Govt’s plan to take over drug price regulator’s powers raises questions

Proposal aims to subsume NPPA into the pharma department and give it a new mandate, while the ability to control prices of drugs would be given to the government


Photo: Hemant Mishra/Mint
Photo: Hemant Mishra/Mint

The NITI Aayog’s proposal to take away the drug-price-fixing powers vested in the National Pharmaceutical Pricing Authority (NPPA), discussed at a meeting over a month ago, may not succeed, officials from the department of pharmaceuticals (DoP) and the health ministry said on condition of anonymity.

The October meeting, involving NITI Aayog chief executive Amitabh Kant, pharmaceuticals secretary Jai Priye Prakash, health secretary C.K. Mishra and department of industrial policy and promotion secretary Ramesh Abhishek, had mooted the plan to subsume NPPA into the DoP and give it a new mandate, while the ability to control prices of drugs would be given to the government.

“Such a move would be difficult to manoeuvre since it would result in a conflict of interest between the government’s need to promote the pharmaceutical industry and its mandate to protect public health needs. That’s the reason why there are separate bodies handling different aspects of price control,” said a senior government official.

Formed in 1997 as an independent price regulator, NPPA looks at the revision of prices of pharma products and the enforcement of provisions of the Drugs Prices Control Order, as well as monitoring drug prices.

The National List of Essential Medicines (NLEM), issued by the health ministry, forms the basis for deciding which medicines should come under price control. Once the NLEM is announced, it’s the DoP’s job to notify or issue the Drugs Prices Control Order, which is issued under the Essential Commodities Act, 1955, through which these medicines are declared essential commodities and their prices capped by NPPA.

The proposed policy may also delink price control from essential medicines.

“The separation of NLEM and NPPA was to make sure that decisional autonomy is maintained for something as critical as affordable medicines for public health. Although resorting to multiple structures is flawed and greater competition in the pharmaceutical sector is desirable, the need to subsume NPPA into the government is questionable,” said a second official.

To be sure, regulators exist in other sectors as well, but they are insulated from vested interests within or outside the government.

The Telecom Regulatory Authority of India (Trai), instituted by an Act of Parliament in February 1997, is a prime example. It was formed to lend a voice to all stakeholders and even has a separate appellate authority—the Telecommunications Dispute Settlement and Appellate Tribunal.

“I am not entirely sure what is the rationale behind wanting to amend NPPA’s mandate. While the pharmaceutical industry’s argument has been that there are adequate generic drug manufacturers to ensure affordable prices, doing away with an independent price-regulatory body like NPPA is unwise,” said a former DoP secretary, asking not to be identified.

What could further complicate the government’s proposal to subsume NPPA into the DoP is that NPPA is engaged in recovering dues from drug firms accused of overcharging consumers, and the apex court recently found in the regulator’s favour.

“While it’s unclear if NPPA being disbanded will affect these proceedings, a decision to curtail NPPA’s mandate could invite a potential backlash that the step is being taken to stop the price-regulator from recovering dues,” said the second official.

DoP secretary Prakash did not respond to questions emailed to him while Kant declined to comment. The health ministry did not respond to an emailed query.

READ MORE