Competition in Pharmaceutical Sector: In a State of Stockholm Syndrome

Competition in Pharmaceutical Sector: In a State of Stockholm Syndrome

Mumbai, January 20, 2014

“Strong regulatory actions including cancellation of licenses will be taken against drug manufacturer and their association if they do not discontinue their unethical nexus with trade bodies such as the All India Organization of Chemists and Druggists (AIOCD) to limit or control drug market supply directly or indirectly” said Mr Mahesh Zagade, Commissioner, Maharashtra Food & Drug Administration while speaking at a CUTS Seminar jointly organised with support from Indian Pharmaceutical Alliance on “Competition Reforms in Pharmaceutical Sector” in Mumbai.

In his talk, Mr Zagade also referred to the steps taken against the system of obtaining a No Objection Certificate (NOC) from the association for introduction of a new medicine in the market and to appoint a dealer and stockist, though it had no legal standing. Following the direction of the Competition Commission of India (CCI), the association had to issue an official circular which stated that no NOC from it would be required and that there would be no boycott of pharmaceutical companies that did not approach the association for an NOC. However, even after the passing of the circular, manufacturers still continue to be loyal towards the trade bodies to obtain the NOC for operations. Stockholm syndrome, some call it.

Speaking at the occasion, Mr D G Shah, Secretary General, Indian Pharmaceutical Alliance which represents India’s leading drug companies spoke about various factors impeding competition in the pharmaceutical sector. He specifically referred to the delays in approval of new drugs by regulators which are proving to be detrimental to the overall development of the pharmaceutical industry in India. He observed that while Intellectual Property Regime grants a certain degree of monopoly rights, Competition Law controls such the abuse of such monopolies, therefore we require a balance between these two while judging the parameters of development needs and economic situation.

Aditya Bhattacharjea, Professor & Head, Department of Economics, Delhi School of Economics presented the research study and touched upon various competition issues in the Pharmaceutical sector i.e. drugs price control, FDI, TRIPS & Patent Protection, etc. He referred to the CUTS Competition Impact Assessment Toolkit, which was used to undertake the competition analysis, which formed critical part of the research report.

Speaking earlier, Udai S. Mehta, Associate Director provided an overview of the National Competition Policy: Economic Growth in India (ComPEG) Project, supported by the British High Commission which has been undertaken to highlight issues that have implications for evolving a level-playing field in three key sectors of the economy: pharmaceuticals, electricity and agriculture product marketing. The key objective is to map evidence based on sectoral studies to advocate for the need to adopt National Competition Policy for India.

According to B R Jagashetty, Former Drug Controller of Karnataka, problem of unethical nexus between pharmaceutical firms and doctors is one of the key reasons for the high out of pocket expenditures. It is the doctor who decided for the patient regarding drugs and diagnostic test and not the patient himself. Therefore, he suggested that a mandatory prescription audit can counter this problem.

C H Unnikrishnan of Mint, Mumbai said that instead of coming out with newer regulations, relevant government department and regulatory agencies should take pragmatic approach in proper implementation and enforcement of existing regulation in the pharmaceutical sector, so as to ensure promotion of free and fair competition in the sector.

Yogesh Pai, Assistant Professor of Law (Research), National Law University, Delhi, presented his views on interim injunctions in the pharmaceutical sector, and was of the opinion that expedited trials are a better option in the limited context of pharma patent litigation. Prof Lalitha Narayanan, Professor, Gujarat Institute of Development Research, Ahmedabad and O S Sadhwani, Joint Commissioner, Food and Drug Administration, Maharashtra also spoke at the event and highlighted the need for creating awareness about generic drugs among consumers and were of the opinion that there is a need for better coordination and inclusive approach among various regulatory agencies and government departments governing the sector for a more competitive and responsible pharmaceutical Industry.

There were over 70 participants in the seminar, drawn from the government, academia, regulatory agency, media, business and civil society.

For more information, please contact:

Udai S Mehta, Associate Director, +91-98292-85926,
Vikash Batham, Senior Programme Officer, +91.9460707005,