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New pharma policy to cap prices of 60% drugs

New pharma policy to cap prices of 60% drugs
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First Published: Fri, Oct 28 2011. 10 31 PM IST

Photo: Bloomberg
Photo: Bloomberg
Updated: Fri, Oct 28 2011. 10 31 PM IST
Mumbai: India’s new pharmaceutical policy seeks to bring at least 400 essential medicines—or 60% of the drugs sold in the country—under the government’s pricing control.
Photo: Bloomberg
The department of pharmaceuticals on Friday put out a draft policy, pending since 2005, after a committee prepared a list of essential medicines, laying down new rules governing drug pricing.
Currently, the government controls the prices of only 34 essential medicines.
The draft says the policy, to be finalized in a month, will cover nearly all the 348 medicines in the 2005 list. Based on updated data, the list will be expanded to cover about 400 drugs to increase access and availability of essential medicines.
India’s drug price control order, or DPCO, was previously revised in 1994.
The policy seeks to change how prices of essential medicines are regulated by basing the rates on the updated national list of essential medicines, 2011, or NLEM-2011. The present policy regulates prices based on market share.
Under the new policy, drug formulations will be priced by fixing a ceiling on the basis of the weighted average price of the top three brands by value.
NLEM-2011 lists at least 450 drug formulations against a total of 663 medicines being sold in India. Total annual turnover of the drugs likely to come under the control of the proposed policy is about Rs 29,000 crore, as per data available with pharma market researcher IMS-Health.
“With the implementation of present methodology of price control as stipulated in the new policy, the ceiling prices of formulations will be fixed below the current highest market prices by 0-5% for over 50% of the medicines of the NLEM-2011 and this reduction will be more than 20% for over 30% of such medicines,” the draft policy says. The National Pharmaceuticals Pricing Authority (NPPA) will remain the implementing authority for the new policy and the new drugs (Price Control) order. In due course, DPCO, now mandated under the Essential Commodities Act, will be replaced by specific legislation covering price control.
The pharma industry says the government is sacrificing long-term availability of drugs to promote access.
“We support the twin objectives of ensuring access and availability as long as the mechanism to achieve them adopts a balanced approach,” said Dilip G. Shah, secretary-general of the Indian Pharmaceutical Alliance, an industry lobby representing local drugmakers. “Access needs reasonable prices. Availability requires investment in research and development and manufacturing to augment supply of medicines.”
namrata@livemint.com
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First Published: Fri, Oct 28 2011. 10 31 PM IST