Drug price monitoring at the forefront

The government seems to be focussing on price monitoring of essential drugs while putting cost-based price control on the backburner. Although this would delay finalisation of the national pharmaceutical policy, it would be a major relief to the industry.

In the first meeting of the 14-member committee to thrash out contentious issues, industry representatives were asked to study and come up with various price monitoring models and their application in the Indian scenario.

The committee was set up last week by Union Minister for Chemicals and Petrochemicals Ram Vilas Paswan.

The committee includes 11 members from the pharma industry, who have to study the cost of treatment per day of the 354 drugs listed in the national list of essential medicines (NLEM). Based on current market rates, the study aims to analyse if prices are high enough to warrant government intervention.

"Besides, looking at the logistics of the price monitoring mechanism, the committee would also be looking at the disease profile outlined in the 10th Five-Year Plan to see which drugs are being used by a larger population," an industry source close to the development added.

The Supreme Court had directed the government to ensure that drugs in the NLEM do not go outside price control.

However, the department of chemicals and petrochemicals and the industry are at variance on what the interpretation of "price control" implies.

They are still unsure if it means cost-based price control, as the ministry wants it, or if it includes "price monitoring" according to the wishes of the industry.

The matter could eventually be sent to the law ministry for clarification, the industry representative added.

Another issue the committee would be working on are the legal definitions of "branded generics" and "generics generics".

They constitute 5-7 per cent of the Rs 35,000-crore domestic drug market but there is lack of clarity within the industry on their definitions.

A week ago, the industry had agreed to cap the margins of both these drug segments at 15 per cent for wholesale and 35 per cent for retail trade from October 2, in a bid to rein in the 1,000 per cent margin that some of these drugs were commanding.

Extensive discussions were also held on the public-private partnership model being considered for health insurance.

"One model under consideration is that companies adopt certain districts and look after their medicine needs, while the other models discussed were such as are practiced in Karnataka, Medicare societies of Rajasthan, and the Chiranjeevi model in Gujarat," said an industry expert who is part of the committee.

In a major reconciliation exercise last week on the contentious pharmaceutical policy, a committee was set up to look into the possibility of price monitoring, insurance for below poverty line families, ways to encourage R&D, concessional prices for government procurement and the role of competition in bringing down prices.