Bulk drug prices may be freed

The government may remove restrictions on the prices of 29 of the 74 bulk drugs that are now controlled after studying their cost of production.

The chemicals and petrochemicals ministry is, however, looking at three other drug pricing options in the forthcoming Pharmaceutical Policy 2006, a draft of which could be finalised in a week.

The second option is to do away with cost-based price control. Instead, there can be ceilings on the prices of all drugs in the National List of Essential Medicines based on the weighted average of the top three brands by value, as suggested by a Prime Minister's task force headed by Pranob Sen, adviser to the Planning Commission.

The third option is to widen cost-based price controls to all drugs in the National List of Essential Medicines, except those facing competitive pressure.

The fourth scenario is a mix in which some drugs will face cost-based price control while the rest have price ceilings based on the weighted average of the top three brands. The 40 hospital drugs and the 42 anti-cancer and anti-AIDS drugs will not fall under either formula.

If the first option prevails, the prices of 29 bulk drugs, which are not on the National List of Essential Medicines, will be free in around three years. They might then attract new manufacturers, which keep away because of price controls.

The other 45 drugs on the National List of Essential Medicines will continue under the cost-based regime of the National Pharmaceutical Pricing Authority.

The National List of Essential Medicines has 309 other drugs, of which 227 can come under price control based on the weighted average of the top three brands by value.

The other 82 will continue to be free of any price control because 40 of these are hospital products, not connected directly to the consumer, and 42 anti-cancer or anti-AIDS.

Late last year, the ministry came out with the first part of the draft Pharmaceutical Policy, looking at the regulatory framework.