Centre’s new control order to slash drug prices in Kerala

Updated - December 04, 2021 11:19 pm IST

Published - May 18, 2013 12:53 am IST - KOCHI:

The prices of medicines are likely to fall across Kerala, which is one of the largest drug-consuming States in the country, in the wake of the Central government’s new drug price order, which has brought 348 drug formulations under the price control regime.

The Department of Pharmaceuticals in the Union Ministry of Chemicals and Fertilizers on Wednesday gazetted the Drugs (Prices Control) Order 2013 which had been in the works for a long time. A stern warning from the Supreme Court recently has forced the government to announce the new order, which replaces the 18-year-old former order issued in 1995.

While the 1995 order covered only 74 bulk drugs and formulations, the new one brings 348 formulations under its control, thus covering around 70 per cent of the common drugs available on the market. The scheduled formulations will have a ceiling price, to be determined by a formula that has been spelt out in the order. The formula is: the average of the prices of all the brands of a particular drug that have one per cent market share. Local taxes and a 16 per cent profit margin to the retailer would be added to arrive at the final price to patient-consumer. The retailers have 45 days to sell off their stock at the current rates.

How far the prices would fall is anybody’s guess, but according to A.N. Mohan, president of the All-Kerala Chemists and Druggists Association, the prices would on a whole go down by 30 per cent. Prices of drugs used in the treatment of life-threatening diseases would fall even sharper.


Mr. Mohan feels that the order would bring in a paradigm shift in the pharmaceutical sector as the prices of most of the drugs would be under the government’s scanner. “This is a consumer-friendly, patient-friendly order,” he said. “It will help clean up the sector which is plagued by a lot of unethical practices and market manipulations.” The government would have a grip on the pharmaceutical companies which charged astronomical prices for certain drugs. He notes that prices of drugs of lifestyle ailments such as diabetes, high blood pressure, and cholesterol would fall substantially and would thus benefit several lakhs of people in Kerala.

However, Sanal C., president of the Kerala State Retail Medical Shop Cooperative Society, is not that positive about the outcome of the new price control order. He noted that the formula to arrive at the ceiling price was faulty and aimed at benefiting large multinational drug companies. He pointed out that a few large companies, who charged high prices for their drugs, dominated the market. Since small drug manufacturers, who charged only a fraction of what the major companies did, could not claim one per cent of the market share, they would be counted out.

For instance, Mr. Sanal said, atorva statin, the drug for high cholesterol, was priced at Rs.104 a strip by the biggest manufacturer. The same drug was available for Rs.12 a strip which was made by a small company whose market share was far less than one per cent. Likewise, clopidogrel, prescribed for heart patients, was sold at Rs.238 a strip by the multinational company which has the largest sale. The same drug was sold by a small company for Rs.33. Though the price difference was more than seven times, many doctors prescribed the expensive one because of the perks offered by the multinational company and hence its market share was huge.

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