GoM finalises pricing policy for 348 drugs

The Group of Ministers (GoM) set up to determine the country's drug pricing policy will recommend that retail prices of 348 essential drugs be fixed at the weighted average price of brands that have more than 1% market share. This will lead to a reduction in prices of several costly brands while allowing the prices of low-cost medicines to rise. 


"We will send our recommendation to the Union Cabinet in a week's time," Union agriculture minister Sharad Pawar, who heads the group, told reporters on Thursday. 


The price control will cover the 348 medicines that are sold in 654 formulations as specified in the National List of Essential Medicines, 2011. 


Earlier this month, the Supreme Court had criticised the government for failing to finalise the long-pending drug pricing policy. The court had given the government time until September 27 to fix the policy, failing which it would pass an interim order. 


"We will tell the Supreme Court what we are doing," said Kapil Sibal, Union minister for HRD and telecom. 


The Supreme Court was due to hear the matter on Thursday but it was postponed. 


According to industry estimates, the proposed policy will bring down drug prices by about 11%. However, prices of some brands for many large companies, both domestic and foreign, may fall by up to 75%. 


It is estimated that prices of 60% of medicines in the National List of Essential Medicines will come down by more than 20%. 


Drugmakers say that while the policy will bring more essential medicines within the reach of the poor, it will affect the revenues of manufacturers by 15-17%, the annual growth rate of the Rs 65,000-crore Indian drug market. 


"All the top 100 companies will be hurt the most and we expect them to make it up by increasing volume," said DG Shah, secretary-general of Indian Pharmaceutical Alliance, a grouping of big Indian drug companies. 


Similarly, the Organisation of Pharmaceutical Producers of India (OPPI), the body of foreign drugmakers in India, said the proposal will now cover around 30% of the Indian drug market. "This will further squeeze margins," OPPI director-general Tapan Ray said. At present, the government fixes prices of medicines made using 74 bulk drugs covering about 18% of the drug market. 


While drug manufacturers are in favour of the pharmaceutical department's October 2011 proposal that retail prices be fixed using the average of brands method, other parties, including the health ministry, NGOs and some parliamentarians, want continuation of the current policy, which uses the cost of production formula.

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