Overview
The DPCO 2013 affects multiple stakeholders in the system, including pharma firms, physicians, patients and retailers, each with varying responses to the price regulation. We list the stakeholders, their expected responses and outcomes below.
Impact of DPCO 2013 on Different Stakeholders
| Expected Response | Outcome |
|---|---|
| Reduce production (DPCO 2013 had put in place mechanisms to monitor and ensure no significant drop in production levels of regulated drugs by the pharmaceutical firms) | No changes in production |
| Withdraw the brand from the market (firms were allowed to exit from a given category only with a six months’ notice, and the NPPA reserved the right to mandate continued production of up to 12 months) | Very few brand exits observed in the data (total of 6 brand exits in the SKUs covered in the analysis in the one year period post regulation) |
| Shift detailing efforts to market more profitable unregulated drugs in the same category to physicians | i) Decline in detailing of regulated drugs. ii) Decline in sales volumes of regulated drugs. |
| Focus on introducing new drugs into the market (DPCO 2013 mandated that prices of new drugs need to be approved by NPPA prior to launch) | Drop in new drugs approved, as i) firms may be reluctant to launch as a new drug may also be brought under price control, ii) the firm has to get the price approved before launching in the market, which introduces uncertainties over potential margins and delays. |
| Expected Response | Outcome |
|---|---|
| Physicians who typically depend on detailing shift to unregulated drugs | Decline in physicians’ prescriptions of regulated drugs |
| Physicians without formal medical degrees who are heavily dependent on detailing shift to unregulated drugs | Decline in prescriptions of regulated drugs by physicians without formal medical degrees |
| Detailing insensitive doctors | No change in behavior |
| Expected Response | Outcome |
|---|---|
| Lower demand for regulated drugs due to decline in disease prevalence | Disease prevalence increased over the time period (from 2009 to 2015). The number of recorded cases of different ailments increased from 2009 to 2015 (IndiaStatHealth 2023) |
| Patients with acute ailments | Decreased demand for regulated drugs due to the detailing effect depending on physician response to detailing |
| Chronic ailments (existing patients) | There may not be any change in behaviour if the medication was effective |
| Chronic, new patients | Decreased demand for regulated drugs due to the detailing effect |
| Patients may shift to alternative, non-allopathic medicines | Decline in penetration of alternative medicine from 2014 to 2018. Penetration of alternative medicine declined from 2014 (Baruah 2023) |
| Expected Response | Outcome |
|---|---|
| Retailers have the option to stock less of the regulated drugs as DPCO fixed retailer margin at 16% for regulated drugs compared to 20% for unregulated drugs. This may affect our sales outcomes, but not prescription outcomes. i) Retailers may reduce stock only when prescriptions reduce (as they may lose out to competitor if they are not able to fulfil a prescription), ii) Retailers may insist on original trade margins from firms. | Original trade margins restored for the retailers (anecdotal evidence) |
References
IndiaStatHealth (2023), “Diseases Data,” (accessed on 17 November 2023), https://www.indiastathealth.com
/data/health/diseases
Baruah, Palash (2023), “AYUSH Medicine Usage Declining, NSS Data Shows. Integrate with Allopathy for Better Reach,” (accessed 15 November 2023), https://theprint.in/opinion/ayush-medicine-usage-declining-nss-data-
shows-integrate-with-allopathy-for-better-reach/1368506/