VZCZCXRO6266
RR RUEHAST RUEHBI RUEHCI RUEHLH RUEHPW
DE RUEHNE #5366/01 3540547
ZNR UUUUU ZZH
R 200547Z DEC 07
FM AMEMBASSY NEW DELHI
TO RUEHC/SECSTATE WASHDC 9769
INFO RUEATRS/DEPT OF TREASURY WASHDC
RUCPDOC/DEPT OF COMMERCE WASHDC
RUCNCLS/ALL SOUTH AND CENTRAL ASIA COLLECTIVE
RUEHCG/AMCONSUL CHENNAI 2104
RUEHKP/AMCONSUL KARACHI 8369
RUEHCI/AMCONSUL KOLKATA 1418
RUEHLH/AMCONSUL LAHORE 4243
RUEHBI/AMCONSUL MUMBAI 1208
RUEHPW/AMCONSUL PESHAWAR 4714

UNCLAS SECTION 01 OF 02 NEW DELHI 005366 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
E.O. 12958: N/A 
TAGS: BTIO ECON EINV ETRD KIPR IN
SUBJECT: CHEMICALS MINISTRY DETAILS GOI CONSIDERATIONS ON DRUG 
PRICING, DATA PROTECTION 
 
NEW DELHI 00005366  001.2 OF 002 
 
 
¶1. (SBU) Summary: Following a meeting in which Mr. Ranga Iyer of 
Wyeth Pharmaceuticals expressed concern that the GOI would institute 
a price-control regime discriminatory against imported drugs, 
Econoff met with Joint Secretary G. S. Sandhu of the Ministry of 
Chemicals and Fertilizers (MCF) to discuss the GOI's intentions. 
Sandhu assured Econoff that the latest draft policy is 
non-discriminatory and offered details both on the price-control 
policy and on plans for modifying trade margins for "branded 
generics."  He also told Econoff that the issue of data exclusivity 
for agricultural chemicals would go before Parliament during its 
next session but that there has been little progress on the matter 
of data protection for pharmaceuticals.  End summary. 
 
WYETH WORRIED ABOUT PRICE CONTROLS 
--- 
 
¶2. (SBU) In a meeting with the Economic Counselor on December 12, 
Mr. Ranga Iyer, Managing Director of Wyeth India and President of 
the Organization of Pharmaceutical Producers of India, explained 
that a recent meeting with the MCF had raised concerns about 
treatment of imported medicines under the proposed price-control 
regime.  Iyer said that while the new system of price controls would 
apply to domestic drugs only if they are on the List of Essential 
Medicines (LEM), it would apply to all imported drugs.  Maximum sale 
prices, as Iyer understood it, would never be permitted to exceed 
150 percent of the import price but could be set at significantly 
lower levels on a case-by-case basis. 
 
MCF: NO DISCRIMINATION AGAINST IMPORTS 
--- 
 
¶3. (SBU) Joint Secretary Sandhu assured Econoff on December 18 that 
the proposed price-control regime, which has been forwarded from the 
Cabinet to a Group of Ministers for consideration, would apply only 
to imported drugs that are off-patent and on the LEM.  Sandhu 
estimated that once all exceptions are granted, approximately 200 of 
the 354 drugs on the LEM will fall under the new price-control 
regime, versus 74 under the existing system.  Nonetheless, he said, 
this will still mean only about 32 percent of the total market will 
fall under formal price controls.  Regarding drugs not on the LEM, 
the MCF also hopes to improve enforcement of the cap on trade 
margins of 100 percent on the indigenously manufactured "branded 
generic" segment, where retailers often take margins of 1000 percent 
or more. 
 
¶4. (SBU) Patented drugs would remain outside of formal controls 
under the new system, but Sandhu said the MCF is interested in 
negotiating prices for patented, imported drugs as part of the 
marketing-approval process to keep them accessible.  He added, 
though, that the MCF is sensitive to the difficulties of fairly 
assessing a pharmaceutical company's expenses in bringing a drug to 
market.  He said the MCF is hoping to develop a system that will 
consider production costs, international pricing, and local 
per-capita income, as well as a given drug's efficacy relative to 
other drugs with similar application.  Sandhu explained that the MCF 
is in discussions with industry stakeholders to develop an equitable 
system and said the MCF hopes that companies will accept lower 
prices and pursue profit by seeking greater penetration and volume. 
 
LITTLE PROGRESS ON DATA PROTECTION 
--- 
 
¶5. (SBU) Turning to the issue of data protection, Sandhu indicated 
that the proposal of three-year protection for agricultural 
chemicals submitted in the Reddy Report will come before Parliament 
in the next session.  However, he was unaware of any significant 
progress on protection for pharmaceuticals.  The Reddy Report 
recommended five-year protection for traditional medicines.  For 
modern medicines, the Report proposed a transition period of 
indefinite length to be followed by five-year protection, but with a 
number of "safeguards" that would significantly limit the scope of 
protection.  The Ministry of Health is still considering the Reddy 
committee's proposals for both conventional and traditional 
medicines and has not made any determinations on eventual policy or 
even on the length of the transition period for modern medicines. 
Sandhu said that, for now, the GOI is working to secure data 
submitted for marketing approval against unauthorized distribution 
but noted that generic companies can still rely on innovators' data 
when seeking marketing approval of their own. 
 
COMMENT 
--- 
 
NEW DELHI 00005366  002.2 OF 002 
 
 
 
¶6. (SBU) A paper by the Corporate Law Group, which represents a 
number of pharmaceutical companies in India, explains that the 
150-percent cap Iyer mentioned will apply only to those imported 
drugs on the LEM.  Based on that paper and the Joint Secretary's 
explanation, it appears that not all imported drugs will fall under 
the formal price-control regime, but Wyeth and other pharmaceutical 
companies still have reason for concern.  It is clear from Econoff's 
discussion with Sandhu that the MCF, on the dictate of Minister Ram 
Vilas Paswan, plans to employ a variety of strategies to control 
prices for both LEM and non-LEM drugs, regardless of whether they 
are imported or indigenously manufactured. 
 
¶7. (SBU) The lack of progress on data protection comes as no 
surprise, since the Ministry of Health was recently made the nodal 
agency on the issue and has traditionally opposed pharmaceutical 
data protection.  So long as MOH retains the lead on data 
protection, we expect little progress on this issue. 
 
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