Kounteya Sinha, TNN | Sep 28, 2012, 12.54AM IST
In a landmark decision, a group of ministers (GoM) headed by agriculture minister Sharad Pawar on Thursday cleared the proposal to bring all 348 drugs on the National List of Essential Medicines (NLEM) under price control. These drugs, with annual sales of around Rs 29,000 crore, account for about 60% of the domestic market.
Once these essential medicines are brought under Drug Price Control Order (DPCO), it cannot be sold at a price higher than that fixed by the government.
The GoM, which included health minister Ghulam Nabi Azad, decided on a “weighted average price formula”. This means the average price of all the brands sold in individual segments with a minimum market share of 1% will be the maximum retail price now.
The GoM will send its recommendations to the Cabinet within a week for approval. “The proposal will now go to the Cabinet which will take the final view,” Pawar said.
Prices rose 40% in 10 years
At present, the government, through the National Pharmaceutical Pricing Authority (NPPA), controls prices of 74 bulk drugs and their formulations. Drug prices have shot up phenomenally in India over the past decade and a half. There was a nearly 40% rise in all drug prices between 1996 and 2006. However, during the same period, the price of controlled drugs rose by 0.02%, while those in the Essential Drug List (EDL) increased by 15%. The price of drugs that were neither under price control nor under the EDL grew by 137%.
Interestingly, experts say there could a small downside to the proposal. “Price of costly drugs will definitely come down. But because the formula will put a cap on the MRP, the price of drugs for the same ailment, which are presently sold at a lower price, will go up,” experts said.
Minister of state for chemicals and fertilizers Srikant Jena said, “The GoM arrived at a consensus on the option which entails the use of weighted average prices for all the drugs which have a market-share of more than 1%.”
The concept of essential medicines, first introduced by the World Health Organization in 1977, has been adopted by many countries including India.
The list includes the most cost-effective medicines for a particular indication. Essential medicines are those that satisfy the priority healthcare needs of the majority of the population. The list is specific to India and addresses the disease burden of the nation besides being the commonly used medicines at primary, secondary and tertiary healthcare levels.
The latest NLEM 2011 has 348 medicines which cover 489 formulations, including 16 fixed dose combinations. These drugs are considered to be adequate to meet the common contemporary health needs of the general population of the country.
A Planning Commission panel had suggested that all drugs on the NLEM should be brought under price control since the cost of medicines constitutes over 60% of the total cost of healthcare of Indians. The commission’s report had said, “Taking advantage of lax regulations on drug pricing, the pharmaceutical industry has been able to reap high margins through complex price setting activities.”
It added, “It has been observed that the price of a therapeutically similar drug could vary around 1,000% between the most expensive and the cheapest brands. The variation between the market and procurement price of similar drugs could range anywhere between 100% and 5,000%. The panel recommends price control on all formulations in the EDL.”
The report said direct price control should be applied to formulations rather than on basic drugs.
A note prepared by the drug controller general of India and available with TOI says, “A total of 348 medicines excluding repetitions are present in NLEM 2011. In NLEM 2011, 181 medicines fall under the category of primary, secondary and tertiary use, 106 medicines fall under category of secondary and tertiary use while 61 medicines are categorized as tertiary use only. In comparison to NLEM 2003, number of medicines deleted is 47 and 43 medicines have been added.”
It added, “Out of the 348 medicines, 37 medicines are currently under prices control by National Pharmaceutical Pricing Authority.”
- India- Free medicine scheme gets Rs 1,300 crore boost #rightohealth (kractivist.wordpress.com)
- Glaxo, Cipla Seen as Biggest Losers as India Sets Prices – Bloomberg (bloomberg.com)
- Discussions essential to influence drug-price policy: P.H. Kurian (thehindu.com)
- 348 vital drugs to come under price control (thehindu.com)