Friday, July 19, 2013

The farce of price control of drugs in India

Following article explains in simple terms how the govt is fooling the
public in controlling the price of drugs.
They are only supporting the drug industry to make more money at our
cost. REcent attempts are just an eye-wash, half-hearted "shows".
MUST if you want to want to learn what the hell is happening. Thanks a
lot to Anant Phadke


About two months ago, following the Gazette notification of May 15, a
new drug price control regime was put in place. It has been welcomed
in some quarters on the grounds that it will reduce the prices of all
348 medicines — ranging from routinely used medicines like
paracetamol, amoxicillin to anti-tubercular agents like rifampicin —
in the National List of Essential Medicines (NLEM). Some medicines,
it's being alleged, will be cheaper by 80 per cent. But a closer look
reveals that the new price control regime is a mere façade to create
an illusion of price-control.

The government has been forced to bring all 348 medicines in the NLEM
under price control due to a public interest litigation (PIL) filed by
the All-India Drug Action Network (AIDAN) in the Supreme Court.

During its initial hearing in 2003, the Supreme Court had directed the
government to devise a policy that would ensure that essential
medicines become affordable for ordinary people. After almost 10
years, the government finally decided to extend price control to all
medicines in the NLEM.

However, the new price-control regime defeats its declared objective.
The Supreme Court, during the latest round of hearing in October 2012,
had said that the government should continue with the cost-based
pricing (CBP) that has been used for the 74 medicines that have been
under price control since 1995.

As per CBP, the ceiling price equals manufacturer's cost of production
plus a margin of 100 per cent. As per market-based pricing (MBP), the
ceiling price is the simple average of the prices of all brands that
have more than one per cent market share and have no relation with
their cost of manufacture.

Without providing any rationale for abandoning CBP, the government,
i.e. the ministry of health, has opted for market-based pricing (MBP)
to decide the ceiling prices of medicines to be brought under price

For example, the accompanying table shows that in the case of four
commonly used medicines, the new MBP would be up to 18 times more
compared to CBP. So the ceiling price of 10 tablets of 10mg of
Atorvastatin (used to reduce cholesterol) would be Rs 59.1.

It would have been Rs 5.6 if CBP had continued. Thus, the new
price-control regime merely legitimises the current exorbitantly high
prices of essential medicines.

Not just that. Many medicines which are considered essential by the
WHO have been excluded from price control because India's current NLEM
leaves out many of these. Among anti-asthmatics, though Salbutamol has
been included, other essential anti-asthmatic medicines like
Doxoph­yl­line, Salmeterol, Montel­uk­ast are missing.

Compared to the WHO's Essential Medic­ines List (EML), medicines for
treatment of multi-drug resistant tuberculosis and life-threatening
falciparum malaria (artemether and combination of artemether and
lumefantrine) are missing from the India's NLEM. The WHO's EML
includes 21 vaccines; the Indian NLEM includes only nine.

Also, of the half dozen commonly used, essential, oral anti-diabetic
medicines, NLEM contains only three. Many other critical care
medicines which are very costly are out of price control because they
are not in the NLEM.

Though all brands of the 348 generic medicines in the NLEM are covered
by the Drug Price Control Order, of all the medicines from the same
therapeutic/chemical class, only one would be under price control. No
reasons have been given why this is so.

For example, among medicines for high blood pressure, only Enalapril
has a price cap. All other medicines of the same class
(ACE-inhibitors), like Lisinopril, Peri­n­do­pril, Quinapril,
Ram­i­pril etc, have escaped price control. Obviously, manufactures
will try to migrate from, say, Enalapril, to these other medicines.

As suggested in 2005 by the Pronab Sen Task Force, (set up to
recommend measures to make essential medicines affordable), to prevent
such "migration", all medicines of the same therapeutic class should
be under price control.

Only those Fixed Dose Com­bi­n­ations (FDCs) of esse­n­tial medicines
(for example, iron-folic acid, calcium-Vitamin D, isonex-rifam­p­icin
etc) included in the NLEM are under price control. Hundreds of other
FDCs consisting of all kinds of combinations of two or more medicines
have esc­a­ped price control.

And only standard dosage forms are under price control. Take, for
example, the antibiotic combination of amoxycilin with clauvulanic
acid which is marketed by GlaxoSmithKline under the brand name
Augmentin in tablets of several strengths: 375mg, 625mg and 1,000mg.

Of these, only 625mg tablet is price controlled. Likewise, eight
brands of Atorvastatin 10mg are under price control whereas seven
other products in non-standard dosages (of 15mg, 20 mg, 40mg) remain
out of price control. In all, about half of all dosage forms will be
out of price control.

Overall, out of medicines worth Rs 68,000 crore sold in India every
year, medicines costing Rs 52,000 crore have been carefully kept out
of price control.

Also, every year manufacturers will be free to hike the prices of all
price-controlled medicines at the same rate as the increase in the
Wholesale Price Index (WPI) irrespective of the change in input costs.

Will the Supreme Court see through this façade which seemingly serves
the ordinary citizen from excessive profiteering?

The writer belongs to All India Drug Action Network and can be
contacted at


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