AIDAN proposes another pricing model for essential drugs

A non-government organisation campaigning for cheaper essential drugs has proposed an alternative pricing model that seeks to fix retail prices at the average price of all brands in a segment.

The proposal of the All India Drug Action Network (AIDAN) is being examined by the department of pharmaceuticals (DoP), an official said. AIDAN says its new pricing mechanism, which excludes brands that account for the top 20% by sales, will make medicines cheaper than the formula suggested by the DoP.

The group had earlier proposed another pricing formula but it was rejected by the industry. "We have proposed this alternate model, if our earlier recommendation or the health ministry's proposals are not acceptable to industry," said Mira Shiva, founder co-ordinator of AIDAN.

The government, which is consulting all stakeholders before framing a new drug pricing policy, has received several suggestions to bring down the cost of essential drugs.

In 2003, the Supreme Court disbanded the Pharma Policy 2002-which proposed to bring down the number of bulk drugs under price control from 74 to 38-saying it would dilute price control regulation. It also asked the government to regulate prices of all essential drugs. The matter is being finalised under the direction of the Supreme Court and the case comes up for hearing on Tuesday.

The NGO had earlier suggested that the government should continue with the existing mechanism of fixing prices based on the cost of production. But this was rejected by industry, which termed it "impractical and non-transparent". In October, the DoP had floated a draft National Pharmaceutical Pricing Policy that proposes to cap the prices of 348 essential medicines and their formulations at the average price of the three best-selling brands.

Sales of these drugs account for about three-fifths of the country's Rs 60,000-crore pharmaceutical market. In its initial feedback, AIDAN had said that the DoP proposal would increase prices of medicines since the best-selling brands are invariably the costlier ones, a view shared by experts, the health ministry and the WHO.

The DoP's draft policy has also been rejected by health ministry, which says the pricing should be based on either the average price of the three cheapest brands or the government's bulk procurement price. I A non-government organisation campaigning for cheaper essential drugs has proposed an alternative pricing model that seeks to fix retail prices at the average price of all brands in a segment.

The proposal of the All India Drug Action Network (AIDAN) is being examined by the department of pharmaceuticals (DoP), an official said. AIDAN says its new pricing mechanism, which excludes brands that account for the top 20% by sales, will make medicines cheaper than the formula suggested by the DoP.

The group had earlier proposed another pricing formula but it was rejected by the industry. "We have proposed this alternate model, if our earlier recommendation or the health ministry's proposals are not acceptable to industry," said Mira Shiva, founder co-ordinator of AIDAN.

The government, which is consulting all stakeholders before framing a new drug pricing policy, has received several suggestions to bring down the cost of essential drugs. In 2003, the Supreme Court disbanded the Pharma Policy 2002-which proposed to bring down the number of bulk drugs under price control from 74 to 38-saying it would dilute price control regulation. It also asked the government to regulate prices of all essential drugs.

The matter is being finalised under the direction of the Supreme Court and the case comes up for hearing on Tuesday. The NGO had earlier suggested that the government should continue with the existing mechanism of fixing prices based on the cost of production. But this was rejected by industry, which termed it "impractical and non-transparent".

In October, the DoP had floated a draft National Pharmaceutical Pricing Policy that proposes to cap the prices of 348 essential medicines and their formulations at the average price of the three best-selling brands.

Sales of these drugs account for about three-fifths of the country's Rs 60,000-crore pharmaceutical market. In its initial feedback, AIDAN had said that the DoP proposal would increase prices of medicines since the best-selling brands are invariably the costlier ones, a view shared by experts, the health ministry and the WHO.

The DoP's draft policy has also been rejected by health ministry, which says the pricing should be based on either the average price of the three cheapest brands or the government's bulk procurement price.

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