NOW, PRICE ROLL BACK
Wednesday, September 13, 2006 08:00 IST
The debate on controlling drug prices has been going on for a long time in this country. It is on once again with the newly constituted expert committee of industry and government representatives. Industry wants no control on drug prices whereas the government has been always for a larger control on essential drugs in public interest. Pharmaceutical industry's pet argument is that the competition can bring down drug prices like any other consumer products. Currently there are only 74 drugs under control with more than 500 drugs remaining outside price control. A large number of these drugs should be considered as essential as they are being prescribed for diabetes, cancer, ulcer, infectious and cardiovascular diseases. They are being increasingly used by the middle class and also poor people. The industry has been constantly propagating the theory that any control on drug prices could turn away fresh investments, discourage R&D efforts and that can also hit exports. With these fallacious arguments and support from the lay press, pharma industry leaders could prevent finalizing the new drug pricing policy so far. In fact, fresh investments and interest in research have been on the rise in this sector despite price regulation all these years. On the export front, Indian pharma industry has fared extremely well during the last ten years.
The objection to controlling drug prices is out of the fear of unfair price fixation and delay in granting revised prices. The standard principle followed in drug pricing is the cost plus formula. And regulated pricing in any sector has to be based on cost plus formula to have a fair pricing. A MAPE of 100 per cent on the ex factory cost of a controlled formulation with fixed margins for the trade ensures a reasonable profit to the manufacturer under the present DPCO. Yet, several manufacturers have discontinued manufacturing and marketing of a number of controlled drugs over the years. The percentage of price-controlled products is hardly 25 to 30 per cent of the total pharmaceutical market. As per the provisions of the DPCO, a regular monitoring of prices of other essential drugs outside DPCO, also needs to be carried out to meet the objective of controlling excessive pricing. NPPA has not been very active in monitoring prices of decontrolled drugs and taking corrective steps for some time. However, its move last week to track prices of decontrolled drugs of top eleven companies is indeed a good beginning. It has already directed the pharma companies, which have hiked prices more than 20 per cent during the last 12 months, to roll back. Such a measure should bring in some kind of price discipline amongst the pharma units and that can eventually discourage them in charging unreasonably high prices for drugs outside DPCO.
with regards
vikas nim
Wednesday, September 13, 2006 08:00 IST
The debate on controlling drug prices has been going on for a long time in this country. It is on once again with the newly constituted expert committee of industry and government representatives. Industry wants no control on drug prices whereas the government has been always for a larger control on essential drugs in public interest. Pharmaceutical industry's pet argument is that the competition can bring down drug prices like any other consumer products. Currently there are only 74 drugs under control with more than 500 drugs remaining outside price control. A large number of these drugs should be considered as essential as they are being prescribed for diabetes, cancer, ulcer, infectious and cardiovascular diseases. They are being increasingly used by the middle class and also poor people. The industry has been constantly propagating the theory that any control on drug prices could turn away fresh investments, discourage R&D efforts and that can also hit exports. With these fallacious arguments and support from the lay press, pharma industry leaders could prevent finalizing the new drug pricing policy so far. In fact, fresh investments and interest in research have been on the rise in this sector despite price regulation all these years. On the export front, Indian pharma industry has fared extremely well during the last ten years.
The objection to controlling drug prices is out of the fear of unfair price fixation and delay in granting revised prices. The standard principle followed in drug pricing is the cost plus formula. And regulated pricing in any sector has to be based on cost plus formula to have a fair pricing. A MAPE of 100 per cent on the ex factory cost of a controlled formulation with fixed margins for the trade ensures a reasonable profit to the manufacturer under the present DPCO. Yet, several manufacturers have discontinued manufacturing and marketing of a number of controlled drugs over the years. The percentage of price-controlled products is hardly 25 to 30 per cent of the total pharmaceutical market. As per the provisions of the DPCO, a regular monitoring of prices of other essential drugs outside DPCO, also needs to be carried out to meet the objective of controlling excessive pricing. NPPA has not been very active in monitoring prices of decontrolled drugs and taking corrective steps for some time. However, its move last week to track prices of decontrolled drugs of top eleven companies is indeed a good beginning. It has already directed the pharma companies, which have hiked prices more than 20 per cent during the last 12 months, to roll back. Such a measure should bring in some kind of price discipline amongst the pharma units and that can eventually discourage them in charging unreasonably high prices for drugs outside DPCO.
with regards
vikas nim