Price control on drugs helps improve accessibility and is key to making health care affordable, a top official in the department of pharmaceuticals said, even as the industry continues to make representations to the government against such a move. "The government cannot do away with it," V K Subburaj, secretary of the department, told Business Standard when asked whether there's a rethink on the issue.
"A large section of the population is poor. Suddenly, your system is disturbed if you have to spend more on drugs. Drugs are an important component of health care expenditure," the secretary said.
In July, the National Pharmaceutical Pricing Authority (NPPA) added 39 drugs meant to treat diabetes, infections and digestive disorders to the list of price-controlled medicines. Consequently, companies had to reduce prices by five to 40 per cent on these.
In May, the NPPA had introduced a cap on prices of 30 formulations, meant to cure tuberculosis, diabetes and asthma. The formula adopted for capping the price of a drug is based on the average price of all drugs with a market share of over one per cent in a particular therapeutic segment. For drugs outside the control, companies can increase prices by up to 10 per cent in a year.
The list of drugs under control is close to 700. In the 15 months since it came to power, the Narendra Modi-government has added about 240 drugs to the list.
In contrast to the government's stand, a study by IMS Health - a NYSE-listed health care information and technology services company - said last month that the control on drugs, mandated by the 2013 Drug Price Control Order, had not helped in improving access to these medicines in the country.
The IMS study said the intake of price-controlled drugs in rural areas had decreased by seven per cent over two years, while that of non-price controlled products had risen by five per cent. It said both price categories of medicines were already among the cheapest in India compared to other developing nations, and price increase had been below or at par with inflation.
Companies argue they are left with limited financial resources to invest in research and development due to price controls. To that, Subburaj said, "Big and small companies investing in research would need more money. In India, we can't afford to remove controls as the burden of disease is high."
Price control is only on the national list of essential medicines and gets modified depending on the disease pattern, the official added, saying, "We cannot reduce the price of patented drugs."