Even as Union Agriculture Minister Sharad Pawar deals with a political crisis in home-state Maharashtra, the Group of Ministers he heads on drug pricing have another situation on hand, at their meeting scheduled for Thursday.
Healthcare advocacy groups want medicine prices in the country to be controlled on a cost-of-production based basis, while the pharmaceutical industry and trade associations are pulling in the opposite direction, seeking a market-price based formula.
In fact, the initial draft policy circulated by the Department of Pharmaceuticals had proposed a market-price based method to cap drug prices at the weighted average of the top three brands in a therapeutic category.
The formulae under discussion at the forthcoming Group of Ministers (GoM) meeting on Thursday have whittled down to three: a suggestion by Union Commerce Minister Anand Sharma to cap prices at the average of drug brands with over five per cent market share in a said category; another proposal to cap prices at the average of brands with over one per cent share; and a third option of brands with over three per cent in a said category, the source said.
The draft policy had proposed that price control be exercised on all 348 drugs in the National List of Essential Medicines (NLEM) and other combinations of medicines mentioned in the list. This too could be reduced to just the drugs listed in the NLEM and not the combinations, the source said. Such a move would bring down the span of price control from 60 per cent to 30 per cent, the source added.
However, pro-health organisations point out that medicine prices in India have no relation to the actual cost of production, packaging and marketing.
“A study commissioned by the National Commission on Macroeconomics and Health showed that there is a very wide variation in the prices of drugs sold in retail and those sold in bulk through tenders to institutions. The price differences ranged from around 100 per cent to 5600 per cent,” the Jan Swasthya Abhiyan, said in a note.
The average of top three brands will legitimise the rampant over-pricing of drugs by companies, as it would encourage cheaper brands to start charging more and approach the high ceiling price, the note said. Since the prices of medicines in the bulk market and the costs for manufacturing formulations are widely known there is no difficulty in fixing prices based on a cost-based formula, they added.