P.T. Jyothi Datta

Mumbai, Aug. 26

THE drug industry has long complained of being the Centre's `favourite whipping boy' when it comes to the price of medicines.

With the concern being on reducing the price burden on consumers, drug companies suggest that other stake-holders in the healthcare sector also be roped in to shoulder this responsibility.

A healthcess on the turnover of all healthcare players, including hospitals, is one of the suggestions that the top brass in the pharma industry will be making to the Union Chemicals and Fertiliser Minister, Mr Ram Vilas Paswan, at a meeting scheduled for Monday.

Medicine prices account for just a fraction, about 15 per cent, of total healthcare expenses, a senior drug company representative said in defence of his sector.

The drug industry in the country has been forced to confront the pricing issue and come up with suggestions, as the Centre prepares to shut the door on discussions and frame a new policy on medicine prices. Though next week's meeting is a run-up to finalising the framework on pricing, the drug industry has been unnerved by recent recommendations made by a government task-force that brought back the bogey of price control.

About 20 per cent of the 354-odd medicines on the Essential Drug List (EDL) would fall under price-control, as per the recommendations.

The task-force has also suggested a hybrid model combining price-control and monitoring.

It has suggested a weighted average price, where a ceiling would be capped at an average price of the top three brands in a category.

This model would cover the remaining 200-plus medicines of the EDL and drug company officials said that it is an indirect form of price control.

The task-force has also recommended that Central and State governments procure medicines at half the Maximum Retail Price.

"Instead of looking at the pharma industry in isolation, the Government can have a health-cess on the turnover of the entire healthcare industry, including hospitals etc. It could be used to improve the distribution infrastructure for medicines.

The Government should also bring in ethical norms for doctors and work out access-programmes with pharma companies to make medicines affordable. Health insurance too needs to be improved," said Mr Kewal Handa, heading the pricing committee with the Organisation of Pharmaceutical Producers of India (OPPI).

Price control is retrogressive, he said, as it would send out wrong signals to foreign investors looking to India. The idea of a health-cess finds acceptability with the Indian Drug Manufacturers' Association as well. Another industry association, the Indian Pharmaceutical Alliance, has said that it was assessing the implications of the Centre's proposal on drug prices in the country.

Meanwhile, an official with the Chemical and Fertiliser Ministry said that the task-force was expected to soon wrap-up discussions and present its report on drug pricing and access to affordable medicines.

(This article was published in the Business Line print edition dated August 27, 2005)
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