Only balm, no cure PDF Print E-mail
Tuesday, 17 December 2019 05:45
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Ishaan edit 


The decision of the drug-price regulator, the National Pharmaceutical Pricing Authority (NPPA), to allow a one-time hike of 50% in the prices of 12 formulations, is a welcome one. That the hike was recommended by the NITI Aayog-led Standing Committee on Affordable Medicines and Health Products (SCAMHP)—market watchers were sceptical of the body since it advocated a widening of the price-control regime—could be a sign that market realities are forcing a rethink of the policy. But, the 12 formulations account for just a sixth of the total number of applications received by the NPPA for price revision within the last two years, of which it had picked 19 in March and sent only 12 to the SCAMHP. This shows how reluctant the government is to allow market-pricing, the hit to drug-makers’ margins translating into poor availability of crucial drugs notwithstanding. Indeed, the government continues with a hike-approval regime when it should have just ended capping and allowed competition to determine prices.

As this newspaper has pointed out before, even when the government has found the price-capping detrimental to the country’s interest, it did precious little. The 2017 draft pharmaceutical policy upheld the price-capping policy even though it admitted that the price-caps have made India import-dependent for active pharmaceutical ingredients (APIs), saying, “The Drug Price (Display & Control) Order 1966 put 18 APIs (raw materials) under price control … from 1996… imported APIs and intermediates started becoming hugely lucrative as a price cap on drugs forced the manufacturers … to obtain the cheapest raw material with the basic minimum efficacy/quality”. Apart from import-dependence, the price caps have also pushed Indian pharma production to become export-focused, as is evident from the falling share of the domestic market in drug companies’ revenues since price-capping came into force. With the price of APIs increasing, production for the domestic market with regulated pricing has become more and more unviable.

The Drugs Pricing Control Order 2013 provides for price hikes, but only based on revisions in the wholesale price index, without considering rising cost of manufacture. While one-time hikes, even if made periodic, are a pain-balm, these are no cure for the morbidity that the price-control regime inflicts on the pharma industry. So, while the SCAMHP asking the NPPA to recommend more applications is welcome, the government must understand that nothing changes until price-control goes. More so, given the prices for most drugs in India are among the lowest globally, thanks to thriving competition in the sector.


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