Explained: Why China factor has led to an increase in price of Heparin; will other drugs follow?

Heparin is a blood thinner that has long been used in patients vulnerable to blood clots in their legs, lungs, heart or other body parts. It is used to reduce their risk of heart attacks, strokes and pulmonary embolism. Several patients with critical illnesses, including those requiring kidney dialysis, are given the drug. During the Covid-19 pandemic, the Ministry of Health and Family Welfare included the drug in its clinical management guidelines for the treatment of Covid-19 patients in the ICU.

Why did companies seek a hike on its ceiling price?

Because it is so essential to high-risk patients, the National Pharmaceutical Pricing Authority (NPPA) had capped heparin’s ceiling price sometime in 2018. However, there have been instances of shortage of this drug during the pandemic, according to the drug pricing regulator.

This is because the active pharmaceutical ingredient (API), which forms a considerable amount of the cost of making the drug in India, has increased drastically, according to pharma companies. APIs are crucial elements in drug production as they give medicines their therapeutic effect.

Since September 2018, the price of this API has shot up 211 per cent, according to an expert committee that looked into this matter. With the maximum price that companies can charge for the drug fixed, but the API costs rising, they claimed it had become unviable to continue manufacturing and selling the drug in India. Companies like Gland Pharma, Biological E, Samarth Lifesciences, Abbott Healthcare, Troikaa Pharmaceuticals and Celon Labs market heparin products in India, according to pharmaceutical market research firm AIOCD Awacs PharmaTrac.

What powers did India’s pricing regulator use to increase the price of heparin by 50 per cent?

NPPA used extraordinary emergency powers provided to it under paragraph 19 of the Drugs (Prices Control) Order, 2013. This provision allows for the regulator to, in extra-ordinary circumstances, fix the ceiling or retail prices of any drug regardless of whether they were under or eligible for price control under normal circumstances. It also allows NPPA to increase or decrease their prices irrespective of the annual wholesale price index of that year.

Has this been done before?

The first time NPPA increased the prices of medicines under price control was in December 2019, where it hiked, by 50 per cent, prices of 21 drugs integral to public health programmes and often used as the first line of treatment. This included the BCG vaccine for tuberculosis, vitamin C, antibiotics like metronidazole and benzylpenicillin, anti-malarial drug chloroquine and leprosy medication dapsone.

What role does China have to play in the availability of heparin? What other drugs is India dependent on China for?

The heparin sodium API for the injections made in India majorly comes from China, according to pharma companies. Some industry bodies say there are not many alternative manufacturers for the API, especially in India.

This is the case with several APIs used in India’s pharma industry. The country heavily relies on China for various APIs used to make crucial antibiotics and vitamins. According to industry bodies, even the API and other key ingredients for popular painkiller paracetamol are imported from China.

In the last three-six months, prices of APIs from China have gone up 20-35 per cent, according to pharma industry associations.

Of the over $3.5 billion worth of ingredients that Indian drug-makers imported to manufacture several essential medicines in 2018-19, China catered to around 68 per cent. This means that a snag in the supply chain from China could disrupt the availability of medicines made in India. It could also hit the availability of medicines in other countries that import from India as well.

This was seen in March, when the government restricted exports of 13 APIs and the various formulations made from them in order to safeguard India’s own stock. Shipments of drugs like paracetamol, erythromycin salts, Vitamins B1, B6 and B12, acyclovir and progesterone were only allowed out of the country with a no-objection certificate (NOC) that companies claimed were difficult to procure. This was around the time that Wuhan in China, from where these APIs were mostly imported, was under a Covid-19 lockdown.

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Is this because of India’s tensions with China?

While the development also comes at a time when tensions between India and China have been on the rise, it is separate from this issue. The increase in heparin’s API costs have happened over the course of the last two years. Even the costs of APIs for other drugs from China have been on the rise since before the clash at Galwan Valley.

According to one industry association, the spike in API costs during the pandemic are also in part the aftermath of the lockdown in Wuhan. Chinese firms took a hit when they had to shut their factories temporarily or were facing difficulties in exporting their APIs during their lockdown. Some of the hikes in API costs are because of such firms trying to recover the costs they endured from this impact, said the association.

While there had been issues with delayed clearances of API consignments from China at Indian ports over the last fortnight, shipments of pharmaceutical products have been released this week, as per an export promotion body.

Will more drugs see a hike in prices?

It is too soon to say which and how many drugs may see a hike in prices, but NPPA has received representations from different firms over the last two months at least for similar hikes in prices of other crucial medicines. Some of the representations have been for antibiotics and vitamins made from APIs majorly coming from China.