GoM on drug pricing to meet tomorrow

Last Updated: Mon, Nov 19, 2012 19:33 hrs

The group of ministers (GoM) on the proposed National Pharmaceutical Pricing Policy, headed by Agriculture Minister Sharad Pawar, would meet on Wednesday to discuss concerns raised by the finance ministry. Finance Minister P Chidambaram is a special invitee to the meeting.

“The meeting is scheduled for 3 pm, Wednesday,” a government official privy to the development told Business Standard.

The meeting is crucial, as the government doesn’t have much time to meet the Supreme Court deadline to formulate and notify the policy. At the court’s last hearing, the government had stated a tentative date of November 25, by which it would notify the policy. While the next hearing of the court is scheduled for November 27, the government is yet to arrive at a consensus on the pricing mechanism, the policy’s key element. Besides, before it is notified, the policy also has to be cleared by the Cabinet.

A senior official said at Wednesday’s meeting, the GoM was expected to sort issues raised by the finance ministry. The official added the proposal would be presented to the Cabinet on Thursday. Sources said the GoM may propose some changes in the policy, in line with the finance ministry’s suggestions. However, it would retain the market-based mechanism for regulating drug prices, they added.

The draft policy, based on the GoM’s earlier recommendations, proposes capping the prices of 348 essential medicines at the weighted average of all drugs in a particular segment, with more than one per cent market share.

However, after the finance ministry objected to the proposed policy, the Prime Minister’s Office referred it back to the GoM, asking it to address the issues raised by the ministry. The ministry has recommended the policy retain the current price regulating mechanism (which is based on the cost-plus method). It also suggested the list of essential medicines under price control be reviewed frequently to ensure pharmaceutical companies didn’t stop manufacturing these.

“It will be interesting to see how the government resolves the issue and whether the finance ministry’s contentions are properly addressed through changes in the proposal,” said an industry expert.

The industry, which is opposed to the cost-plus pricing mechanism, is worried over the uncertainty. “The level of competition in the market is a strong reassurance against any potential scope of cartelisation,” said an official at a pharmaceuticals company. He added price control on bulk drugs would result in about 70 per cent of the Indian pharmaceuticals industry coming under the ambit of the inconsistent and insufficient cost-based price control mechanism.

However, health activists and public interest groups have welcomed the finance ministry’s suggestions. Earlier, at a hearing, the Supreme Court, too, asked the government not to alter the current pricing mechanism.

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