Draft pharma policy does a balancing act between consumer, industry

There is no single pill to cure all ills. And the two past attempts at getting a new Pharmaceutical Policy in place, stand testimony to this.

The Pharma Policy of 2002 landed in the Karnataka High Court over concerns regarding the price of critical and life-saving medicines.

And the draft policy of 2006 never saw the light of day.

The pharma industry though, was happy to see the 2006 draft policy slip through the cracks, as it advocated greater control on medicine prices.

The recently released draft National Pharmaceutical Policy 2011 though, attempts to address the twin concerns of keeping medicines affordable, and taking on board industry concerns.

While this draft policy still has a journey to take, through stake-holder comments and standing committee clearances before it becomes the law – industry voices say “it is ignoring long-term availability to ensure short-term access”.

There is a redeeming factor, in that the policy moves away from the corruption-prone, cost-of-production based system to the more transparent market-based-pricing system, says Mr D.G. Shah, representing the Indian Pharmaceutical Alliance, a platform of large domestic drug-makers.

The system of taking the weighted average of the top three prices of a single ingredient medicine of a specified dosage to decide the ceiling price is also finding acceptance.

Price control

The policy proposes to control prices on all NLEM's 348 medicines. But to extend price control to combinations of medicines involving drugs listed in the National List of Essential Medicines (NLEM) has enlarged the span of control significantly, as over 60 per cent of the pharmaceutical market will come under price control, against about 20 per cent under the current regime, he said.

“It also introduces an element of subjectivity in policy making,” he added.

The Government should stick with the NLEM made by public health experts, after they took into account parameters such as cost of treatment, usage, need, etc, he told Business Line .

“The proposed Policy has violated the integrity of the NLEM by going beyond it,” he said.

If the present draft goes through, consumers can expect a price reduction on some medicines, observed Mr Sujay Shetty, PricewaterhouseCoopers' India-Head (Pharmaceuticals). Companies though could see the range of their drugs under price control go up from about 15 per cent now to about 40 per cent. And companies with medicines among the top three prices in a particular medicine dosage could see a 10 per cent impact on profits, he added.

Industry representatives say it is early days to identify drugs and companies that would be impacted. But, the proposed policy could have an inhibiting influence on the domestic drug market, growing at a steady trot of over 15 per cent, they add.

COMMENT NOW