Early last month the US Congress came out with a decision to investigate sharp price hikes of certain generic drugs effected by 14 companies including some of the prominent pharma companies from India in the American market. Three top Indian firms included in this list of 14 are Sun Pharma, Dr Reddy’s Labs and Cadila Healthcare. Apart from the three Indian companies, the investigation is being carried out on Teva, Mylan, Actavis, Apotex, Endo, Global Pharmaceuticals, Heritage Pharmaceuticals, Lannett Company, Marathon Pharmaceuticals, PAR Pharmaceutical Companies Inc and West Ward Pharmaceutical Corp. The US Congress has taken serious objection to hiking prices of three drugs namely Divalporex Sodium ER, Doxycycline Hyclate and Albuterol sulfate which are used to prevent migraines, treat certain types of seizures, treat a variety of infections, asthma and other conditions of the lung. According to data provided by the Healthcare Supply Chain Association of the US, the average prices charged for these drugs have been hiked as much as 736 per cent for Diavalporex Sodium ER, 8,281 per cent for Doxycycline Hyclate and 4,014 per cent for Albuterol sulfate from October 2013 to April 2014.

Unlike India, the US used to be a free market for pharmaceutical pricing for a long time and drug prices are essentially governed by competition. Because of this, there has been no restriction or cap on prices of either generic products or new and innovative medicines. Indian pharmaceutical companies have been taking full advantage of this situation in the US for all these years by selling drugs at much higher prices that what was sold in India. The huge profits of India’s top companies were showing in their balance sheets for the last 10 years or more was largely on account of their exports to the US market. With steady rise in lifestyle diseases and activism of patient groups and NGOs in the US, the authorities there also started scrutinizing at the excessive profiteering by pharmaceutical companies. The decision of the US Congress now to look at the huge price hikes of generic drugs has to be seen in the context of the huge demand for these drugs by poor and disadvantaged sections of the American society. There is certainly a need to keep healthcare costs low universally and that was expected from the generic companies from India and the US. In fact, Indian pharma companies had a reputation of offering quality generic drugs at reasonable prices to the American society for some time. Indian pharma giants should have been careful enough to retain that image by restricting their urge to make huge profits on essential drugs just because there is no price control policy in the US.