‘‘The paradigm shift from cost-based pricing to market-based pricing has been long overdue’’

India’s search for a universal formula to fix prices of essential drugs appears to have been addressed with the new pharma policy and the DPCO 2013 endorsing market-based pricing method as the panacea to this perennial problem of balancing public need and industry’s survival and growth. The various drug policies, all these years, were broadly based on the principle of putting a ceiling on prices of the most popular drugs on a ‘lowest common denominator’ basis. The Government finally realised that keeping prices under strict control and artificially very low will neither benefit the patients, nor the industry. The National Pharma Pricing Policy (NPPP) 2012 envisaged three key principles — essentiality of drugs, control only on formulations and market-based pricing.

The paradigm shift from cost-based pricing to market-based pricing has been long overdue, as it has been stunting the industry’s growth and forcing manufacturers to discontinue production of some controlled drugs since they were proving highly unviable. Today, the Indian economy is largely market-driven, with prices determined by market conditions and market forces.

The Department of Pharmaceuticals has now notified the DPCO 2013 and recommended that a simple average of all the products in a therapeutic category with at least one per cent market share is to be considered based on IMS data. It would not be out of place to mention here that manufacturers are not in agreement with the prices arrived at through IMS data and hence National Pharmaceutical Pricing Authority (NPPA) has asked manufacturers to provide information on prices (all inclusive) of the products.

The DPCO 2013 does not provide any distinction for formulations under the National List of Essential Medicines (NLEM), which are both in hard gelatin and soft gelatin capsules, although separate norms existed in the DPCO 1995. Similarly SR, CR, once-a-day tablets etc. also have the same dosages as ordinary products, but are distinctly more beneficial therapeutically and hence need to be priced as well as marketed differently; which the new DPCO seems to have overlooked. The pharma industry needs to be provided some returns to invest in Novel Drug Delivery Systems (NDDS), newer and better therapies and drugs; otherwise patients will not benefit as they will not have access to the same. The prices revised by the Government have to be implemented within 45 days of notification. This is draconian and an almost impossible situation, it involves recalling lakhs of retail packs from over 600,000 retailers and thousands of stockists from all over the country and repacking them with the revised price labels. It is unfair and illogical to hold the manufacturer responsible for ensuring that all retail packs with chemists all over the country are returned. This also will lead to shortages in the market for many weeks and months, not to mention heavy losses to manufacturers in carrying out this herculean exercise and then having to repack /relabel each pack. How the issue of excise calculation all over again would be worked out will need to be seen once this exercise begins.

On the whole, the DPCO 2013 appears to be fairly well balanced with availability and affordability being taken care of by ensuring that there is control on essential medicines, at the same time allowing market forces to ensure that prices are affordable. It is a very rational attempt at achieving a fine balance between reasonable prices, uninterrupted availability, administrative feasibility, future growth and investment.

– Daara B Patel, Secretary-General, Indian Drug Manufacturers Association