Drug prescription & pricing in India: how is cost-benefit to the patient diversified?

Abstract

For each commodity, price dispersion across the market is an eternal truth and can never be ruled out completely. Nevertheless, the efforts should always be made to evaluate the rate and extent of price dispersion which will help to harmonize the pricing of similar products to the best possible level. The present work is aimed to understand the price dispersion of pharmaceutical drug products which are marketed in India, and subsequently to determine the current loss for the Indian patients as driven by the price dispersion. For the stated work objective, 17 different drug products from anti-hypertensive class, each drug molecule accounting for more than 100 Crore market size, are selected based on their large volume of consumption. The price and volume data for the chosen anti-hypertensive drug products are extracted from the database of All Indian Origin Chemist & Distributors Ltd (AIOCD – May 2020). Annual market value (Cost to the patient) of these 17 molecules ranges from 115 Crore to 1199 Crore as per the current pricing of each brand. To have an unbiased assessment, five different evaluation methods were selected to determine financial loss to the patients or the health care system. Notably, the estimated cumulative loss to the patients for all selected molecules computed against their current market value is found to be substantial [i.e. about INR 1677.42 Crore (27.4%) to INR 4242.11 Crore (69.2%)] as derived by the five evaluation methods. However, stated derived financial loss to the patients can be converted into potential savings for the patients. One of the approach to achieve the same is allowing medical-store pharmacists to dispense more affordable generic option to the patients against the higher-priced products as prescribed by the physicians. To implement this system in India, the prime requirement is to shift from the proprietary/brand-naming system to the universal generic naming system for the generic drug products, leaving only innovators to assign the brand-names. The proposed change can lead to more competitive pricing by the drug manufacturers and thereby benefit the patients.