Steep drug price hikes to attract govt stick

Pricing authority to track medicines whose prices rise by over 10% annually.

Pharmaceutical companies which increase prices of their medicines beyond 10 per cent in a year will face regulatory action.

To check arbitrary increase in the prices of medicines, the chemicals ministry has asked the regulator "" National Pharmaceutical Pricing Authority (NPPA) "" to keep track of all medicines whose prices rise by 10 per cent in a year.

The pharma industry is at present free to increase the prices of non-scheduled medicines (drugs whose prices are not fixed by the government) up to 20 per cent in a year.

The ministry has asked the authority to modify its operational guidelines to reflect these changes. The guidelines, to check abnormal increase in the prices, were finalised recently.

The drugs whose prices would be monitored should have a turnover of more than Rs 1 crore. If the authority detects any violation, it would issue a short notice seeking reasons for the price hike. Depending on the response, it would issue a showcause notice and fix the price of the drug after 21 days.

While the government has direct control over the prices of medicines that contain at least one of the 74 notified bulk drugs (raw materials), the prices of non-scheduled formulations are normally fixed by the companies themselves.

The Drugs Price Control Order (DPCO), 1995, administered by the NPPA, calls for price intervention on such non-scheduled drugs in public interest (in the eventuality of an abnormal price hike).

"We felt that allowing a 20 per cent price hike a year would be too much after we found several instances where the prices of non-scheduled drugs were raised between 15 per cent and 18 per cent. The NPPA will start monitoring the prices based on the new criteria with immediate effect. This should discourage companies from increasing the prices arbitrarily," a senior chemical ministry official said.

Reacting to the development, Indian Pharmaceutical Alliance Secretary General D G Shah said such "piece-meal actions" were not desirable "when a full fledged policy is in the making".