Govt forms inter-ministerial committee to review drug pricing policy

02 Nov 2015 Evaluate

In order to review the Drug Price Control Order (DPCO) 2013, the government has formed an inter-ministerial committee, following the Supreme Court verdict this year that termed the drug pricing policy as irrational and unreasonable. The committee will look into the drug pricing mechanism specifically in the market based pricing formula which is being used at present under DPCO 2013.

An inter-ministerial committee comprising representatives from Department of Industrial Policy & Promotion (DIPP), Ministry of Health, National Pharmaceutical Pricing Authority (NPPA) and Department of Pharmaceuticals have been formed following the Supreme Court orders to look into the pricing of drugs as there have been complaints that the companies are making significant profits which go up to few thousand per cent.

Earlier in July, the Supreme Court had observed that the centre was fixing maximum price of a medicine above the retail price of the leading company, after hearing the NGO All India Drug Action Network petition. According to the NGO’s petition one of the five issues to be considered by the government includes that MBP (Market Based Pricing) was never used for any price regulatory purposes and this was making medicines costlier. Besides, the NGO had also sought inclusion of more life-saving medicines of diseases like diabetes and tuberculosis in the list of drugs whose prices would be regulated by the government.

Additionally, as per the NGO petition, under the new policy simple average ceiling prices were, in many cases, higher than the market leader price. Till date, the authority has fixed the ceiling price of 530 formulations from the list As set under DPCO 2013, drug price regulator NPPA fixes the ceiling price of essential medicines of schedule-I. And no one is authorised to sell any scheduled medicine to a consumer at a price higher than the one notified by NPPA under the order. While fixing the ceiling price, 16 per cent margin is allowed for retailers. For non-scheduled formulations, there is no control over the launch price. In respect of medicines not under price control, manufacturers are allowed to increase the maximum retail price (MRP) by 10 per cent annually.

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