- Health ministry expanded India’s National List of Essential Medicines (NLEM) from 74 to 799.
- NPPA fixes the price of these essential medicines and no one can sell above this fixed price. Prices regulated by Drub Price Control Order.
- Only 17% of the pharmaceutical market is covered under DPCO
Why Drug Price Control Order was put in place?
- To stop profiteering by pharma companies.
- In many countries government provide health care for all but in India such system does not exist. To compensate a little bit we need to have cap prices on medicine.
SC verdict and issues related to it:
- SC verdict that drug pricing policy is irrational and unreasonable.
- Complaints that the companies make significant profits which go up to few thousand per cent
- Centre was fixing maximum price of a medicine above the retail price of the leading company.
- NGOs demanding inclusion of more life-saving medicines of diseases such as diabetes and tuberculosis in the list of drugs whose prices would be regulated by the government
- Committee was formed to review Drug Pricing Control Order 2013
Explain the rationale behind imposing restrictions on Indian pharmaceutical companies in charging a free market price. What are the mechanisms used by the government and add a note on recent controversy regarding drug pricing. (200 Words)
Governments have to strike a balance between the conflicting interests of the industry and consumers to ensure affordable medicine without dampening innovation and competitiveness in the pharmaceutical industry. Following a Supreme Court order to regulate drug prices, the Pranab Sen task force was constituted on the basis of whose recommendations the government set up NPPA (National Pharmaceutical Pricing Authority) under the Essential Commodities Act.
It is cleanly summed up in the motto of the NPPA- “Affordable medicine for all” The availability of drugs at affordable prices is essential for the health and productivity of Indians. Low purchasing power of a large population, high mortality and poor health scenario further prompts the government to intervene.
NPPA sets a ceiling price of essential medicines determined essential by averaging the MRP of all products with >1% market share.
NPPA tried to set price ceilings of 100 or so non-essential drugs citing its mandate to control prices of non-essential drugs during shortages or emergency. This caused several complaints and litigations from the pharma companies. India was put under a watch-list of regimes with market-unfriendly IPR and price control bodies.
This hurts our image as a fair market, as well as the upcoming BIT with the USA. The government revoked NPPA’s authority to control prices for non-essential drugs although efforts continue to bring more drugs into the essentials list. Prices of certain drugs shot up exponentially causing distress to several affected citizens.