There was move made in December 2019 to allow a one-time hike of 50% in the price-caps of 12 drugs in the essential list.
What was the move?
The price capping of these 12 drugs which consists of 21 drug formulations seemed like the government was finally reading the signals from the market right.
The high-API (Active Pharmaceutical Ingredients)costs were pushing up costs for manufacturers, and thus, the price cap effectively would translate into poor availability of these drugs.
The draft pharmaceutical policy of 2017 recognised that price caps pushed up cheap imports at the cost of domestic API manufacturers.
Based on this, one would imagine that the NITI Aayog-headed Standing Committee on Affordable Medicines and Health Products (SACMHP) would steer India away from pharma price-policing.
But, the government seems to be too reluctant to give up control.
The National Pharmaceutical Pricing Authority (NPPA), along with the department of pharmaceuticals, is finalising a proposal.
What is the proposal?
The proposal is to limit the trade margins of non-scheduled drugs and medical devices that are not supposed to be under the price control.
However, the government has moved to control prices of medical devices such as cardiac stents while non-scheduled medicines remain under a quasi-price-control regime, with yearly increase of their prices capped at 10%.
The NPPA has used the special powers under the Drugs (Price Control) order 2013 to slash ceiling prices of some non-scheduled drugs.
The Government needs to realise that price-controls are bad idea.
The willingness to expand this idea will make shortage and poor quality of drugs meant for the domestic market a chronic affliction.
Apart from hitting domestic API manufacture hard, the price-control regime has meant that the Indian pharma production has become more export focussed.
This is evident from the trend of a falling share of the domestic market in drug-company revenues since capping came into force.
What is the 2013Order?
The Drugs (Price Control) Order 2013 provides for price-hikes, but only based on revisions in the WPI, without considering the actual cost of manufacturing such as the rising prices of APIs.
So, even the relief from periodic hikes may not be timely.
This will only be to the detriment of the patients, if there are not enough drugs to serve the demand or efficacy is poor because quality has been undermined.
