Is the govt mulling a surgical strike on medicines?

S SRINIVASAN | Updated on January 15, 2018

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As dismantling price controls will impact patients, all stakeholders must be consulted

The Government is keen on another surgical strike, it seems, as moves are afoot to dismantle the NPPA (National Pharmaceutical Pricing Authority) that implements the DPCO (Drug Price Control Order) 2013.

The thinking is that price control should be “delinked” from the 370-plus essential drugs. And thereafter price control must be confined to what the government thinks fit. Tell this to the poor people standing in the queue to exchange their demonetised notes. They understand the devastating impact of such a move on their lives.

The argument being given for dismantling price control is that a) it inhibits growth of pharma industry and b) inhibits new investment. This is a wrong argument and not evidence based. Price control affects only 12 per cent (maximum of ₹12,000 crore) of the total domestic market of more than ₹1 lakh crore. Out of which less than 50 per cent of the “affected” market, that is only ₹6,000 crores, had to actually reduce their prices to the ceiling price fixed by the DPCO. About 88 per cent of the market is out of price control. During the period DPCO 2013 has been in operation, the domestic sales of medicines have increased from ₹70,000 crore in 2013 to more than ₹100,000 crore as of date. Exports are another ₹100,000 crore. So, does the DPCO really inhibit growth?

There is in fact a need to expand the span of price control to cover a range of essential and life-saving drugs as directed by the Supreme Court in its order dated March 10, 2003 in Union of India vs KS Gopinath and Ors. The Supreme Court has clearly held that the government has a Constitutional obligation to ensure the affordability of essential medicines. The AIDAN (All-India Drug Action Network) and Others had impleaded themselves in the matter in 2003 and the case is still before the Supreme Court (Writ Petition (Civil) 423/2003). The current DPCO 2013 is itself an outcome of the above PIL. It is, hence, curious that the Government should discuss the dismantling of the DPCO 2013 when a) the matter is sub judice, and b) when it is against the spirit of Supreme Court directives on the issue.

AIDAN has served a legal notice, citing the case, to those involved with the discussion of dismantling the NPPA (the CEO of the Niti Aayog and the Secretaries of Health, Department of Pharmaceuticals and the Department of Industrial Policy and Promotion).

Pharma industry lobbies are reeling from two recent court orders: one, the refusal by the Bombay High Court to question the legitimacy of the NPPA’s action, under Para 19 of the DPCO 2013, that brought more essential drugs, like antidiabetics and cardiovasculars, under price control. The other order, by the Supreme Court, will result in industry having to pay more than ₹4,500 crore for overcharging essential medicines under the previous DPCO. It is no wonder that the very foundation of price control is now being brought to question.

But in the interest of bringing in greater “ease of doing business”, the Government needs to ensure that Parliament and the regulatory requirements are not bypassed, stakeholders are not kept in the dark, and patient interest is not sacrificed.

(The writer is with LOCOST and All India Drug Action Network. Views expressed are personal and represent that of the two organisations.)

Published on November 25, 2016

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