India exempts patented drugs from price control for a limited time, but patented medical devices continue to remain under price control

As of January 2019, the Indian Government has allowed importers and manufacturers of patented new drugs to price their product freely for a period of five years. The said five year window will begin from the date of the product’s commercial marketing in India.

Prior to this development, patented new drugs which were not developed in India were subject to certain price restrictions depending on whether the drugs were part of National Essential Medicine List (NLEM) or not. Where the drugs were part of NLEM, the government prescribed a price ceiling above which the drugs could not be sold. Where the drugs were not part of NLEM, the importers/manufacturers of the product were not permitted to increase their price by more than 10% in any 12 month period. These restrictions will not be applicable to patented new drugs any longer until expiry of the said five year window.

The Indian government has also carved out an exemption from price control for orphan drugs. Going forward, any drug that, in the opinion of Ministry of Health, is used for treating orphan diseases will also receive exemption from price control. Such a drug need not be a new drug, or have a patent, or both to be able to be eligible for the price exemption as long as it is used in treatment of an orphan disease. Interestingly, certain medical devices such as coronary stents and knee implants are regulated as drugs in India and therefore are part of price control applicable to drugs. These medical devices will not be able to take benefit of this exemption as medical devices do not fall within the definition of ‘new drug’ under the law.

Foreign Manufacturers, Importers, Indian distributors and Indian manufacturers should take note of this development immediately and evaluate whether they are eligible and interested in taking benefit of the exemption. If the drug is already in market, then the availability of the five year window period for the drug should be evaluated.