'Government policy would succeed if generic drug quality improves'

The Centre's steps to make doctors prescribe drugs by their generic names and not by their brand names may not have material impact without steps for improving the quality standards for drugs, investment banking firm Jefferies has said.

In a report issued on Sunday, Jefferies said: "In our view, without steps for improving quality standards for drugs available in the market, the move will not have much material impact and will shift power from doctors to pharmacists."

According to Jefferies, transition to generics is a long term aim where the first step needs to be quality.

The push towards generic drugs began with Prime Minister Narendra Modi declaring that the government will bring a legal framework to get doctors to prescribe generic names, said Jefferies.

Soon after the Medical Council of India (MCI) directed doctors to write generic names in prescriptions or face disciplinary action.

According to Jefferies, the push to get the doctors to prescribe generic names, is one of the many steps the government has been taking to reduce medical costs in India.

The key ones has been 1) expansion of National list of Essential Medicines (NlEM) bringing them under price cap, 2) push by the government to increase awareness of generic drug prices and 3) increase access through Jan Aushadhi programme.

"A shift to a generic-generic model (similar to US) from the branded generic model currently in India, requires confidence among doctors, pharmacists and patients on the quality of drugs available in market," Jefferies said.

The key focus of the government then needs to be towards strengthening and empowering the regulator. It also needs to improve and standardise the drug approval process in India, the report added.

"Without quality assurance, move just shifts power to pharmacy - While the push to generic prescription is a positive step for the consumer, without quality assurance and awareness, we believe branded generics will still retain majority share," Jefferies said.

According to the report, prescriptions by generic names will shift the brand selection power to pharmacist.

"The focus of companies, in the current environment, will then shift to pharmacists for marketing their drugs. At the pharmacy level, generic-generic drugs have much higher margins than branded drugs but the lower retail price and lack of quality assurance will keep branded drugs the preferred pick for pharmacists to dispense," Jefferies said.

According to Jefferies, a move towards a generic-generic market is negative for the Indian pharmaceutical companies.

"This move, though, is a long term target in our view. It will require multiple steps including 1) strengthening the drug approval process, 2) strengthening the drug regulator, 3) increased inspection of drug facilities, 4) increased awareness of generic drugs and their quality and 5) rationalising the fixed dosage combination drugs," Jefferies said.