| Drug cos to get notices for price hikes |
| BS Reporter / New Delhi May 23, 2007 |
| National Pharmaceutical Pricing Authority (NPPA) is planning to issue show-cause notices to drug companies for increasing the maximum retail prices of 331 drug packs beyond the permissible limit. Dr Reddy's Laboratories, Emcure, Torrent and Cadilla are among the major drug companies whose products figure in the list. While 279 notices are of priliminary nature seeking explanation from the companies on the apparently abnormal price rise, 52 are of serious nature where NPPA is not satisfied with the initial replies from the companies. "If the companies fail to give satisfactory replies to the second set of notices, NPPA can fix the prices of those drugs and ask the companies to comply with that price," Ashok Kumar, chairman, NPPA said. All these cases pertain to drugs that are not under regular price control. Usually, companies either provide valid reasons for the price increase or agree to reduce the prices to the permissible level (up to 10% increase in a year). In the cases of 52 notices, the companies will either reduce the prices or let NPPA prescribe the MRP. The current medicine price control mechanism calls for two sets of approaches. The first approach is that of direct price control where government fix the prices of all medicines made using 74 notified raw materials (bulk drugs). Though all other medicines that do not contain these 74 bulk drugs as ingredients are out of price control, they are constantly monitored by NPPA to see percentage of price increase happening in these drugs. Till January 2007, NPPA used to issue notices to all medicines where a 20% or more increase has been seen in a year. The limit was brought down to 10% since early this year, and it was decided that NPPA will issue show-cause notices for all price increases beyond 10%. While the 52 notices are for medicines where prices rose 20%, rest are mostly instances where prices went up by 10%. The basis for calculation of the hike in prices is the retail stockist price data supplied by market research organisation IMS-ORG. "The ORG had supplied prices of 53,000-odd formulations in March 2007. The prices of about 200-700 new packs are included every month. We compare it with the price list of March 2006 to arrive at the conclusion", Kumar said. NPPA has so far issued notices to recover about Rs 1,400 crore from drug companies for violation of the fixed price range. The recovery percentage - just over Rs 100 crore in 10 years - is very poor as most companies accused of major price violations (eg: Cipla |
