Essential drug prices to come down by 20%

Amit Mitra Updated - September 28, 2012 at 10:48 PM.

N.R. Munjal , Vice-Chairman and Managing Director of IndSwift Labs , Rajasekhar Undru , Joint Secretary (Pharma), and P. V. Appaji , Director-General of Pharmexcil, at the 4th edition of ' Outstanding Exports Performance and Patent Awards 2012 ' at Hyderabad on Friday . -- P.V.Sivakumar

There will be an average reduction of 20 per cent in prices of the 348 essential medicines under the new pricing mechanism recommended by the Group of Ministers on Thursday.

The GoM recommended a weighted average based pricing system of all the 348 medicines and 614 formulations under the National List of Essential Medicines that was finalised in 2011.

Raja Sekhar Vundru, Joint Secretary, Department of Pharmaceuticals, Ministry of Chemicals and Fertilisers, said 60 per cent of these medicines could see a price reduction of over 20 per cent and the remaining 40 per cent below 20 per cent.

“We expect the new price structure to be in place by this year end,” he said at the Pharmexcil Awards here today.

He did not think that this would hurt the profitability of the drug makers.

“The essential medicines constitute only 30 per cent of the Rs 12,000-crore Indian pharma industry. This is the best way to balance the growth of the industry and improve affordability of the essential drugs,” he said, adding affordability of essential medicines was important as 70 per cent of the health care expenses in India went towards purchase of these drugs.

Raja Sekhar said the price of these drugs will trace the movement of wholesale price index (WPI) and will be revised annually. This method will also ensure better monitoring of production of medicines by the Government, as companies will have to submit their annual production and cost figures.

“I do not think the industry should look at it as a loss of 20 per cent (of Rs 1,200 crore) which the Government should compensate,” he felt.

The Indian Pharmaceutical Alliance had reacted to the GoM recommendation, stating that the top 100 drug companies will be affected and there would be a 15-17 per cent revenue loss.

Raja Sekhar did not think that the new price structure would affect India’s pharma exports. He was confident that the industry would be able to meet the Government’s target of $25 billion export turnover from the current $13.5 billion.

>amitmitra@thehindu.co.in

Published on September 28, 2012 15:17