Pricing Policy may change to regulate base prices of 50% of all drugs

Mere noting the recommendation is not adequate

Picture: Pixabay

Last Updated on December 8, 2021 by The Health Master

The Department related Parliamentary Standing Committee for the Ministry of Chemicals and Fertilisers has further pushed its earlier recommendation to the Department of Pharmaceuticals (DoP) for a policy change giving autonomy to the National Pharmaceutical Pricing Authority (NPPA) to regulate the base prices of at least 50 per cent of all drugs sold in the domestic market.  

The Committee also expressed its displeasure on the DoP’s response towards its recommendation against a blanket permission for 10 per cent price increase on non-scheduled drugs per year.

The Committee, earlier in its report on Demands for Grants 2021-22 to the DoP presented to Lok Sabha on March 17, 2021, raised its concern that the NPPA fixes ceiling prices of only scheduled formulations, which constitutes only about 17.2 per cent of the total formulations, while the other 82.8 per cent of medicines are in the non-scheduled segment and the authority does not fix the ceiling price of those medicines.

While their price increase is permitted only up to 10 per cent of maximum retail price per annum and there is a limitation of regulatory powers of NPPA in fixing and monitoring prices of non-scheduled drug formulations.

Considering that expenditure of medicines constitutes more than 50 per cent of expenditure on health, this is affecting poor families to cope with the high cost of medicines, it observed.

“The Committee feels that there is an immediate need to increase the percentage of regulation of medicines from 17.2 percent to at least 50 percent within a year by incorporating suitable policy changes in this regard,” it said in the report in March.

It suggested introduction of a policy change in the National Pharmaceutical Pricing Policy, 2012, and Drug Price Control Order (DPCO) wherein NPPA should be given autonomy to regulate the base prices of at least 50 per cent of all drugs sold in the domestic market, to expand NPPA price regulation function in an effective way beyond the scheduled drugs mentioned in the National List of Essential Medicine (NLEM).

The DoP furnished its reply on July 8, 2021, stating that it had taken note of the recommendation. Responding to this, the Committee, in its latest Action Taken Report submitted to Parliament this month, said that while the Department has shown positive intent to make policy changes in the NPPP, 2021 and DPCO, “mere noting the recommendation is not adequate“.

“The Committee hope that prompt action would be taken by the Department in this regard. The Committee would like to know the progress made in this regard in the final action taken replies,” added the report by the Parliamentary Panel headed by Member of Parliament Kanimozhi Karunanidhi.

The Committee is not satisfied with the reply given by the Department to the recommendation of the Committee that it along with NPPA should examine critically the necessity of permitting 10 per cent increase of MRP of non-scheduled drugs per annum particularly when the price of raw materials, etc does not increase.

“The reply given by the Department that DPCO, 2013 does not consider the aspect of cost while fixing the ceiling price of scheduled formulations as the policy marked a shift to market-based pricing based on one of the principles enunciated in National Pharmaceutical Pricing Policy, 2012 is not acceptable to the Committee,” said the latest report.

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“Any pricing policy cannot be against the interest of the common man. Leaving everything to the market forces would defeat the goals of a welfare state. Since the blanket permission to increase the price of non scheduled drugs upto 10 % even when the price of raw materials does not increase is an unjustified provision which may result in increased spending on medicines by the people of the country and may pinch their pockets, the Committee reiterates the earlier recommendation and hopes that the recommendation be examined in proper perspective for the benefit of the common man. Action taken in reply in this regard may be furnished to the Committee, ” it added.

The recommendation comes at a time when various pharma industry bodies are requesting the Government to consider revising the drug prices based on the raw material cost, as the prices of Active Pharmaceutical Ingredients and excipients has gone up for many products due to the higher cost of these materials from China and due to various supply chain constraints.

In its report in March, the Committee said that the Department should also examine the rationalisation of the fixation of MRP, as MRP itself is fixed on the higher side and the subsequent 10 percent increase in price per annum makes the cost of drugs unaffordable for the common people.

The Committee also said that there is a need to regulate the prices of medicines charged by private hospitals to patients as a part of the overall treatment charges, and that the DoP and NPPA should examine the related issues.

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