Govt seeks more control over pricing of drugs

A new pharmaceutical policy, moved by Chemicals Minister Ram Vilas Paswan for Cabinet approval, aims at bringing 34 per cent of all drugs marketed in the country under price control.

It aims at slashing the average market prices from 10 to 30 per cent for low-end brands and from 30 to 60 per cent for high-end ones.

A proposal to check the prices of patented medicines and select medical devices through government-industry talks has also been made.

The proposals, if cleared, would make way for government control over 17,000 specific formulation packs worth around Rs 7,000 crore, industry sources said.

The proposal for more price control, which has been vehemently opposed by the industry, came after the ministry decided to go by a Supreme Court (SC) order asking the ministry to formulate appropriate criteria to ensure that essential and life-saving drugs did not "fall out" of price control.

The move will bring 663 formulations of specific strength (about 7,000 packs) from the National List of Essential Medicines (NLEM) under the price control category.

The ministry has also decided to maintain status quo on the current list of price-controlled drugs. This will ensure that 74 bulk drugs and their formulations remain under price control.

According to official sources, the ministry intends to announce a new Drugs Price Control Order (DPCO) under the Essential Commodities (EC) Act to give effect to the policy.

The DPCO would provide for higher maximum allowable post-manufacturing expenses (MAPE), which is presently 100 per cent over the cost of manufacture.

The proposal is to revise it to 150 per cent in general to provide for increased cost of GMP compliance, transportation, local taxes, R&D etc, and an additional 50 per cent for R&D-intensive companies.

A Drug (Price Regulation and Control) Act (DPRC Act) would be enacted later to bring drugs out of the purview of the Essential Commodities Act.

The policy calls for efforts from the departments of chemicals and health in framing guidelines for price negotiation on patented medicines. It wants a committee to look into the issue and suggest guidelines for the purpose.

On medical devices, the chemical ministry has suggested a differential pricing system for critical medical devices like stents, catheters and pace-makers for government supplies.