Draft policy for no price control on new drugs

The draft National Pharmaceuticals Policy for 2006, has proposed exemptions from all kinds of price controls for new drugs developed through indigenous research, for a period of five years.

The same exemptions are proposed to be extended to vaccines, biological drugs, drugs used exclusively in hospitals and drugs costing less than Re 1 per capsule.

Medical devices like stents, catheters and pace-makers will also have a differential system of pricing for supply to the government's retail outlets and hospitals.

In a bid to promote drug discovery and development in the country, the policy wants the pharmaceutical research and development fund to be scrapped and converted into an annual grant of Rs 150 crore. This amount would then be increased over the next five years.

Maximum allowable post-manufacturing expenses (MAPE) of 200 per cent would be given to research and development (R&D) intensive companies fulfilling standards like a minimum of Rs 50 crore or 5 per cent of the turnover, 200 scientists and a patent filings abroad. For all other drugs, this markup would be 150 per cent, up from 100 per cent in the present scenario.

A three-member appellate tribunal would be constituted for addressing grievances against the orders of the National Pharmaceutical Pricing Authority (NPPA) "" the pharma watchdog which monitors drug prices and sets ceilings.

As part of the other new initiatives proposed, a settlement commission would be set up to recover money from pharmaceutical companies on a large number of cases of alleged overcharging.

Of this recovered amount, a drug price monitoring and awareness fund would be created for strengthening the NPPA and creating public awareness.

At present, 74 bulk drugs and all their formulations are under the price control of the NPPA on the basis of its cost studies.

These studies have been often contested and labelled as arbitrary by the pharma industry.

Under the revised system, which would cover 33 per cent of the pharma market, both 74 bulk drugs and their formulations and 354 combinations of the National List of Essential Medicines (NLEM) would come under the NPPA's cost-based price control.

The prices in this system, would be supplied by raw material manufacturers and the price regulator would conduct random checks.

For drugs outside NLEM, intensive monitoring would be carried out for a pre-specified list of therapeutic categories and any significant variation (above 10 per cent) would be identified for negotiation.