The government cleared the National Pharmaceutical Pricing Policy that will bring 348 essential drugs under price control, leading to reduction in prices of around 20 percent.
“The National Pharmaceutical Pricing policy has been approved by the Cabinet with an objective to put in place a regulatory framework for pricing of drugs to ensure their availability at reasonable prices,” an official source said.
The Cabinet has imposed a cap on prices of 348 essential medicines at the arithmetic average of prices all drugs in a particular segment with more than one per cent market share, in line with GoM’s new recommendations.
At present, the government through the National Pharmaceutical Pricing Authority (NPPA) controls prices of 74 bulk drugs and their formulations.
The source said the government has also considered providing sufficient opportunity for innovation and competition to support the growth of the Indian pharma industry.
Last month, the Supreme Court had set a deadline of 27 November for the government to finalise the policy while asking it not to alter the existing mechanism of cost-based drug pricing.
Representational Image. Getty Images
Earlier, a group of ministers, headed by Agriculture MinisterSharad Pawar proposed to fix prices based on weighted average of brands which have more than 1 percent market share.
The policy, that aims to bring 348 essential drugs(The existing essential drugs list has only 74 items) under price control, was earlier approved by the GoM on 27 September and was subsequently sent to the Cabinet.
After being unable to frame a policy for price control of essential drugs in its previous term, the UPA-II government had last year circulated a draft National Pharmaceutical Pricing Policy, 2011 through the Department of Pharmaceuticals.
The policy, however, took long to finalise due to differences between ministries of health and chemicals and fertilisers. Other stakeholders, industry and NGOs had also expressed their concerns on the pricing model which was suggested.
In 2010-11 the production turnover of the Indian pharma sector stood at Rs 1.05 lakh crore and the country is the third largest producer of medicines by volume in the world. It exports to over 200 countries.
Prices rose 40% in 10 years
At present, the government, through the National Pharmaceutical Pricing Authority (NPPA), controls prices of 74 bulk drugs and their formulations. Drug prices have shot up phenomenally in India over the past decade and a half. There was a nearly 40% rise in all drug prices between 1996 and 2006. However, during the same period, the price of controlled drugs rose by 0.02%, while those in the Essential Drug List (EDL) increased by 15%. The price of drugs that were neither under price control nor under the EDL grew by 137%.
Price of costly drugs will definitely come down. But because the formula will put a cap on the MRP, the price of drugs for the same ailment, which are presently sold at a lower price, will go up," experts said. The concept of essential medicines, first introduced by the World Health Organization in 1977, has been adopted by many countries including India. The list is specific to India and addresses the disease burden of the nation besides being the commonly used medicines at primary, secondary and tertiary healthcare levels.
The latest NLEM 2011 has 348 medicines which cover 489 formulations, including 16 fixed dose combinations. These drugs are considered to be adequate to meet the common contemporary health needs of the general population of the country.
A Planning Commission panel had suggested that all drugs on the NLEM should be brought under price control since the cost of medicines constitutes over 60% of the total cost of healthcare of Indians.
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