Will you really get cheaper medicines?

The government’s decision for simple average of market-based pricing for 348 drugs is simply a whitewash, according to many activists who were hoping for cost-based pricing. There may be marginal reduction in some medicine prices, but it legitimises overpricing of life saving drugs


After a delay of seven long years to decide on a comprehensive drug pricing policy, the Group of Ministers (GoM) has decided in favour of simple average Market Based Pricing (MBP) policy for price fixation of 348 essential drugs ostensibly to reduce drug prices. While drug companies may declare that it will impact their profit margins for some drugs, they must have sighed a relief that cost-based model is scrapped. MBP will legitimise overpricing of life-saving drugs.
 

At present, the government through the National Pharmaceutical Pricing Authority (NPPA) controls prices of 74 bulk drugs and their formulations through cost-based pricing. What happens to it? Dr Chandra M Gulhati, editor, Monthly Index of Medical Specialities (MIMS) says, “74 drugs under cost-based DPCO (Drug Price Control Order) will shift to the new policy (MBP) with substantial increase in prices.”
 

This new formula will fix the ceiling prices of medicines by calculating simple average of prices of brands of medicine having more than 1% share. This is a clear ploy to minimize the reduction in drug prices, to allow pharmaceutical companies to continue to charge inordinately high prices for their products. The complete divergence between the manufacturing costs of medicines and their present market prices (in case of those not presently under price control) has been widely documented.
 

The table below also shows that using simple average instead of weighted average (which was proposed) is hardly beneficial to patient.
 

Drug   

 

Disease

Market Based Pricing   (Weighted Average)

Market Based Pricing  (Simple Average)

Cost Based  Pricing

Metformin

Diabetes 

Rs33 

Rs35 

Rs14

Atorvastatin 

High blood cholesterol

Rs142

Rs127

Rs17

 

Atenolol 

High Blood pressure

Rs51

 

Rs38.5

Rs8

Source: Jan Swasthya Abhiyan
 

The new policy allows a leeway for 10% p.a. increase in the prices of 348 drugs. According to Dr Gulhati, “There are about 900 total medicines. The price regulation will cover 348 drugs. There will be lots of opportunity to shift from regulated to unregulated drugs. 10% increase annual increase can mean adding Rs630 crore every year to total sales.”
 

According to S Srinivasan, managing trustee, LOCOST (Low Cost Standard Therapeutics), “The new drug policy is simplistic, still legitimates overpricing and full of loopholes.”
 

It may be recalled that responding to a petition by the All India Drug Action Network (AIDAN), the Supreme Court in 2003, had directed the government to devise a policy which would ensure that essential medicines are available at costs that ordinary people can afford. Further, the Supreme Court—while hearing arguments on this writ petition—had recently opined that the government should continue to use the cost-based formula for price fixation of 348 essential drugs.
 

JSA (Jan Swasthya Abhiyan—Peoples Health Movement—India) contends that though policymaking is the prerogative of the executive, the Supreme Court has acted well within its constitutional mandate in directing the government to take a policy which would stop the denial of the human rights of millions of Indian people. According to JSA, “As reported in the press, the Additional Solicitor General has reportedly advised the government that it need not follow the Supreme Court’s   suggestion to follow cost-based pricing under the pretext that policy making is the executive’s prerogative.”
 

JSA contends that Supreme Court’s suggestion is to protect human rights of citizens and ignoring it shows the disrespect for the Supreme Court’s attempt to protect right to life enshrined in the constitution; it’s tantamount to contempt of the SC.
 

According to Dr Anant Phadke of JSA, “We are hoping that at the next SC hearing on 27 Nov 2012, there may be something positive that will force the Government to rethink.”
 

The Jan Swasthya Abhiyan demands that 

1)  The government should heed the Supreme Court’s opinion and impose price control on all 348 essential drugs and their derivatives, using the existing cost-based formula for price fixation. 
 

2)  All escape routes used to wriggle out of the price regulation must be plugged. Thus all dosage forms of all 348 essential medicines and all fixed dose combinations of these medicines must be brought under price-control; (all irrational fixed dose combinations should be banned.) Otherwise in practice, the price regulation would be largely nullified.
 

3)  The government should immediately set up a committee of experts to list crucial medicines that—a) have been left out of the current list of essential medicines and   b) have been included in the essential drug lists of states but which are not currently included in the NLEM (National List of Essential Medicines).

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    User 

    COMMENTS

    bhagavan p s

    6 years ago

    The government of India should bring out media advertisement in public interest asking the people to use Generic drugs to safe money on medicine and avoid unnecessary expenditure on brands. The irony is Indian pharma companies are exporting drugs in generic names and selling the same to Indian patients in brand names.Health Ministry is within its right to educate the people just as Petroleum ministry is with in its right to promote Industry.

    Bhagavan ps

    8 years ago

    Well, it is not just sufficient to change the formula of pricing procedure. The drug price issue is going hay wire due to lack of regulatory provisions to control irrational and unwanted high end cosmetized formulations. India needs a NATIONAL MEDICATION POLICY under Health ministry to address the issue comprehensively from the patient end unlike the present National Drug Policy which is under Ministry of petrochemicals. Petroleum ministry is doing its job of promoting industry effectively and the Health ministry is a mute spectator at the mercy of the petroleum ministry. The national Technical Drug Advisory Board (DTAB) also needs to be revamped. Now it is a full house of doctors with MBBS + qualification who know nothing about pharmacy, Pharmaceuticals let alone pharmaceutical technology. It works purely on data and detailing delivered by the pharma companies. The Committee should have more of pharma experts, rational drug use activists and few doctors to look into the medical aspects.It is my experience that it is easier to convince a doctor technically than a pharmacist. Many a time the doctors dont show up their inability to understand and accept the promotion to cover up their ignorance. Few doctors had argued with me that what is approved by the Govt for marketing should be safe. The same doctors argued that the brand they use (expensive ones) is a reliable one and cannot trust the inexpensive ones available. patients are suffering with soaring drug prices as total issue: approval and prescribing has been left to the doctors with no control and rationale. Hope, I have driven home the issue and I look forward for a National Medication Policy and a revamped DTAB for the good of the patients.

    Bhagavan ps

    8 years ago

    Well, the analysis is well done. But there lies a basic issue that needs to be addressed so that further build ups could go along the need and affordability basis. The pharmaceutical industry is under ministry of petrochemicals (MPC) that goes by industry biased policy decision. Crying before the Industry ministry with the problem of the common man is like crying before a tax man! Our national Drug policy is again industry biased. The focus of the industry is always on money and when it is strikes a molecule the build up of healthcare and social service coating takes place for the purpose of marketing. The National Drug Advisory Committee responsible for approval of drugs is full of MBBS doctor who know nothing about pharmacy, pharmaceuticals , let alone pharmaceutical technology. The way the irrational molecules and formulations are flooding the market and patronized by the doctors, it can hardly be believed that this committee is really going through the documents as meticulously as desired in the Act or in their own Standard Approval Procedure (SAP). Pardon me if am harsh in comparing this committee to our film censor board. You pick up any drug that has entered the market in the last 10 -15 years as a sample, almost all are having the descriptions like: Mechanism of action not fully known, safety in pregnancy, infants, children not known and some times the symptoms itself are being shown as possible side effects. How to differentiate the natural symptom from the side effect, if the drug is to be discontibued? When it comes to the dose, the manufacturer washes off his hands by just mentioning 'Use as directed by the physician' on the label. Why cant they mention standard dosage and usage on the label. How come such products with incomplete information and vague indications are getting approved, particularly in India where there is no system of counter check for the prescription? Who should correct the wrong dosage if any in the prescription? or Has it been declared and are we to believe that Indian doctors are no wrong doers?
    Why not fill this committee with more number of pharma experts and rational drug use activists with few doctors only for looking into medical related issues, just as it happens in a pharma industry. It is my experience that it is easy to convince a doctor than a pharmacist!.
    Coming back to National Drug Policy (NDP), what we need is a ‘National Medication Policy’ (NMP) to guide and if necessary command and dictate the pharma industry on what is needed and what is not at all needed, because, the NMP is more patient oriented where as the NDP is more industry (Money) oriented. Ex: Sugar coated Iron folic acid tablet is not manufactured as better money yielding formulations is available, but at whose cost?
    Once these baselines are set right, the pricing policy definitely fall in line with the needs of the common man

    Vaibhav Dhoka

    8 years ago

    These drug companies form CARTEL and there will be no decrease in Drug price for common MAN.

    Government approves drug pricing policy to lower cost of medicines

    The new pharma pricing policy aims to bring prices of 348 essential drugs under control

    New Delhi: The Indian government has cleared the National Pharmaceutical Pricing Policy (NPPP) that will bring 348 essential drugs under price control, leading to reduction in prices, reports PTI.

     

    "The National Pharmaceutical Pricing policy has been approved by the Cabinet with an objective to put in place a regulatory framework for pricing of drugs to ensure their availability at reasonable prices," an official source said.

     

    At present, the government through the National Pharmaceutical Pricing Authority (NPPA) controls prices of 74 bulk drugs and their formulations.

     

    A source said the pricing now would be based on simple average of rates of all brands which have more than 1% market share.

     

    Another source said the government has also considered providing sufficient opportunity for innovation and competition to support the growth of the Indian pharma industry.

     

    Last month, the Supreme Court had set a deadline of 27th November for the government to finalise the policy while asking it not to alter the existing mechanism of cost-based drug pricing.

     

    Earlier, a group of ministers, headed by Agriculture Minister Sharad Pawar proposed to fix prices based on weighted average of brands which have more than 1% market share.

     

    The GoM had met after the Cabinet had deferred a decision on it following objections from the Finance Ministry.

     

    The policy, that aims to bring 348 essential drugs under price control, was earlier approved by the GoM on 27th September and was subsequently sent to the Cabinet.

     

    After being unable to frame a policy for price control of essential drugs in its previous term, the UPA-II government had last year circulated a draft National Pharmaceutical Pricing Policy, 2011 through the Department of Pharmaceuticals.

     

    The policy, however, took long to finalise due to differences between ministries of health and chemicals and fertilisers. Other stakeholders, industry and NGOs had also expressed their concerns on the pricing model which was suggested.

     

    In 2010-11 the production turnover of the Indian pharma sector stood at Rs1.05 lakh crore and the country is the third largest producer of medicines by volume in the world. It exports to over 200 countries.

  • User 

    COMMENTS

    Bhagavan ps

    8 years ago


    Bhagavan ps

    Bhagavan ps 1 minute ago

    Well, it is not just sufficient to change the formula of pricing procedure. The drug price issue is going hay wire due to lack of regulatory provisions to control irrational and unwanted high end cosmetized formulations. India needs a NATIONAL MEDICATION POLICY under Health ministry to address the issue comprehensively from the patient end unlike the present National Drug Policy which is under Ministry of petrochemicals. Petroleum ministry is doing its job of promoting industry effectively and the Health ministry is a mute spectator at the mercy of the petroleum ministry. The national Technical Drug Advisory Board (DTAB) also needs to be revamped. Now it is a full house of doctors with MBBS + qualification who know nothing about pharmacy, Pharmaceuticals let alone pharmaceutical technology. It works purely on data and detailing delivered by the pharma companies. The Committee should have more of pharma experts, rational drug use activists and few doctors to look into the medical aspects.It is my experience that it is easier to convince a doctor technically than a pharmacist. Many a time the doctors dont show up their inability to understand and accept the promotion to cover up their ignorance. Few doctors had argued with me that what is approved by the Govt for marketing should be safe. The same doctors argued that the brand they use (expensive ones) is a reliable one and cannot trust the inexpensive ones available. patients are suffering with soaring drug prices as total issue: approval and prescribing has been left to the doctors with no control and rationale. Hope, I have driven home the issue and I look forward for a National Medication Policy and a revamped DTAB for the good of the patients.

    Pepsi bags IPL title sponsorship rights

    Pepsi, which placed a bid of Rs396 crore, pipped Airtel, which had offered Rs316 crore, in the bid for the title sponsorship of the Twenty20 cricket tournament

     
    Mumbai: Soft drink giants Pepsi today became the new title sponsors of the cash-rich Indian Premier League (IPL) after it won the bid for title rights for five years by paying a whopping Rs396 crore, reports PTI.
     
    Pepsi pipped Airtel, which had offered Rs316 crore, in the bid for the title sponsorship of the Twenty20 tournament.
     
    IPL chairman Rajeev Shukla said that the title-sponsorship contract was for five-year period and will end in 2017.
     
    Realty firm DLF ended its five-year-long association with the IPL as the title sponsor in August and the BCCI floated the tenders last month. DLF paid Rs200 crore for the five year period of 2008-12.
     
    “So far our records of selling various properties of IPL has been very good. We have doubled, tripled or quadrupled the amount while selling some of the properties,” Mr Shukla told reporters after the meeting of the IPL Governing Council.
     
    Deepika Warrier, executive director-marketing of Pepsico Beverages, said she was very happy that the company has reaffirmed its commitment to cricket.
     
    “We have been associated with cricket for the last 20 years. The IPL is a tremendous product. It is a brand which rivals any other sporting brand across the world,” she said.
     
    The title sponsor rights include a number of branding and other marketing benefits to be received by the title sponsor at every IPL match during the season as specifically outlined in the Invitation to Tender.
     
    The BCCI had made it clear in its tender notice that the companies which intend to sell off the rights after winning the bid are ineligible to apply in the first place.
     
    Only corporate entities, whether in India or abroad, which are interested in placing a bid for themselves and/or their holding or subsidiary company(ies), for the purpose of the advertisement and promotion of their own brands within their primary product or services categories were eligible to participate in this tender process and to submit bids. 
     
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