Drug Industry Seeks Gradual Decontrol

The pharmaceutical industry has suggested gradual de-control of drug prices in response to a government request for suggestions on a new pricing regime.

The industry said in its response last week that with India preparing to accept product patents in pharmaceuticals, the drug price control policy would be come irrelevant.

In a letter submitted to the Chemicals and Fertilisers ministry, the two leading Industry associations, the Multinational dominated Organisation of Pharmaceutical Producers of India and the domestic firms led- Indian Drugs Manufacturers Association, have said that process to free the list of 74 essential drugs from the price control should be spread over a three year period.

 

The government should immediately de-control 17 of the 74 drugs as these were under dispute ever since the implementation of the Drugs Price Control Order in 1995.

The industry said drug firms were faced with some drugs becoming expensive due to the patents acceptance, but the control policy would fix a ceiling on retail prices. This would put the industry under great strain.

The remaining 54 drugs from the 74 could be freed as per a timetable set by the government preferably over a three year period.

Squashing government fears that commonly used drugs would become very expensive if taken off price control, the letter said the large number of drug firms and the nature of the market would ensure that competition existed in all segments and this would keep prices low.

Since only 5 per cent of drugs would be under patents at any given time, the large number of Indian firms, over 1000 large and medium ones, would ensure sufficient production at a competitive prices in all segments of drug manufacture.

The 74 major drugs under price control represent 50 per cent of the retail industry and account for a turnover of around Rs 1,500 crore. The industry has been finding it difficult to subscribe to the government policy in the absence of a tight monitoring system. Some companies manage to circumvent the price control policy by changing ingredients or pack sizes. Others simply sell at a higher price taking advantage of the lax policy.

Ever since the National Pharmaceutical Pricing Authority (NPPA) came into being last October, prices of controlled drugs have been controlled. The NPPA has fixed prices of over 300 formulations bringing some of them under price control and lowering the prices of many. It has even increased prices of some of them on request from the industry.

Government sources said the suggestions of the two associations would take some time to process. The request for comments on a new policy had been sent to some individual companies also. A committee is likely to be formed which will study the responses and give its comments to the government. A decision on any new policy could only come after that.