Pharma Cos Nervous Over Drug Price Revision

The pharmaceuticals industry is nervously awaiting the National Pharmaceutical Pricing Authoritys (NPPA) announcement on the third round of price revision of controlled drugs.

In the previous two rounds of price rationalisation by the NPPA, prices of 72 formulations were cut at a time when drug companies were demanding a hike. Rates of standard size retail formulations of 15 other drugs were raised marginally.

The industry is upset that by effecting steep reductions in prices of formulations not under price control, the NPPA is sending wrong signals, more so at a time when drug firms are battling threats from foreign companies in the low priced off-patent drugs category and in bulk drugs from China.

Our margins are very thin. This broadside from the NPPA which we thought was intended to protect our interests has completely upset our calculations, said an industry source.

The sources said petitions were planned under the umbrella of the two major drug associations. However, with only a caretaker government in place, no decisions were expected, the sources felt.

The NPPA has brought 9 formulations under price control, the first instance in two years.

The semi-autonomous body, which was set up on the industrys demand, took over the pricing functions from the government in November 1997. Earlier, the ministry of chemicals and fertilisers was fixing the prices of controlled drugs.

Sources said effecting price changes were a continuous exercise. The NPPA had to cut prices to reduce discrepancies between the manufacturing cost and the market price in the interest of the consumer.

While the hikes were in the 3-12 per cent range, the cuts ranged between 12 per cent for penfill liquid purified insulin made by several firms and 76.85 per cent for Histac EvT tablets made by Ranbaxy Laboratories.

A section of the industry dubbed the slashing of prices as savage and not in tune with manufacturing, post-manufacturing, packaging, distribution and marketing costs. If the drugs were selling at the so-called high prices and there were no consumer complaints, the NPPA had no business to effect price cuts, they charged.

The NPPA defends this by saying that factors like conversion charges, packing material, packing charges, loss of raw material and other indirect costs were considered while fixing prices. The ministry used to followed the Bureau of Industrial Costs and Prices to arrive at a retail ceiling price for controlled drugs.