Concerns put pharma policy back on GoM table

Last Updated: Wed, Nov 14, 2012 21:21 hrs

The long-pending pharmaceutical pricing policy revamp, awaiting Cabinet approval, has been sent back to the group of ministers (GoM) which finalised it. The prime minister’s office (PMO) wants the GoM to address concerns raised by the finance ministry.

Finance Minister P Chidambaram, not part of this GoM, would be a “special invitee” to the panel’s meeting scheduled for Friday. The GoM is headed by Agriculture Minister Sharad Pawar.

The new concerns were raised by the finance ministry on the draft policy sent for Cabinet consideration last month, a source said. The proposals aim to cap the prices of 348 essential medicines, each at the weighted average of all the drugs in the particular segment with more than one per cent market share.

The finance ministry says there are several loopholes in the recommendations. In a note to the PMO, the Cabinet secretariat and the department of pharmaceuticals (DoP), it has said, “The current system, which is a cost-plus system, is adequate to cover all legitimate costs for a manufacturer, particularly when the costing is being done annually.” Under the proposed mechanism, it argues, various low-priced drugs might become more expensive. For, it says, there are many formulations in the market, including those from multinational corporations, with the price of the product predominantly reflecting the associated brand value. It is unnecessary, it says, to link the prices of such products with the others.

Following this, the proposal was also taken off the Cabinet meeting’s agenda last week. The finance ministry’s observations are significant because the Supreme Court had during an earlier hearing said the government should not change the pricing mechanism. The Cabinet secretariat had then directed DoP to check with the law and finance ministries, in the light of these observations. The law ministry gave a green signal; it said the framing of a policy was the prerogative of the government. However, the concerns raised by the finance ministry has stopped onward movement.

The revamp of policy is pending since 2003. Despite repeated criticism by the Supreme Court, the government failed to arrive at a consensus on the mechanism to regulate the prices of essential medicines. The apex court had sought a deadline from the government for fixing a policy, in connection with a case before it. The next hearing is scheduled on November 27. To meet this deadline, the GoM will probably have to arrive at a consensus in its Friday meeting and place the matter before a Cabinet meeting next week.

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