Industry chamber CII has sought Prime Minister Narendra Modi's intervention over "unilateral fixing" of drug prices by NPPA saying the exercise based on "an inequitable formula" has done collateral damage to indigenous industry.
"The industry is willing and committed to partner the government in its efforts to meet the healthcare needs of Indian patients through various mechanisms ... But questions the unilateral fixing of ceiling prices based on an inequitable formula which will only devalue and erode the strength of this very important sector," CII National Committee on Biotechnology Chairperson Kiran Mazumdar Shaw said in an open letter to the Prime Minister.
Lashing out at the National Pharmaceutical Pricing Authority (NPPA) over the recent moves to fix drug prices, she said: "The forced pricing discounting imposed by NPPA has done collateral damage to our indigenous industry which has only strengthened our external competitors, especially China."
She claimed that Indian manufacturers of active pharmaceutical ingredients (APIs) or bulk drugs have been unable to compete with Chinese rivals and many are shutting factories as domestic pharma firms are increasingly importing APIs from the neighbouring nation.
"Additionally the drastic price discounting imposed on a number of antibiotic drugs have led to their manufacturing being discontinued by Indian companies on grounds of non viability. This has resulted in drug shortage which will eventually result in importation of Chinese antibiotics," Shaw said in the letter.
This is an extremely dangerous situation that is evolving and must be corrected urgently, she added.
"I request you Hon'ble Prime Minster, to urgently intervene and take corrective action to revive and resurrect this life saving sector," Shaw said in her letter to Modi.
Recently, the government through the NPPA had decided to examine the vast variation in drug prices. Ceiling prices on 348 essential drugs under NLEM (National List of Essential Medicines) have been fixed by the government. Moreover, it has also fixed prices of non-scheduled drugs which do not come under NLEM.
In her letter, Shaw recommended government to consider a host of issues such as supporting capital investment by upgrading and expanding manufacturing infrastructure, exemption in weighted tax deduction on R&D costs, computation of drug price ceilings to be based on an equitable formula which ensures like-for-like comparisons and factors quantum of investment among others.
She also asked for removal of MAT (Minimum Alternate Tax), 5 year tax holiday for the sector to start after obtaining regulatory approval and revival of clinical trials for strengthening the sector.
