Price control on 354 essential drugs likely
KG NARENDRANATH

NEW DELHI, MAY 5: A proposal to put almost all the 354 “essential drugs” under price control is likely to be included in the pharmaceutical policy. If this proposal, currently being finalised in the chemicals and fertilisers ministry, passes muster with the Cabinet, it could cripple India’s globally competitive pharma industry and mark a reversal of the the now-entrenched policy of progressive decontrol of drug pricing.

Currently, prices of just 74 drugs are controlled by the government under the Essential Commodities Act. A largely autonomous body called the National Pharmaceutical Pricing Authority fixes all-industry ceiling prices and company-specific non-ceiling prices of the controlled bulk drugs and formulations. The heavy dose of price control would, however, come with some concessions, which the industry has immediately termed irrational and far from compensatory.

According to official sources, the ministry will propose an increase in the maximum allowable composite margin of the manufacturer and trade from 100% at present to 200%. That is, the difference between the maximum retail price and manufacturing cost as reckoned by the the government would be 200% of the latter.

The sources added the policy would also suggest a shift in the cost determination policy, by enhanced norm-orientation. An idea being deliberated upon is to determine the manufacturing cost of bulk drugs by the method of averaging, instead of the present unit-specific, rigorously inspection-based system. Since the government in the past found it difficult to gather relevant data from the industry, the norm would, however, be benchmarked against PSU norms.

Significantly, the ministry has rejected a proposal of the task force headed by Planning Commission principal advisor Pronab Sen regarding fixation of ceiling prices. The task force had said the ceiling price of formulations in a therapeutic segment be fixed as the average of the prices of top three brands by value, with incremental increase linked to inflation. So, cost-based pricing would continue, with increased normation. The ministry’s move is ostensibly aimed at complying with the SC directive to put all essential medicines under price control.

With the ministry going for the jugular, the pharma industry is set to intensify lobbying with the PMO, which is seen to be favouring a less-rigorous regulation.

Courtesy : www.financialexpress.com
6.5.2006

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