Trump's new drug pricing policy might hurt Indian pharma industry
What's the story
US President Donald Trump has signed an executive order in relation to prescription drugs. Now, US drug prices have to match the lowest rates paid by other developed countries. This may have wide-ranging implications, especially for generic drug exporters like India. Trump's order could pressure global pharmaceutical companies to cut US-branded drug prices by as much as two-thirds. This could force Indian generic drug manufacturers to further slash their prices to remain competitive in the American market.
Market expansion
US pharma firms urged to explore new markets
The US government is likely to push its multinational pharma companies to increase exports of patented branded drugs into new markets, as a means to compensate for domestic revenue losses. Many branded drugs, especially with "evergreened" or marginal patents, are not eligible for protection in countries like India and Brazil. As a result, US would further pressure these countries to change their patent laws through trade deals.
Issues
Why is USTR worried?
The US Trade Representative's (USTR) Special 301 Report, keeps India on its Priority Watch List, in light of persistent concerns regarding the country's intellectual property rights (IPR) regime. Potential patent revocation, expansive application of patentability standards under the Indian Patents Act, and Section 3(d) restricting patenting of incremental modifications of known substances, have been sticking points between the US and India for long.
Data protection
Concerns over India's protection for confidential test data
The USTR has also criticized India's limited protection of confidential test data and trade secrets while getting approvals for pharmaceuticals. Indian pharma companies, which hold a significant share of the US generic drug market, could be hit by Trump's new policy. The US makes up for almost a third of India's pharma exports, worth around $9 billion last fiscal.