Duty cut: 150 life-saving drugs to be cheaper

The reduction in countervailing duty has reduced the prices of key imported raw materials.

The prices of over 150 life-saving medicines are set to come down as the reduction in countervailing duty (CVD), announced in the Budget, has made imports of key raw materials cheaper.

The National Pharmaceutical Pricing Authority (NPPA), the drug price regulator, which scrutinised the post-Budget prices of such raw materials, has notified the reduced prices of over 1,000 packs of such medicines.

The NPPA has also reduced the prices of imported medicines marketed by multinational drug firms like Pfizer, Novo Nordisk, Sanofi Aventis and Eli Lilly.

Industry estimates that the medicines whose prices are being revised enjoy a combined marketshare of about Rs 4,000 crore. These include life-saving drugs like carbamezapine, salbutamole suphate, rifampicin, human insulin, betamethazone and ranitidine.

NPPA scrutiny found that of the 64 types of bulk drugs (medicine raw material) whose prices are directly fixed by the government, over 36 have imported ingredients.

The lowering of the CVD on medicines from 16 per cent to 8 per cent will have an effect on the prices of all these imported inputs. The authority has also considered the fluctuations in the foreign exchange rates while preparing the new price list, it is learnt.

According to sources, of the 36 bulk drugs with imported content, the prices of 33 were found to have been changed. In 21 cases, the price reduction is more than 1 per cent. NPPA's internal guidelines say that all price reductions above 1 per cent have to be passed on to consumers.

The NPPA had signalled this move on March 20 by announcing the reduced prices of 38 bulk drugs. Based on the reduced prices of these raw materials, the regulator will now issue another notification specifying the maximum retail prices of all formulations or finished products. In most cases, this revision comes after a year.

This is the third NPPA directive for reduction in medicine prices as a result of favourable Budget announcements. The government had brought down the excise duty on medicines from 16 per cent to 8 per cent.