Freedom to fix prices not working, finds NPPA

Contrary to the claims of drug firms that free markets lead to lower prices, regulator National Pharmaceutical Pricing Authority (NPPA) has found that the prices of 15 top-selling medicines that were taken out of direct price control 12 years ago increased 9.65 per cent as against the 1 per cent rise in case of medicines whose prices continued to be controlled.

The price increases happened even after the input costs of many of these medicines went down several times, government sources said.

The medicines that were scrutinised included commonly used drugs like Paracetamol, Diclofenec Sodium, Cephalexin and Ampicillin.

"The annual price increase of 15 top formulations of top 15 bulk drugs that went out of price control in 1995 were examined. The increase in prices was evident," NPPA Chairman Ashok Kumar said.

The data will strengthen the chemicals ministry's demand for increasing the span of price control through the new pharma policy.

The NPPA is also trying to track price violations in case of medicines under price control. For instance, initial scrutiny of random samples picked up from over a dozen centres in the country during the last three months showed that 57 per cent of the 658 samples indicated price violations.

"Of the total cases that were seen to be genuine, 60 per cent were instances of over-charging. The prices of the rest of the products were never approved by the authority. This shows the importance of better market surveillance," Kumar said.

The authority is likely to issue show-cause notices to the manufacturers of these drugs. Kumar declined to give the names of the firms whose medicines figure on the list.

The NPPA has also started issuing notices on cases of price violations that were tracked through the complaints from public interest organisations.

"We received 83 complaints of over-pricing 479 scheduled formulations (medicines under price control) during 2006-07. After scrutinising this, we found that in 460 cases, the complaints were against over-charging of medicines. Only 19 pertained to sale of medicines without mandatory price approval," Kumar said.