New Drug Policy Set To Make Price Fixing Transparent

The new drug policy is expected serve as a window to the government's price-fixing procedure for drugs that fall in the price control basket, sources within the drug industry said here today.

The government's price fixing procedure always kicked up a rumpus within the industry, with more than one pharmaceuticals manufacturer going to court on the issue.

Before the latest policy was announced, the government determined the prices of 74 drugs. That number is now down to about 38.

Sources explained that the National Pharmaceutical Pricing Authority (NPPA), which determines the value of price-controlled drugs, will use ORG Marg data relating to March 2001 to decide which drugs will be included under price control and which will be excluded.

"Previously the drug policy and the Drug Price Control Order(DPCO) would just put drugs under price control without stating any apparent reason. But this new policy states clearly that ORG Marg data will be used, making the basis for deciding the criteria very clear," said an industry source.

The latest criteria will bring drugs that have a turnover of over Rs 25 crore and a market share of over 50 per cent under price control. Drugs that have a turnover of Rs 10 crore to Rs 25 crore and have a market share that exceeds 90 per cent will also be subject to price control.

Conspicuous by its absence is the competition clause. Industry lobby groups such as the Organisation of Pharmaceutical Producers of India (OPPI) argue that the exclusion of this criteria was unjustified.

"This is an important criteria, particularly in a market where the competition is intense and many drugs are sold below the ceiling price," an OPPI statement said.

NPPA will also have to contend with the issue of quality control. "Making drugs affordable will not ensure that the drug quality will remain the same," said the source.