Regulator caps prices, drug firms crunch numbers

Regulator caps prices, drug firms crunch numbers
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First Published: Tue, Apr 01 2008. 12 15 AM IST

Check list: Price ceiling, which covered 1,018 packs in 2005-06, is expected to top 2,000 packs in 2007-08.
Check list: Price ceiling, which covered 1,018 packs in 2005-06, is expected to top 2,000 packs in 2007-08.
Updated: Tue, Apr 01 2008. 12 15 AM IST
New Delhi: The Indian pharmaceuticals industry is yet to get a fix on the effect the drug price regulator’s latest revision of prices will have on their balance sheets.
The National Pharmaceutical Pricing Authority (NPPA) has in a 24 March notice revised and fixed the prices of more than 1,000 medicines that include multivitamins, antibiotics, painkillers, insulin and cardiovascular drugs. This is believed to be the largest number of drugs it has covered in one sweep.
Check list: Price ceiling, which covered 1,018 packs in 2005-06, is expected to top 2,000 packs in 2007-08.
“Companies will take a few days to study the order and do the number crunching to figure out the impact on their margins. The impact for the consumers will also be known once we are able to compare the ceiling prices vis-a-vis the prevailing market rates,” said an industry executive, who did not wish to be named.
NPPA has capped prices of drugs sold in soft gelatin capsules, strips, bottles, vials, eye drops as well as insulin pens and cartridges.
It has also specified prices for liquid drugs of every possible pack size to ensure no drug maker is able to get around the control ambit by tweaking the sizes.
The regulator has revised prices of medicines that are made from the 74 drugs for which prices are controlled. Currently, prices of about 20% of the Rs44,000 crore Indian drug market are controlled. The rest is monitored by NPPA for steep price rises — defined as more than 10% hike in a year.
Most of the new packs on NPPA’s price-cap radar result from an extensive combing operation that the regulator undertook through its newly established enforcement directorate, and constant market surveillance.
This, coupled with pro-rata, or proportionate, pricing norms has deepened the regulator’s hold over the market, said a government official.
While only capsules and liquid drugs are under the pro-rata pricing regime right now, NPPA intends extending it to include ointments, gels, vials and injections in the future.
Till 2004-05, price ceilings were fixed for some 550 medicine packs every year.
This figure climbed to 1,018 packs in 2005-06 and is expected to top 2,000 packs in 2007-08.
According to an NPPA report, its stricter monitoring has led to price rises of just three drug packs in November 2007 as compared with 1,353 packs in the same month of 2005.
Union minister for chemicals and fertilizers Ram Vilas Paswan has consistently backed NPPA’s actions, saying that the regulator was merely doing its job well.
The industry, on the other hand, has viewed the drug price regulator’s actions as regulatory activism and has voiced its disapproval in the past.
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First Published: Tue, Apr 01 2008. 12 15 AM IST