Government interventions to regulate prices of essential drugs have led to hike in their cost when compared to unregulated similar drugs instead of making them affordable, according to the Economic Survey for 2019-20.
In India, the government has historically relied on price controls to regulate the prices of pharmaceutical drugs through the National Pharmaceutical Pricing Authority (NPPA) and Drug (Prices Control) Order, said the Survey.
The government through DPCO ensures that the medicines listed under the National List of Essential Medicines (NLEM) are available at a reasonable price to the general public, it added.
"The regulation of prices of drugs through the Drugs Prices Control Order (DPCO) 2013, has led to increase in the price of a regulated pharmaceutical drug vis-a-vis that of a similar drug whose price is not regulated," the Economic Survey 2019-20, tabled in Parliament on Friday, said.
It further said: "Our analysis shows that the increase in prices was witnessed for more expensive formulations than for cheaper ones and those sold in hospitals rather than retail shops, reinforcing that the outcome is opposite to what DPCO aims to do - making drugs affordable."
To parse out the effect of the DPCO order, the Survey said,"the prices of formulations that came under DPCO, 2013 and that were mostly sold at hospitals increased by Rs 99 per mg. In the case of formulations mostly sold in hospitals that were unaffected by DPCO, 2013, the prices increased by only Rs 25 per mg."