The Hindu Business Line : Keeping drugs affordable

THE GOVERNMENT PLAN to peg prices of drugs supplied to the hospitals sector at 50 per cent of the MRP (maximum retail price) may not be the best, but is certainly the closest the Centre has got to addressing the issue of affordability of medicines. Even in its new avatar, the National Pharmaceutical Policy draft continues to uphold the cause of generic drugs. And this time it is not at the expense of innovative and branded medicines. The ushering in of a product regime since January 1 had triggered in generic drug-makers fears of their marginalisation besides a rise in prices. The Government had allayed these misgivings when passing the patents law.

Keeping the `generic' promise has perhaps shades of red painted across its intention. But, politics notwithstanding, it will keep affordable drugs in circulation for the consumer. The fact that the excise duty is payable on a 35 per cent abatement to the MRP suggests that the retail margin is of that order.

Since pharma companies bypass the retail trade insofar as their supplies to the hospital sector are concerned, the implicit revenue loss may not be as large as the 50 per cent reduction might suggest. It is also in step with the recommendations of an expert committee, set up some months ago at the behest of the Prime Minister's Office. In a sensible turn of events, however, the apex Ministry has dropped the expert committee's suggestion to sell drugs sans brands in select categories. This recommendation would have put consumers at risk as it transferred the prescribing function from the doctor to the neighbourhood chemist. Since generic drugs are cheaper than the branded, the new policy intends to ensure there is no disruption in the supply of generics. Producers of generic drugs are to be given such incentives as keeping them outside the purview of price-control or being favoured for government procurement. The question of standards will be addressed by the apex Ministry proposal to help generic producers with schemes and fiscal support to make good quality medicines. Bringing in a uniform MRP across the country will also streamline the pricing for drug companies, ensuring some transparency for the consumer.

The Government will have to tread carefully on the span of price-control and the number of medicines from the list of essential drugs to be kept under it. The 2002 Pharma Policy is locked in litigation at the Supreme Court over a similar issue. But in keeping with the spirit of the apex court's suggestion, the new policy looks to cap the price of drugs in different therapeutic areas through an indirect control mechanism. The weighted average of the top three drugs in a category would be set as the cap. What is still a bone of contention for multinational drug majors is the price negotiation on patented drugs. And with the mechanism yet to be decided, the apex Ministry should compare the cost of the patented medicine in different markets. The rate at which India would sell the patented drug can be fixed on a par with its lowest price on the overseas markets. While this may not be the best solution to keep patented drugs affordable, it is the closest to keeping all stake-holders in good health.

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