Pharma firms agree on essential drug price freeze

The pharmaceutical industry today offered the government a bargain, vehemently opposing a proposal to de-brand generics and agreeing to a freeze on prices of essential drugs.

The industry associations, which met chemical and fertiliser minister Ram Vilas Paswan in New Delhi, also offered to sell essential drugs at half their price in government procurement programmes.

The price freeze - as envisaged by Indian Pharmaceutical Alliance, which comprise domestic companies, and Organisation of Pharmaceutical Producers of India, the multinational lobby - will apply for a year, after which prices may be allowed to rise in line with inflation.

The Indian Drug Manufacturers Association, another group of domestic companies, however, strongly opposed the view saying that it was an MNC strategy to escape price control on new drugs.

According to industry representatives, the proposed system of price control through a weighted average formula and a mandatory debranding of generics - both have been suggested by the pharma pricing taskforce - will be anti-competitive and hurt consumers.

Paswan said at a press conference later that the new drug price regime will be finalised by the end of this month or early next month and take into account industry's reservations.

"We don't want the industry to suffer but we also want to see that the drugs are available at an affordable price," he said."

"The government should not put a curb on pricing and the status quo should be maintained . There ought to be an exemption of R&D products from price control mechanism," said Nicholas Piramal's Chairman Ajay Piramal, who led a CII delegation to the meeting.

IDMA president Suresh Kare told Business Standard that the association would again work out proposals to ensure a rational pricing policy.

"Currently there is lot of confusion among the industry on this whole issue. It is the government's responsibility to create clarity on the drug pricing policy," he said.

Asked an industry analyst: "Does the government want to control prices or see an immediate reduction?"

The taskforce, which has shifted the focus of price control by looking at whether a drug is 'essential' and not just the turnover it generates, has asked the government to bring 354 drugs in National List List of Essential Medicines (NLEM) under price control.

Even the ones outside, says the taskforce, can be subjected to "intensive monitoring". In case of a significant variation - say more than 10 per cent of the ceiling prices "" the drug may be brought under price negotiation.

To the industry, this is nothing short of "100 per cent price control".

Calculating the ceiling MRP by using the weighted average of the top three brands by 'volume' is another suggestion that has been opposed by the industry.

While the taskforce has suggested that 'brand leader' be selected on the basis of volume, some players including IPA want this criteria to be on the basis of value. In the latter, volume shall be multiplied by price and companies with a higher price are more likely to come up as 'brand leaders'.

D G Shah, secretary general of IPA who has put forth the suggestion of there being just 'one' brand leader based on value observes, "Weighted average formula is anti-competitive and hence anti-consumer. This way the competition between the top three brands would be completely eliminated."

The industry also has reservations on the constitution of National Authority on Drugs and Therapeutics which they have labelled as "unwieldy".