The Hindu Business Line : `Excessive price control may result in drugs shortage'

Price control was the ostensible villain in that piece, making it unviable for companies to produce the drug and thus putting consumers in a spot, recall pharma industry players.

Domestic drug companies caution that despite the Government's best intentions to keep a watch on medicine prices, consumers could end up getting the wrong end of the stick. "We could be faced with shortages in medicine supply, if local companies find it difficult to produce drugs because of increased control on prices," observes Mr B.K. Raizada, an authority on the pharma industry.

"The National Pharmaceutical Pricing Authority (NPPA) has the power to intervene and they have done so in the past. Take out the people who are profiteering, there is no need to change policy. All that is required is to strengthen the monitoring mechanism," he adds.

Meanwhile, the industry is clinging onto every word from the Union Chemicals and Fertiliser Minister, Mr Ram Vilas Paswan. And they are heaving a sigh of reief that he has recently called for monitoring of prices, as opposed to control over them.

"Attempts to control prices to make medicines accessible to consumers could backfire. Shortages will arise if local producers find it unviable to produce price-controlled medicines and stop making them. These drugs will then be imported by multinational companies and then prices cannot be controlled," cautions Mr Yogin Majmudar, President of the Indian Drug Manufacturers' Association.

If the Government goes ahead with its plan to bring 300 essential drugs under price control, local companies will have no options before them besides simply opting out, say industry representatives.

The Indian Pharmaceutical Alliance's Mr D.G. Shah laments: "For one rupee paid by the consumer, about 37 paise goes to the Government, 35 paise to the trader and only 26 paise goes to the company."

"Companies balance out the low margins from price-controlled drugs, against the better margins got from producing drugs that are not under control. But even in the case of drugs that are not under price control, competition puts profits under pressure. So now, if the price control net is widened, companies will not have any drugs to balance out their act," explains the IDMA chief.

In its presentation to the Union Minister, the IPA further points out that "excessive price controls" between 1979 and 1986 led to "cut-back in production, investments and shortages of medicines leading to emergence of spurious and sub-standard products."

Recognising this, the Government, in its Drug Policy of 1986 said: "The pricing system needs to be simplified and rationalised, if the benefits of price control are to be effectively realised by the consumer, particularly the weaker sections of the society. The span of price control at present is impracticably large covering 347 bulk drugs and over 4,000 formulations marketed in about 20,000 packs. It is proposed to reduce to a considerable extent this span of control and to make the price control system less cumbersome but more effective."