After a gap of 18 years a new pharmaceutical pricing policy is going to
be notified by the Central government once that is cleared by the Union
Cabinet. The Group of Ministers (GoM) approved the policy draft on last
Thursday to bring formulations of 348 bulk drugs under price control as
against 74 drugs and their formulations in the 1994 drug policy.
A major deviation in the new policy is the adoption of market based pricing for fixing formulation prices instead of cost plus formula followed currently. Under the new system, the prices of drug products will be fixed on the basis of the average price of all brands in a therapeutic segment that has more than one per cent market share. Another major change in the policy draft is the exemption of bulk drugs from the ambit of price control. By expanding the list of price controlled formulations in the new policy.
GoM said that the span of control in the pharmaceutical industry would be 30 per cent as against 18 per cent currently. As per the 1994 drug policy, the companies were also allowed to raise prices up to 10 per cent every year in case of all drugs other than the 74. And as a matter of right, the companies have been jacking up the formulation prices of more than 500 drugs which are outside price control even when their costs remained static or dropped.
The new pharmaceutical policy leaves as much as 70 per cent of the drug products marketed in the country outside any kind of price control. Definitely this is a policy intended to benefit the pharmaceutical industry and not in the interest of the patient community. Organization of Pharmaceutical Producers of India representing foreign drug companies and Indian Pharmaceutical Alliance, a body of top dozen Indian companies are not happy with new policy as they consider the profitability of their member companies may be hit.
By taking average of prices of all brands in a therapeutic group for price fixation can bring down prices of some products of MNCs and top Indian companies. Because, product prices of these companies are very high whereas prices of many medium and small scale companies are much lower.
A major deviation in the new policy is the adoption of market based pricing for fixing formulation prices instead of cost plus formula followed currently. Under the new system, the prices of drug products will be fixed on the basis of the average price of all brands in a therapeutic segment that has more than one per cent market share. Another major change in the policy draft is the exemption of bulk drugs from the ambit of price control. By expanding the list of price controlled formulations in the new policy.
GoM said that the span of control in the pharmaceutical industry would be 30 per cent as against 18 per cent currently. As per the 1994 drug policy, the companies were also allowed to raise prices up to 10 per cent every year in case of all drugs other than the 74. And as a matter of right, the companies have been jacking up the formulation prices of more than 500 drugs which are outside price control even when their costs remained static or dropped.
The new pharmaceutical policy leaves as much as 70 per cent of the drug products marketed in the country outside any kind of price control. Definitely this is a policy intended to benefit the pharmaceutical industry and not in the interest of the patient community. Organization of Pharmaceutical Producers of India representing foreign drug companies and Indian Pharmaceutical Alliance, a body of top dozen Indian companies are not happy with new policy as they consider the profitability of their member companies may be hit.
By taking average of prices of all brands in a therapeutic group for price fixation can bring down prices of some products of MNCs and top Indian companies. Because, product prices of these companies are very high whereas prices of many medium and small scale companies are much lower.
