The Hindu Business Line : Govt plans pharma index to track prices

TO safeguard against unnatural price hikes of drugs in the post-patent era, the Union Government is looking at the possibility of creating a pharmaceutical price index to track prices.

According to senior officials in the Ministry of Chemicals and Fertilisers, "We do not have any effective mechanism for monitoring price hikes in the pharmaceutical sector. We have been depending on IMS Health-AC Nielsen, (formerly ORG) for tracking data on retail sales both in volume and value terms. Therefore, having a pharmaceutical price index on the lines of the Consumer Price Index or Wholesale Price Index is being considered."

Though details of the proposed index were not available, officials said that the Government could create an index by having a basket of drugs whose prices would be benchmarked to a base year. It could then monitor any changes in their prices in relation to the index.

However, the therapeutic segments that would form the basket would have to be decided. Also, whether the index would monitor prices of only generic drugs or include patented drugs as well would also have to be finalised.

"Earlier too, the Government had a price index based on a very small basket of seven-eight drugs whose prices were being monitored. But this was not a very effective mechanism," said industry sources.

The Sandhu Committee, which was set up earlier to look into the issue of trade margins of generic drugs, was asked to work on various other monitoring mechanisms.

Currently, the National Pharmaceutical Pricing Authority (NPPA) keeps a check on prices of 74 bulk drugs and revises them periodically. However, generic drug companies have been offering trade margins of 500-2000 per cent leading to an increase in prices.

Meanwhile, developed countries such as Australia, the US and Canada, where the patent regime has already been implemented, have pharma price indices.

In Australia, for instance, there is a therapeutic group pricing mechanism wherein the lowest price of a brand or drug sets the benchmark price for either other brands of that drug or other drugs within the same group.

Similarly, the US and Canada use market baskets to calculate price index and these have been changed to include generic drugs as and when a patented drug goes off-patent.

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