Will the new drug pricing regime recommended by the Group of Ministers (GoM) on drug pricing on Thursday slash the current high prices of essential drugs in Kerala?
Opinions of experts vary. “The prices of lifestyle-disease drugs, which are not regulated now by the government, will definitely come down once the recommendations are accepted,” says A.N. Mohan, president of the all-Kerala Chemists and Druggists Association. “Our association wholeheartedly welcomes the recommendations as the price regulation will benefit the patients and put a check on jacking up prices.”
However, B. Ekbal, neurosurgeon and leader of the Jan Swasthya Abhiyan (People’s Health Movement), believes that the prices of many of the essential drugs will go up if the government accepts the “market-based mode of price fixing” recommended by the GoM. The five-member GoM, headed by Union Agriculture Minister Sharad Pawar, which made marginal changes to the draft National Pharmaceuticals Pricing Policy, recommended that 348 drugs be put on the List of Essential Drugs. It also recommended that the maximum retail prices (MRP) of these drugs be determined in such a way that the price would be the “average price of all brands in a segment that has more than one per cent market share by sales.”
Ineffective control
The recommendations will be presented to the Union Cabinet next week and if it accepts them the pharmaceuticals pricing policy will take effect in a few weeks.
While the 1995 drug price control order covered only 72 drugs, the new drug pricing policy has a wider net of 348. Since the 1995 order effectively controls only less than 30 drugs now, the pharmaceuticals market is virtually uncontrolled. Lack of an effective monitoring and implementing mechanism ensures that patients end up paying several times more than the actual cost of medicines.
Mr. Mohan told The Hindu that the proposed price regime, which the government was forced to formulate by a Supreme Court directive on a PIL (public interest litigation), would in general lower the prices of essential drugs.
It would also shrink the huge gaps between the prices of different brands of drugs. The fall in prices would be more pronounced in the case of medicines for diabetes, high blood pressure, cholesterol and other lifestyle diseases, he noted.
Medicine consumption
Since Kerala is the highest consumer of lifestyle-disease drugs in the country, Mr. Mohan noted, the impact of the new price control would be more in Kerala.
He, however, said the prices of certain low-priced drugs, mainly those produced by Indian companies, would go up.
Mr. Mohan noted that Kerala consumed medicines with an estimated value of Rs.2,500 crore a year. This was a little over five per cent of the total national medicine consumption.
Dr. Ekbal feared that the weighted average pricing policy would legitimise the rampant overpricing of drugs by the manufacturers.
The GoM’s recommendation went against the grain of the Supreme Court directive to the government to put in place a mechanism to control the prices of all essential drugs so that they were affordable to the common people.
Dr. Ekbal, former Vice-Chancellor of Kerala University, contended that drug prices in India were not linked to the actual cost of production, packaging, and marketing. Moreover, there was a wide variation, ranging from 100 per cent to 5,600 per cent, in the prices of drugs sold in the retail and those sold in bulk.
The prices of the same drug sold under different brand names varied extremely widely leading to massive exploitation of the sick by the drug companies.
Dr. Ekbal pointed out that since the multinationals and large manufacturers used hard sell and unethical marketing practices, they controlled a huge share of the market of most essential drugs, though their products were overpriced.
The proposed weighted average price mechanism would be unduly skewed towards their prices, he said. This would mean that the prices of currently low-priced drugs would shoot up.
An example
Citing the example of atorvastatin 10mg, a drug used for cardiovascular diseases, Dr. Ekbal pointed out that there were 75 brands in the market. While the highest-priced brand cost Rs.7.50 a piece, the lowest was sold at 92 paise.
If the weighted average price, being recommended, were to be adopted, the price of the drug would go up to Rs.4.92, which was five times the price of the lowest-priced drug.
“The net result would be a rise in the prices of most of the essential drugs, and not a fall,” he claimed.
He said the Jan Swasthya Abhiyan urged the government to go in for a cost-plus formula and not the average price formula.
