Sharp Rise In Drug Prices Since 80, Says Study

Drug prices in the country have risen sharply during 1980-95, in some cases by over 1,500 per cent, according to an industry study.

This is in sharp contrast with the popular belief that drug prices have been kept low by the governments price control policy.

The study, conducted by two Ahmedabad-based industrial consultants, says that while 263 formulations in standard pack size showed a rise in prices, only 50 marked a slight decline. The price-rise was sharper than that of clothing and footwear, whose index rose by 170 per cent during the same period.

However, it is difficult to work out an index for drug prices due to the different prices of different brands of the same medicine, according to the study.

Author Wishvas Rane says in the study that the last modified drug policy has brought down the number of drugs under price control from 142 to 73 and a maximum allowable post-manufacturing expenses of 100 per cent and up to 4 per cent profitability for bulk drug manufacture.

By offering such a liberal drug policy the government has conveniently forgotten that even developed market economies treat the drug industry differently from the consumer goods industry. Price and production controls are enforced in all developed countries.

A category-wise analysis of the prices has shown a rising trend in prices, especially of essential and life saving drugs.

Rane says a recent Reserve Bank analysis of the working of the Foreign Exchange Regulations Act companies reveals that the progress of the drug industry has been quite impressive.

The increase in turnover, in relation to the investment in fixed assets, has been more than proportionate to the additional capital outlay on modernisation and expansion, and dividends on enlarged capital could be paid liberally out of profits. A large portion of profits after tax was also retained in the business.

The price-rise has been substantial in some specialty segments like anti-coagulants. The price of standard size medicine rose from Rs 5.15 in 1980 to Rs 80.25 in 1995, a rise of 1458.25 per cent.

The price of Panzynorm, an enzyme, rose from Rs 7.24 to Rs 87.72, an increase of 1,111 per cent. The price of one particular brand of anti-coagulant, acitrom 4 mg, rose from Rs 1.83 to Rs 45, an increase of Rs 2,350 per cent.

The price of Majeptil, a sedative, rose from Rs 1.73 to Rs 20.24, an increase of 1,069 per cent.

The study has also found that Indian drug prices are lower than the levels in the United States and UK and even neighbouring countries like Pakistan.