New Delhi: Drug ointments are next on medicine price regulator’s list as it implements a new price control formula that seeks to set caps and control pricing for all packs of a drug, not just those of a particular size.
With liquid drugs coming under this formula for the first time 10 days ago, the National Pharmaceutical Pricing Authority (NPPA) is looking to extend the price control regime to other categories as well, as part of its ongoing drive to stop companies from evading price controls by changing pack sizes: For example, a certain ointment might be sold in a tube of 7.3g because prices are regulated for 5g and 10g but not the amount in between.
The drug industry largely agrees that the regulator is doing its job but questions the sudden spurt in regulatory activity — and its timing — as a new pharmaceutical policy is being formulated.
Tablets, capsules and liquid drugs account for about Rs24,000 crore, or roughly 79%, of the total retail medicine market in the country; all drug formulations that contain one or more price-controlled drugs are currently under pro rata pricing. The addition of ointments — worth Rs1,253 crore — will cover another 4.1% of the market.
“Ointments are next on the radar as NPPA has found some very expensive ointments in very strange pack sizes,” said an official close to the developments, indicating that price control may be extended to other categories such as vials, injections and gels too.
NPPA fixes the price of 74 bulk drugs and all the formulations, or final consumable medicines made from it. The catch is that NPPA prescribes price caps for specific formulations in specific pack sizes.
And thus, by merely changing the size or syrup volumes, companies have been able to dodge the price ceilings. For example, if NPPA fixes prices of a syrup in 50ml and 100ml packs, the company could introduce a 60ml pack and technically have no price cap on it.
To snuff out this possibility, NPPA had brought all liquid oral drugs under pro rata pricing on 31 January and listed the maximum price for all volumes from 10ml to 500ml. Capsules and tablets have been covered under this since 1998. The catch in fixing price slabs for all volumes is in finding a formula that can account for the manufacturing expenses of packing material and packing charges. These expenses don’t increase proportionately with the drug quantity and abruptly jump at certain levels. NPPA is working to find such a formula for the ointments right now.
Daara Patel, secretary general of the small domestic drug companies lobby, the Indian Drug Manufacturers’ Association, said, “Companies by and large don’t evade price control. There are a few black sheep and NPPA has its own ways to deal with them.”
Patel’s counterpart in the Indian Pharmaceutical Alliance — a lobby of big Indian drug makers—D.G. Shah concedes that NPPA is only doing its job but questions the timing of the action.
“Question is, why (do it) suddenly and why now? Particularly when the new drug policy is in the making,” he said, adding that NPPA ought to “take confidence-building measures” rather than deepening the existing divide between the industry and ministry of chemicals and fertilizers.
The drug regulator scanned more than two million medicine packs between 2003-04 and October 2007 and brought 24 new drugs under price control in the last one year invoking a legal provision that can be used in the public interest.
It has also halved the extent of price rise allowed on a drug to 10% and created an enforcement directorate to comb the market more finely for violations.