'Cap on drug prices to be counter-productive'

Union Chemicals Minister Ram Vilas Paswan's proposal to expand the scope of price control on drugs through the draft National Pharmaceutical Policy, 2006, has met with serious objections from the Planning Commission.

The Department of Chemicals and Petrochemicals (DCP) has submitted the draft policy to the Cabinet. The policy proposes to bring all 354 essential medicines under price control, including the 74 bulk drugs and their formulations, as ordered by the Supreme Court.

Faced with strong protests from the pharma industry, the government set up a seven-member group of ministers under the chairmanship of Agriculture Minister Sharad Pawar to look into the various provisions of the draft. Planning Commission Deputy Chairman Montek Singh Ahluwalia is a member of the group.

The Plan panel has objected to the proposal saying the step could prove to be counter-productive by discouraging new investments in the pharma industry and limiting competition.

To counter the argument that Indian drugs were more expensive, the Plan panel said there was no evidence that the Indian pharmaceutical industry was overcharging. "Our medicine prices continue to be the lowest in the world," an official source said.

The department has been saying that the policy has been formulated at the behest of a clear order from the Supreme Court.

The Planning Commission had advised that the opinion of the attorney-general be sought on the judgment.

However, the department had rebuffed the proposal saying the order of the apex court was so simple that it did not call for further legal opinion.

Despite this, the Plan panel reiterated its stance and said the draft policy in its present form would lead to proliferation of fraudulent practices and disappearance of essential medicines from the market.

The panel has suggested that the department place a separate detailed note before the Cabinet on the proposed extension of price control policy addressing the various issues raised by it.