India needs strong monitoring, not control system

Stakeholders are sharply divided on the methodology of fixing the price of drugs which perhaps explains delay from the Government to finalise the pricing policy besides making it difficult.

Indian Pharmaceutical Association (IPA) honorary general secretary S D Joag says:  “Policy makers’ intentions are good but approaching the issue is wrong.”

Elaborating, Joag, who is also IPA’s Central Executive Committee member, says the government cannot have two sets of policy-- one for exporters and another for domestic consumption at least when it comes to essential drugs, after people within the country should be able to afford it first than anybody.

“The government should think in terms of giving some exemption in excise duty and power at concessional tariff for domestic drug companies to produce and market essential drugs,” he added.

While some drug manufacturers are in favour of retail pricing be fixed using the average of brands methods, but a large segment, including NGOs, prefers continuation of the current policy which uses the cost of production formula.  However, Joag says:“IPA’s CEC is deliberating on the issue and it will come out with a white paper on this matter.”

Dr P V Appaji, Director General of Pharmaceuticals Export Promotion Council of India (Pharmexcil) based in Hyderabad, also feels the proposed drug policy will be imposing controls on certain drugs with certain strengths, which may be counter productive.

  “If a manufacturer was asked to produce 500mg of a drug at a lower cost, he would prefer producing only 250 mg as it is under decontrol or may encourage suspension instead of tablets. Either way he would try to recover his margin,” he added.

Dr Appaji, who was part framing earlier drug and pharma policies, said the pharma companies have to sustain costs of production and research and development.

“What the country that caters to 50 per cent of the world’s requirement of generic drugs, particularly the third world and developing countries, requires is a very strong monitoring system and not a control system. Why select only 348 drugs. Every drug in India should be available at a reasonable price,” said Dr Appaji, the Director General of Pharmexcil in Hyderabad.

Dr Appaji, whose primary responsibility is to promote exports, asked if the government imposes price control regime on bulk drugs which forms the basis of manufacturing generic medicines the net will increase to almost 99 per cent and how could the government justify that.

Dr Appaji opined that Indian made generic drugs are considered as saviours all over the world. Some HIV formulations that cost $1,000 per patient per month costs as little as $50 in India and several countries either import from or manufacture several life saving drugs in India.   

Deepak Padia, former Chairman Indian Drugs Manufacturers Association (IDMA), Gujarat State Board, fears that if the government start exercising price control, the common man may not get the right medicine at below cost price. There should be consensus on the issue rather on forcible implementation, he added referring to the Apex court's threat to pass the order.

Chirag Doshi,
Chairman of IDMA,

Gujarat, says that the proposed amendment has not taken care of the adverse effects it is going to have on legitimate manufacturers who follow proper systems formulated under the Drug and Cosmetics Act and the rules and which are controlled as per the prescribed procedures in the act the profession. The genuine small scale units run by professionals will be forced to quit as no body would like to operate under the threat. It is against the very concept of promoting small scale industry in the country. Once the competition is reduced and only organised sector remains in the field then the prices of medicines will go up and will be unaffordable by the general masses.

In 2006, there were about 5,000 pharma SSI units in the country with a market share of about 40 per cent in the Rs 35,000 crore annual produce of medicines. With the advent of SSIs in 1960s, drug shortages became a thing of the past and medicines became cheap as the competition forced big companies to cut prices.

He claimed If a market survey is done today, 95 per cent prescriptions by doctors are those of local SME companies except for large hospitals in metros. Thus they have become a perpetual headache for the resourceful bigger entities that came down heavily on SSI.

The move shall be the final blow at the behest of large industry to decimate SSIs and hand over their 40 per cent market share to large industry on a platter.

(Inputs from Suresh Nandi in Mumbai,
J B S Umanadh in Hyderabad and

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