Competition Issues in Pharmaceutical Industry and Health Delivery Systems in India’ SERVICES

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