Quality drugs at affordable prices

NEW DELHI FEB. 15. The Government today outlined details of the new pharmaceutical policy that envisages a shift from a ``controlled'' to a ``monitoring regime'' for the drugs industry. These include taking low cost drugs out of price control, removing curbs on profitability and entrusting more powers with the regulator.

The new policy, according to an official statement, has been formulated with an aim to promote the indigenous drug industry through reduction of the span of the price control regime, and at the same time ensure abundant availability of quality drugs at reasonable prices.

Though the new policy allows for fixing ceiling prices for any formulation, it provides a series of exemptions from the price control. These include cases of new drugs patented under the Indian Patent Act, drugs developed through indigenous R & D and formulations involving new delivery systems. In the case of low cost drugs measured in terms of cost per day per medicine, formulations can be exempt if these do not exceed Rs. 2.

Under the new policy, while indigenously manufactured formulations would be allowed a mark up of up to 100 per cent for post-manufacturing expenses, imported formulations would be allowed a margin of about 50 per cent of the landed cost as margin to cover selling and distribution expenses, including interest and importers' profit.

Another salient feature is that the Government may fix ceiling prices for any formulation from time to time and it would be obligatory for all, including small scale units or those marketing under generic name to follow the price so fixed.

The new policy also prescribes that for a scheduled bulk drug, the rate of return in case of basic manufacture would be higher by 4 per cent over the existing 14 per cent on net worth or 22 per cent on capital employed. The Government would, however, retain the over-riding power of fixing the maximum sale price of any bulk drug in public interest.

While moving away from a `controlled regime' to a `monitoring' regime, the policy proposes to introduce a new monitoring system, which would be based soly on market price data and to apply controls selectively only to those cases, where either profiteering or monopoly profit seeking was noticed.

In this regard, it is proposed to revamp and reorient the National Pharmaceutical Pricing Authority (NPPA). It is to be empowered to check against the problem of high margin or commission offered to the trade by printing higher prices on the labels of medicines.

As regards price fixation and revision, monitoring of the prices of decontrolled drugs and formulation and overseeing of the implementation of the drug price control orders, NPPA would continue to be entrusted with these tasks. The only change would be that Government would now have the power to review its price fixation and revision orders.

The policy also envisages inclusion of a provision in the price control order to ensure that amounts that have already accrued to the Drug Price Equalisation Account and which are likely to accrue as a result of action in the past was protected and used specifically for the purpose for which it was intended.

Further, it envisages that the Health Ministry would progressively benchmark the regulatory standards against international standards, harmonise standards for clinical testing with global practices, streamline the procedures and steps for quick evaluation and clearance of new drug applications developed indigenously, and set up a world-class Central Drug Standard Control Organisation by modernising, restructuring and reforming the existing system.

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