New drug pricing policy an eyewash

VISAKHAPATNAM: The new drug pricing policy that fixes the price of essential medicines manufactured by private pharmas is not only dichotomous but also an eyewash, feel officials of the Drugs Control Administration (DCA) in the state. Despite being aimed at bringing down prices of 348 drugs under the National List of Essential Medicines (NLEM) through the new Drug Pricing Control Order (DPCO), the policy has actually pushed up the ceiling prices of some drugs.
As per the new DPCO, the government has fixed the prices of 348 drugs in the NLEM based on the simple average market price of the product, which has led to an increase in the price of some drugs and just a marginal decrease in that of others. Also, the profit margin of drug manufacturers still remains abnormally high due to the irrational price ceiling, which is not based on the cost of manufacture, the officials alleged.
"Earlier, the pricing of drugs was decided on the basis of the manufacturing cost factor but now it is determined by the simple average pricing of all brands with over 1% market turnover in the market, which is arbitrary and causes confusion. It's not a consumer-friendly decision. Fixing the price based on a simple average market price is not recommended as there's no data with the government on the profits of the drug manufacturers and records can always be manipulated," explained R Uday Bhaskar, secretary general from All India Drugs Control Officers' Federation.
"There's also no rationality in this price ceiling because there's a slight decrease in the prices of drugs and in some cases, there has also been an increase in prices. This even as the manufacturer's profit margin continues to remain very high," he added.
If for a drug, the manufacturing cost is just Re 1, there's no logic in keeping the MRP at Rs 30 even though it may be a Rs 5 decrease from the earlier pricing. Instead, the government should have fixed the MRP at Rs 10 if they indeed wanted to make drug prices pocket-friendly for consumers, pointed out DCA officials.
Citing some examples, Uday Bhaskar, who is also assistant director, drugs control administration (DCA), said, "For an antibiotic like Amoxycillin + Clavulanate Potassium 625 mg, the Jeevandhara distributer's price for a pack of 10 tablets is Rs 1.40 and the manufacturers' cost is around 70 paise per 10 tablets. However, the old price of the drug manufactured by private pharmaceutical companies was Rs 121.30 and after fixing the price, it's gone up by Rs 23 to Rs 144. Similarly, prices of other drugs such as Losartan, Atenlol and Acyclovir have also escalated as compared to the new price after fixing it based on the average market turnover. So, making a blanket statement that prices of drugs have fallen after price ceiling by DPCO (drug policy control order) is misleading," said the official.
The pharma manufacturers, however, are unhappy over price fixing and cribbing about an Rs 900-Rs 1,000 crore reduction in profits. A drug manufacturer from the city said, "We were given one-and-half months to make the stock available in the market and quote the new price of the essential drugs as per the average market turnover but we are approaching the court to extend the timing. The drug manufacturers are going to lose out around Rs 900-Rs 1,000 crore if the new DPCO pricing comes into effect."
However, a DCA official pointed out that the price ceiling is a farce. "We have a domestic pharma market worth around Rs 50,000 crore and another Rs 79,500 crore worth drugs are exported. For the Rs 50,000 crore, the manufacturing cost is just Rs 10-15,000 crore and manufacturers still retain a profit of around Rs 35,000 crore. So, the loss of Rs 900-Rs 1,000 crore is minimal and doesn't really matter," he stated.