The Hindu Business Line : Industry, Govt still differ over drug pricing policy

The pharmaceutical industry would like a slimmer National List of Essential Medicines (NLEM). Continuing its ongoing tug of war over prices of essential drugs, the pharmaceutical industry has suggested that over the counter (OTC) drugs and those costing less than Rs 3 be kept out of the NLEM.

While the Satwant Reddy Committee report, finalised after meetings between industry representatives and the Government, is ready and a draft pharma policy is expected to be forwarded to the Cabinet by the end of the year, differences over several key issues remain.

The Government would like only those drugs that cost less than Re 1 per unit to stay out of the NLEM, as opposed to the Rs 3 per unit demand from pharma companies. The industry has also offered a rollback of prices by six months from the date when the new drug price control order comes into effect. To that they've offered to add a five per cent price reduction.

The National Pharmaceutical Price Authority has suggested a 10 per cent reduction in prices. The Government would also like a three-year freeze of the 1995 Drug Price Control Order (DPCO). The industry is only willing to agree to a year's extension. "The drugs under the DPCO have seen only an average price increase of one per cent. Also, some of the drugs in the list do not qualify under NLEM," says an industry representative.

Even the number of formulations is under dispute, while the industry insists on only allowing 241 formulations to come under price control, the NPPA would like to see 391 formulations covered.

The industry is also unhappy with the monitoring mechanism itself, which it would prefer over a price control mechanism. "The monitoring mechanism will be de facto price control if the Government chose to take a case by case approval," says the industry representative.

Commenting on the argument that a price control mechanism does not take into account R&D spend, the NPPA says that consumers anyway pay for successful research leading to patents. Why must they pay for research that isn't successful, when pharma companies enjoy tax benefits for the same, asks NPPA.