Kolkata: The Drug Price Control Order (DPCO) 2013, India’s key drug regulation aimed at making essential medicines more affordable, has inadvertently led to a decline in the availability of these regulated drugs, according to a study published in the Journal of Marketing.
Essential medicines, regulated by the Indian government under DPCO, are drugs deemed necessary to meet the healthcare needs of a population. They are selected based on factors like disease prevalence, efficacy, safety, and cost-effectiveness, aiming to ensure they are always available in appropriate forms and quantities within healthcare systems.
The study, conducted by researchers from the Indian Institute of Management (IIM) Calcutta, the University of Chicago, and the Management Development Institute, Gurgaon, titled “Do No Harm? Unintended Consequences of Pharmaceutical Price Regulation in India,” sheds light on the complex dynamics between government policies and pharmaceutical companies.
The DPCO lists specific essential medicines and imposes price caps on them to prevent excessive pricing by pharmaceutical companies. The DPCO 2013, intended to control drug prices for accessibility, resulted in pharmaceutical firms reducing marketing efforts for regulated drugs due to diminished profit margins. Consequently, these firms shifted focus to unregulated but related drugs, the lead authors Saravana Jaikumar, Pradeep K. Chintagunta, and Arvind Sahay from IIM Calcutta found.
The study examined 179 oral solid drugs (pills) covered by DPCO 2013, comparing India to the Philippines, where similar regulations were absent, and found that sales volumes of these regulated drugs declined on average in India.
The main reason identified for this decline was a strategic shift in marketing efforts by pharmaceutical firms. In India, where direct-to-consumer advertising for prescription drugs is prohibited, detailing—providing information about drugs to physicians by medical representatives—was the primary promotional method.
According to Jaikumar, “using data from a major pharmaceutical firm, the study revealed that due to reduced margins on regulated drugs, firms redirected their detailing efforts towards unregulated but related drugs. For example, firms might have shifted focus from atorvastatin, a regulated drug for cholesterol issues, to rosuvastatin, an unregulated alternative.”
The study also examined how this shift affected prescriptions from non-MBBS physicians, who often served areas lacking highly qualified doctors. These physicians heavily relied on pharmaceutical detailing to inform their prescriptions. Chintagunta explained that “due to the change in detailing focus, there was a notable decrease in prescriptions for regulated drugs among non-MBBS physicians.”
The research excluded other potential reasons for the decline in sales, such as increased prevalence of diseases like acute respiratory infections and diabetes, as well as a decline in new drug approvals and traditional Indian medicine (AYUSH). Sahay emphasised that “their findings strongly supported the conclusion that reduced sales volumes of regulated drugs were primarily influenced by changes in detailing practices.”
