Tag Archives: Price Control

Pharma Price Control Policy: Unrealistic and Unfair

Economic & Political Weekly (EPW) August 23, 2014 Vol XlIX No 34

S Srinivasan, T Srikrishna, Malini Aisola

Despite the government’s and pharmaceutical lobby’s claims and counterclaims, the Drugs (Prices Control) Order, 2013, which covers only 18% of the total domestic market of Rs 71,246 crore, has had very little positive effect as a price control policy. This article points out that the Order leaves out much that should have been included, while including much that should have been left out. Its provisions have made the playing field more uneven, with multiple ceiling prices, which is very unfair to consumers already dealing with an irrationally priced market

LP_Commentary_23August2014.inddLP_Commentary_23August2014.indd  LP_Commentary_23August2014.indd

Civil society letter on NPPA’s action on price control

Shri Ananth Kumar
Hon’ble Minister of Chemicals and Fertilizers
Udyog Bhavan
New Delhi 11001
 
20 August 2014
 
Dear Ananthji,

 

The National Pharmaceuticals Pricing Authority (NPPA), on July 10, 2014, released a new set of price notifications for 50 cardiovascular and diabetes medicines under paragraph 19 of the Drug Prices Control Order (DPCO), 2013. The notifications for the 108 formulations (two were subsequently withdrawn) of these selected medicines are in addition to the notifications for essential medicines declared under the DPCO 2013. We note that the earlier notifications for essential medicines excluded several dosage forms and strengths because they did not feature in the National List of Essential Medicines (NLEM), 2011. Thus the recent notifications were necessary to cover more of the strengths of medicines than that are listed on the NLEM. In addition, the notifications also covered medicines in the cardiovascular and diabetes therapeutic categories that are not included in the NLEM.

We the undersigned civil society organizations welcome the initiative of the NPPA to cap the prices of formulations involving essential and lifesaving medicines that fall outside the NLEM as a first step towards the institution of a robust, pro-public health policy of drug price control. This is an action that truly interprets the spirit of the Drug Prices Control Order, and its underlying legislation the Essential Commodities Act, 1955. In the past, despite its attention being drawn to the profiteering in medicines not listed in the DPCO, the government had looked the other way.

We are surprised at the misinformation being spread by the Pharmaceutical Industry in this regard, and its efforts to prevent relief to the consumer by filing petitions in the high courts in Mumbai and Delhi. Industry has challenged the legality of fixing the prices of the 50 medicines under Paragraph 19 of the DPCO 2013 when in fact the Government has in successive drug price control orders always retained the power to intervene in prices in the public interest in the light of evidence of overpricing.

Limiting all price regulation only to a list of 348 medicines and specified dosages and strengths in the DPCO 2013 goes against the policy objective of making medicines affordable to the public. The National List of Essential Medicines, a list of 348 rational and cost-effective medicines, is not the basis for production, promotion and prescription in India. In reality the most frequently prescribed and consumed medicines are not listed in the NLEM.

Industry has claimed that this will cause an annual loss of revenues of over Rs.600 crores. NPPA’s action on the market will however be marginal, and nowhere near the doomsday predictions of the industry. It will affect only those brands that were selling at very high prices. We have analysed the impact of the notifications and found that the retail market of Rs.77,526 crores (Moving Annual Total, June 2014) would experience a loss of  Rs. 350 crores (AIOCD-AWACS, PharmaTrac Data, 2014).  This represents a loss of approximately only 2% (Rs. 112 crore) in the anti-diabetic therapy segment and 2.5% (Rs. 238 crore) in the cardiac therapy segment. This in a way establishes the excess profits of the industry in those particular formulations by overcharging the patients.

Also the market based price fixation being followed by the NPPA, a departure from the long used cost-based price control mechanism, is irrational and means that the ceiling prices are still very high. Many medicines are sold by reputed companies much below the NPPA ceiling price. The ceiling price of atorvastatin 40mg is Rs. 22.02 per tablet while Biochem Pharmaceutical is selling the same at a much lower price of Rs. 14.94 per tablet. The ceiling price of glimepiride 3mg is Rs. 10 per tablet, while Ipca Laboratories is able to sell it for Rs. 6.90 per tablet. As per our calculations only a little over one fourth of packs selling on the market will need to revise their prices downwards because they were originally priced higher than the notified price. This is evidence that there is a scope for significant reduction in NPPA ceiling prices, without affecting the reasonable profits of the industry.

We also note that the notifications have not included fixed dose combinations in the cardiovascular and diabetes therapeutic categories whereas the sales of many combinations exceed those of the single molecule medicines.

We also raise the argument that fixing of ceiling prices of all the other dosage forms of all medicines under NLEM cannot be neglected. Here again the same phenomenon of overcharging remains. NPPA should come out with similar action to cover all dosage forms and fixed dose combinations containing one or more medicines under NELM, and as well as bring other essential and life saving medicines under price control immediately.

Although this notification of NPPA will give some relief to patients in the chronic disease sector in the present context, it should be expanded and rationalized. We request the Government and NPPA to strongly defend its stand and also consider the actions suggested by us to promote public health.

Signed,

All India Drug Action Network (AIDAN)
Jan Swasthya Abhiyan
Low Cost Standard Therapeutics (LOCOST)
Medico Friends Circle
Third World Network- India
All India Peoples Science Network (AIPSN)
National Working Group on Patent Laws

 
Copy to:
Hon’ble Shri Narendra Modi, Prime Minister of India
Hon’ble Shri Dr. Harsh Vardhan, Minister of Health and Family Welfare
Mr. Nripendra Misra, Principal Secretary, Prime Minister’s Office
Mr. Lov Verma, Secretary, Department of Health & Family Welfare, Ministry of Health & Family Welfare
Ms. Aradhana Johri, Secretary, Department of Pharmaceuticals, Ministry of Chemicals & Fertilizers
Mr. Injeti Srinivas, Chairman, National Pharmaceutical Pricing Authority, Department of Pharmaceuticals, Ministry of Chemicals & Fertilizers

 
 
 
For further information, contact:
 

LOCOST
1st Floor, Premanand Sahitya Bhavan
Dandia Bazaar
Vadodara, Gujarat – 390001
Ph: 9998771064
Email: chinusrinivasan.x@gmail.com

Jan Swasthya Abhiyan
National Secretariat
c/o Delhi Science Forum
D-158, Lower Ground Floor
Saket, New Delhi 110017
Ph: (011) 26524323, 26862716
Email: jsasect.delhi@gmail.com

 
 

Compulsory Licensing in India: A historic move to make drugs affordable

The government’s decision to grant a compulsory licence for the manufacture of an important anti-cancer drug should be the first step towards making available essential drugs at little or no direct cost.

Read more: The Hindu, March 14, 2012

Ensuring affordability, accessibility and safety of medicines through urgent action

Health Action

Health Action

Health Action (HA) has published articles relating to essential medicines, generic medicines, drug price control and other drug related issues in its September 2009 issue. Some of the relevant articles have been uploaded here (with permission from HA).

Dubious Rather Than Spurious Drugs – India’s Real Drug Problem
Dr Anurag Bhargava M D

Access to medicines implies access to medicines of proven efficacy, safety and acceptable quality, prescribed in a rational manner. Governments have a responsibility of ensuring availability and affordability of such medicines. Yet the situation in India with all these issues related to medicines is marked by paradoxes. In spite of having one of the largest pharmaceutical industries supplying low-cost essential medicines globally, India has the largest number of people in the world without access to essential medicines, …………

People’s Initiative for Generic Medicines
Dr. Anant Phadke

In India, medicines are unnecessarily exorbitantly costly. Prices of medicines can be brought down to one half, even to one-fourth immediately, if the government takes appropriate measures to stop reckless profiteering and waste that are prevalent in the manufacture and sale of medicines. Since the early eighties, the All India Drug Action Network (AIDAN) has been advocating these measures, but in vain. While it may take many more years to change the govt…….

Essential Medicines: Economic constraints in access in India
Dr. Purnabrata Gun & Sushanta Roy

Essential medicines are among the most costeffective elements in modern health care and their potential health impact is remarkable. This year alone, there will be over 40 million deaths in developing countries, one-third among children under age five. Ten million deaths will be due to acute respiratory infections, diarrheal diseases, tuberculosis, and malaria. Safe, inexpensive, essential drugs can be life-saving in all these disease conditions……..

Good to be True, but True! Retail Sale of Generic Drugs at Low Prices by the Government in Chittorgarh Dt
S.Srinivasan

We all know that one of the solutions for making medicines affordable to people is to make available only essential generic drugs at lower prices, that is if your doctor prescribes them in the first instance. Procurement prices of generic drugs by Governments like that of Tamil Nadu and Delhi have revealed that prices of generics are 1.5 % to 10 % of the maximum retail price (MRP) of branded equivalents at the retail level. However, to get a retail pharmacist to stock these low-priced generics is easier said than done…..

Drug Price-Control: Problems, Principles and Prospects
Dr Chandra M Gulhati

One way or the other, prices of many sensitive goods and services are subject to some sort of price regulation either through state’s intervention or other mechanisms including competition, negotiated prices by bulk buyers, reimbursement by insurance companies just to mention a few…………

To download the entire issue of Health Action, September 2009 issue, click here

MAKING MEDICINES AFFORDABLE – Reaching the Unreached

MAKING MEDICINES AFFORDABLE - Reaching the Unreached

MAKING MEDICINES AFFORDABLE - Reaching the Unreached

LOW COST MEDICINES INITIATIVE – CHITTORGARH
DISTRICT LEVEL INTERVENTIONS – THE MODEL

“We knew that the actual cost of most of the drugs is very low. But, these were not available to patients at low rates because of three obstacles:…………….. So, the district administration adopted the following strategy to provide low cost medicines to the patients.”

These are some excerpts from the booklet “MAKING MEDICINES AFFORDABLE – Reaching the Unreached” – documented by Dr. Samit Sharma, Collector and District Magistrate, Chittorgarh. To know about the strategy or to download or read the booklet, click here

To know more about the low cost medicines initiative in Chittorgarh, click here

To see the comparisons between printed M.R.P. of medicines and prices at CHITTORGARH SAHAKARI UPBHOKTA THOK BHANDAR LTD., CHITTORGARH, click here

Medicine Prices and Affordability – A Policy Brief on Drug Pricing

This policy brief discusses the issue of medicine pricing and affordability for the common people of India. This document gives specific examples of overpricing. A decaying public health system and a market riddled by overpriced, irrational and unscientific medicines aggravates the lack of access and affordability. Several Government of India committee reports have suggested some form of medicine price regulation. As this brief points out, even in the so-called advanced countries of the West, some form of governmental regulation is prevalent. Health is too precious to be left to market forces – a thinking which even a ‘free market’ economy like the US and its new president elect is veering towards – the meltdown has made it clear that access to affordable health is a basic human right.

To download the policy brief, click here

Price Control Move Hailed (AIDAN Press Release 2006)

Press Release: 27 July 2006

MOVE TO BRING ESSENTIAL MEDICINES UNDER PRICE CONTROL HAILED

– All India Drug Action Network (AIDAN) calls for a comprehensive, balanced and rational drug policy

The All India Drug Action Network (AIDAN), which is a national network of a number of organisations who have been working on pharmaceutical policy issues since the early eighties, has hailed the decision of the Union Chemicals and Fertilisers Ministry to bring all the medicines in the National List of Essential Medicines under price control.

RATIONALE FOR PRICE CONTROL

We point out that there is a strong rationale for price control of the essential drugs

·    Medicines are the only commodity in which the payer (the patient) does not decide what to buy and at what cost. The doctor prescribes and the patient pays.

·    Unlike other commodities, the purchaser of medicines is extremely vulnerable as they are seeking immediate relief from suffering. Hence even in so-called market economies (except USA) medicine prices are regulated.

·    In India, unlike in the developed countries, expenditure on medicines constitutes a large proportion (>50%) of total medical expenditure. 90% of this expenditure is out-of-pocket expenditure by the people, since the government spends a very small proportion on medicine procurement

·    Unlike in the developed countries, most Indian patients face the drug industry as hapless individuals because most are not covered by insurance or social security mechanisms.

·    Majority of Indians are below or near poverty-line, yet they are forced to spend on unnecessarily costly medicines. This unnecessary expenditure on medicines is a very important cause for indebtedness after hospitalization.

·    The track record of the drug industry in India as regards to pricing is extremely reprehensible. The following example would illustrate this point –

The same drug in the same strength manufactured by two trusted companies can vary from 2 times to 20 times in their prices, which has no credible explanation other than overpricing. Levofloxacin used in infections is sold by CIPLA at Rs. 7 per tablet, while Aventis sells it at Rs. 95 per tablet. What is worse is that costlier drugs most often sell more because of more aggressive promotion.

·    Lastly, the prices of drugs outside price control are marked by anarchy and price deregulation in the past has increased the prices of drugs. Committees constituted by the Government have clearly documented abnormal rises in prices of drugs after they were taken off the list of price-controlled drugs. For instance –

After price deregulation in 1995, the price of some TB drugs rose by 250%. Yet no action has been taken.

Successive governments had brought down the number of drugs under price control from 347 in 1977 to a projected 25 or so in 2002, due to industry pressure. And it took the Supreme Court of India to take note of the situation and rule that, this would make them out of the reach of ordinary people.

PROFITABILITY vs. PROFITEERING

We believe that ‘price regulation is fully compatible with profitability’, as the real cost of manufacturing a drug is often a very small fraction of the retail price. For instance, Cadila Pharmaceuticals bid for supply of a medicine for worms, Albendazole 400 mg tablets, at a mere 22 paise, while its ZYBEND brand sells for Rs. 11.90 in the market. A drug for hypertension like Atenolol is procured at 12 paise by Delhi State while in the market, the same drug is sold for as much as Rs. 2.50, i.e. over 20 times the cost.

Currently drug prices are unnecessarily high also because the pharma trade too is indulging in profiteering. The trade margins in pharmaceuticals can be astronomical. A study done by VOICE, a consumer education organisation, and supported by the National Pharmaceutical Pricing Authority had shown that the difference in price to the retailer and that to the patient could well be over 400%. For instance, Nimesulide was available at Rs.24 for 10 tablets, while the price to the retailer was just Rs.6 for the same. The trade margin should also be regulated.

Pharmaceutical sector needed to explain to the public how it could afford to sell drugs at even 10% of their MRP to wholesalers and not suffer from loss of profitability and yet complain bitterly whenever the MRP was sought to be lowered by the government? The proposed pricing policy talks of a 150-200% margin on the post-manufacturing expenses for drugs under price control. Surely such a profit margin was adequate for profitability of any manufacturing enterprise,

RESEARCH vs. MARKETING

We disagree with the claims of the drug industry that research would be hit due to price control. In India, pharma companies spend 2% of sales on research and ten times on sales promotion! Pharma industry should divert its expenses from unnecessary sales promotion to research. It has been a part of the pharma policy that any drug developed by indigenous R&D shall be exempt from price control for a period of up to 15 years. But, here have been no claimants!

MORE ACTION REQUIRED

Past experience suggests that in the light of price regulation, the companies switch to production and promotion of alternative drugs, which are often irrational or higher priced alternatives which are outside the list. The government should pre-empt this by bringing all alternative drugs also under price control, if not, at the very least, under a scheme of price monitoring. And with over 649 million people in India lacking regular access to essential medicines (World Medicines Situation Report, 2004; WHO), there is an urgent need to go beyond just price control and to institute a comprehensive, balanced and rational drug policy in the country.