from IMS for several years now so this is not a cost imposed by the Policy per se.

However, the regulator cannot require a private data provider to tweak its data collection process nor expand its scope or coverage unless this demand comes from several customers and makes it expedient for the company to do so. It can conceivably commission the firm for customised projects but that will likely be at an added cost.

It appears as if there is little choice in the matter. It may be that the regulator has examined the cost and effort of creating its own database  and dispensed with the idea as being unfeasible or impractical though it doesn’t say so anywhere. But as the Policy rolls out in April 2013, if it does, these are pertinent points to ponder over.

Pic sourced from klynslis’s photostream on Flickr.

 

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