ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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Prices of New Pharmaceuticals in India: A Cross Section Study

There is an ongoing debate about the rationality of price controls in a regime where drugs can be manufactured through alternative processes as was the case in India before 2005. In a regime of only process patents, competition was expected to bring prices down. However, even when there was an absence of intermolecular competition, firms have been involved in intramolecular competition to charge varying levels of prices for the same drug. This study examines the role of inter- as well as intramolecular competition, apart from the extent of therapeutic advantage that a new molecule offers, in the determination of the level and rate of change in drug prices. In a regime where product patents are also recognised and the competitive pressures are going to be limited, the need for price monitoring and control would be greater for therapeutically superior drugs. Also drugs which are predominant in their class for specific indication need to be monitored.

SPECIAL ARTICLE

Prices of New Pharmaceuticals in India: A Cross Section Study

Ravinder Jha

There is an ongoing debate about the rationality of price controls in a regime where drugs can be manufactured through alternative processes as was the case in India before 2005. In a regime of only process patents, competition was expected to bring prices down. However, even when there was an absence of intermolecular competition, firms have been involved in intramolecular competition to charge varying levels of prices for the same drug. This study examines the role of inter- as well as intramolecular competition, apart from the extent of therapeutic advantage that a new molecule offers, in the determination of the level and rate of change in drug prices. In a regime where product patents are also recognised and the competitive pressures are going to be limited, the need for price monitoring and control would be greater for therapeutically superior drugs. Also drugs which are predominant in their class for specific indication need to be monitored.

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