Companies

NPPA role set to morph from restrictive to constructive

P. T. Jyothi Datta Mumbai | Updated on November 13, 2017 Published on November 06, 2011

Draft pharma policy favours market-based pricing





The National Pharmaceutical Pricing Authority (NPPA) is set to morph from being a “restrictive” controller to a “constructive” monitor, even facilitator for the industry – if the draft National Pharmaceutical Policy, 2011, gets approved in its present avatar.

The significant shift in the NPPA's role comes even as the draft policy seeks to increase the span of price-control on medicines, from 20 per cent to about 60 per cent of the domestic market.

Price fixing

The 14-year-old NPPA at present fixes the price on medicines in the price-controlled list, based on the cost of production. But this approach will be shed under the proposed new regime, in favour of a market-based pricing approach.

In such an approach, the ceiling price is fixed by taking the average of the top three prices on specific medicines listed by the Government.

By fixing the ceiling price based on data picked from the market-place, the draft policy places a greater onus on the pharma industry to behave responsibly, say senior ministry officials.

Market-based pricing also gives industry more room to manoeuvre, with besides

More responsibility

The official's observation finds an echo both in industry and among industry-watchers, who agree that a mature shift has taken place. From being on either side of the divide, the Government and the industry are looking to walk the extra mile to address problems regarding access to medicines.

Faced with a large section of population unable to access medicines, there is a need to democratise healthcare and the Government is making the shift from being a controller to viewing the industry as a partner in its social agenda, observes Mr Muralidharan Nair, Partner with Ernst & Young.

Oversight role

The belief in the draft policy is that the industry is mature enough to have a self-regulated equilibrium and in that sense, there is greater responsibility on the industry, he says.

But that is not to say that the Government goes into a hands-free mode or that price control was not required from day one, he explains.

A parent bringing up a teenager, and allowing him or her to take a decision, for instance, does not mean the parent does not watch over the child anymore, he points out. Similarly, the Government through its monitoring body will continue to have an oversight role – to ensure there is no cartelisation or unhealthy practice.

The technique of intervention is changing, in recognition of the industry's maturity – as more multinationals and domestic companies undertake programmes to address people at the bottom of the pyramid, he points out.

Published on November 06, 2011
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