Says Govt need not look beyond essential medicines list to restrict prices

Pharma trade-organisation the All India Organisation of Chemists and Druggists (AIOCD) has cast its lot with the pharmaceutical industry on drug pricing.

They have suggested that the Government stick with its proposal of looking at market-based pricing. But providing a different formula, the trade-body said the Government could fix a ceiling price on the weighted average of all brands in a particular dosage form, with over one per cent market share. This was suggested as an alternative to the present policy proposal of the referential price being fixed at the weighted average of the top three brands.

The trade body’s formula brings down the price of drugs by about 13 per cent as compared to the policy proposal, which lowers price by about nine per cent, said AIOCD head, Mr J.S. Shinde. Competition in the market will prevent companies from increasing their prices, if they were lower than the ceiling price, added the AIOCD Director, Mr Ameesh Masurekar, allaying concerns of the formula fanning medicine prices.

The trade body, representing over 5.5 lakh chemists across the country, also suggested that the Government stick with restricting price control to the 348 drugs mentioned in the National List of Essential Medicines.

Responding to suggestions from some quarters that trade margins given by drug companies need to be curbed, Mr Shinde told Business Line that they have urged the Government to stick with existing margins, not increase or reduce it.

Retail margins on price-controlled drugs are 6 per cent, and 8 per cent for wholesalers. For decontrolled drugs, the distribution margins add up to a minimum 30 per cent. Mr Masurekar pointed out that it was part of standard practice, and in the US for instance, the trade margins given by companies selling branded generically-similar drugs was about 40 per cent.

(This article was published on July 10, 2012)
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