22 Nov 2012
Nod For New Drug Pricing Policy
The new policy proposes to bring formulations of 348 bulk drugs in NLEM list under price control
BW Online Bureau
India's domestic drug market, the fourth largest in the world by volume, is estimated at about Rs 60,000 crore a year.
The last time a drug policy was announced was in 1994. The new policy proposes to bring formulations of 348 bulk drugs specified in the National List of Essential Medicines (NLEM) under price control. So far, only 74 drugs and their formulations are subject to price control as per the 1994 policy.
The apex court has voiced its criticism over the Centre’s inaction on the subject for the last two years; now, an SC bench headed by Justice G.S. Singhvi has asked for quick action on implementation of the new price control policy.
According to the proposed policy, the prices of these formulations will be fixed by taking the weighted average price (WAP) of all brands that have 1 per cent or more of market share by volume. Currently, only about 18 per cent of the market falls under price control; prices of these drugs are calculated using a cost-plus formula.
However, price reduction in some medicines made by large firms, domestic and foreign, will be as high as 75 per cent. The overall effect could be to reduce industry revenue by 15–17 per cent, says the IPA.
While the industry is concerned about revenues, there is also the fear that the production of some drugs may be stopped due to lower profitability or switched to fixed-dose combinations, while others may even increase prices.
Read: A Bitter Pill For Drug Makers?
(with input from Reuters)