JOIN USThe National Pharmaceutical Pricing Authority (NPPA) has done well to fix an upper ceiling for the prices of some drugs used in the treatment of cardiovascular diseases and diabetes. The decision affects about 50 drugs whose pricing had defied rational explanations.
These are not on the national list of essential medicines (NLEM) which contains 348 drugs. This is the first time non-scheduled drugs outside NLEM are subjected to price control. However there is a provision in the law for control of the price of any drug “in public interest” in extraordinary circumstances. Cardio-vascular ailments and diabetes are no longer lifestyle diseases which affect only a section of society.
They are common ailments and the medicines used in their treatment can be considered essential drugs which should be affordable to most patients.
The NPPA has cited the wide variation in the prices of the same drugs produced by different companies as the main reason for the regulation. Even when they have the same components, some drugs are priced up to 15 times more than the cheapest available in the market.
Brand names or quality differences cannot justify such wide difference in prices. The NPPA has taken it as a case of market failure. The idea of free pricing is not fully applicable to drugs, especially those which are considered essential. This is because the buyer has no free choice as in the case of other consumer products, as medicines are bought on prescription from a doctor.
Patients do not have information about alternatives and have no option to buy them in that circumstance. So the argument of competition and consumers’ freedom of choice cannot be invoked in this case. The NPPA has prescribed a formula by which the maximum retail price of a drug should not exceed 125 per cent of the average price of different brands of drugs of the same category. It is felt that the formula would protect the interests of patients and give a fair margin of profit to drug makers.
Drug manufacturers have challenged the decision in courts. The industry has also sought the prime minister’s intervention on the matter on the ground that the formula is inequitable. But the arguments that there is no extraordinary circumstance now and that the diseases and the price differences have always existed are not strong enough to make the price regulation wrong and unwarranted. The industry should get reasonable profits but patients should get a fair deal.