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Laxmi Yadav, Mumbai November 20 , 2021
The Competition Commission of India (CCI) has called for uniform and effective implementation of existing quality standards across states which will help move the needle on quality perception and price competition in generics.

“Differing regulatory and testing capacities across states along with varying interpretation of norms lead to different quality standards followed in practice, in spite of the same rules being applicable to all states. A harmonised system of quality standard enforcement is an immediate imperative to steer generic competition in the market from non-price to price dimension,” stated the commission in a market study on the pharmaceutical sector in India.

Further, for effective enforcement of quality standards, the state level regulatory apparatus needs to be strengthened by equipping the regulators with adequate personnel having requisite knowledge and skill set, state-of-the-art infrastructure including upgraded testing infrastructure, and sufficient resources, it said.

A mechanism may be devised under the aegis of the CDSCO to create awareness on quality issues, build capacity, and harmonise training and practices across the country with a view to ensure uniform and consistent application of quality standards, stated the CCI.

The commission observed the price dispersion across brands in the market of same generic molecules and the significant price difference that exists between unbranded/generic generics and branded generics. Despite the seemingly strong generic competition in each therapeutic area and at the level of formulations/molecules, consumers in India ostensibly pay a premium for brands, the study revealed.

There were 47,478 brands associated with 2,871 formulations in the pharmaceuticals market in India during August 2019–July 2020, implying the presence of 17 brands on an average for every formulation. Pharmaceuticals contribute 43.2 per cent to the total out-of-pocket expenditure (OOPE) on health in India. This makes it the single largest contributor to OOPE, which accounts for an estimated 62.7 per cent of total health spending in the country. Thus, prices of pharmaceuticals have a significant bearing on access to healthcare. While around 17.7 per cent of the pharmaceuticals market in India (in terms of value) is under price regulation, competition is expected to be the key source of price discipline for the rest of the market.

Representatives of the manufacturing industry underlined the branding of generic drugs as reflective of quality competition and as a means to highlight actual product differentiation for addressing the entrenched concerns around the quality of drugs. On the other hand, medical practitioners also asserted that there is no homogeneity of drugs available in the market in terms of their safety and efficacy.

In a bid to raise confidence in the system and improve quality expectation, the CCI has called for periodic, systematic and scientific testing of drugs.

“To keep abreast of the extent of sub-standard/spurious drugs across geographies over time and to calibrate regulatory responses as required, sample collection and testing following a scientific and statistically robust methodology, may be increased with a simultaneous increase in drug testing capacity both in central and state drug-testing labs as well as in accredited private labs. This measure will also raise confidence in the system and improve quality expectations,” it added.

Besides this, the commission also called for ensuring better transparency at every stage of drug regulation.

“Transparency at every stage of drug regulation is critical. Information gaps on grant of licences, inspections, prosecutions for non-compliance, etc., could be bridged through real time data/information on these, which could be published on a central online portal,” it said.

The CCI has stressed the need for creation of a national digital drugs database which will help address information asymmetry and provide important inputs in mapping regulatory needs in different states.

“A comprehensive, online, centralised drug databank consolidating real-time data on active pharmaceutical manufacturing companies in the country, therapeutic class-wise/formulation-wise approved branded/unbranded products along with their manufacturing and marketing entities may be created, maintained, and made accessible to regulators, industry, physicians and consumers,” it suggested.

It also emphasized the need for quality control across the supply chain.

Pharmaceutical distribution in India is fragmented, with wide variation in distribution practices, processes, technical capability and limited traceability. Varying attention and capacity to maintain product quality in handling, storage, transportation and distribution can significantly affect drug quality.

The CDSCO has developed and issued draft guidelines for Good Distribution Practices (GDP) for pharmaceuticals in 2018 to establish standards of quality control across the supply chain. Sensitisation and capacity building of relevant stakeholders about GDP and effective enforcement of the finalised GDP guidelines will provide the necessary impetus for effective quality management in pharmaceutical distribution, stated the CCI.

It also advocated the need for trade margin rationalization to make drugs affordable for all as it was done by the National Pharmaceutical Pricing Authority (NPPA) in selected anti-cancer drugs in 2019. In 2019, NPPA invoked para 19 of the Drugs Prices Control Order, 2013, to rationalise trade margins in select anti-cancer drugs. Under this price-capping mechanism, trade margin was restricted to a maximum of 30 per cent.

To safeguard patient privacy and protect sensitive personal medical data, the CCI has urged online pharmacies to adopt self-regulatory measures in the areas of collection, use, sharing of data and privacy until the country legislates its data protection law.

The commission reiterated its stand that it will remain vigilant and continue to enforce the provisions of the Competition Act to ensure that manufacturing companies, stockists, and pharmacies can enter and operate independently of such collective controls or diktats of associations, which have the potential of limiting competition.

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