Pharma pricing policy to be discussed today

Last Updated: Wed, Nov 07, 2012 21:43 hrs

The Cabinet is likely to take up the proposed National Pharmaceutical Pricing Policy tomorrow, government sources said. The policy is aimed at 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.

If the Cabinet clears the proposed policy, the Department of Pharmaceuticals would have to notify this before the Supreme Court’s next hearing on the matter on November 27. Once the proposed policy is in place, the prices of various expensive drugs would fall. However, it is also likely some low-priced medicines would turn expensive.

According to a source, the proposal is listed in the Cabinet’s agenda. A minister privy to the development confirmed this.

2003: SC disbanded Pharma Policy 2002 (proposed to bring down no of bulk drugs under price control from 74 to 38), saying it would dilute price control regulation 
2003: SC asked the govt to finalise a new list of all essential drugs, bringing these under price control
2007: First GoM was formed to formulate the policy; held four meetings through 2007 and 2008 but could not make any recommendations
2009: GoM reconstituted when UPA-II came to power
Jun ‘11: Health ministry gave a National List of Essential Medicines with 348 formulations and combinations
Oct ‘11: DoP floated a draft National Pharmaceutical Pricing Policy that proposed to cap the prices of 348 essential medicines
Mar ‘12: GoM met to consider the proposed policy
Sep 11,’12: SC slammed the govt for delay in policy formation
Oct 3, ‘12: SC sais the govt should not change the existing pricing mechanism
Oct 9, ‘12: DoP tells SC that it will give a Cabinet note to Cabinet Secretariat by Oct 15
Nov 27, ’12: SC is scheduled to hear the matter again

Last month, the Supreme Court had asked the government to fast-track the policy, adding if it failed to do so, the court would pass an interim order. The government told the court it would try to notify the policy by the end of November, provided it received the Cabinet’s approval. The Department of Pharmaceuticals also told the court it would sent a Cabinet note to the Secretariat by October 15.

Last month, the Cabinet Secretariat had asked the government to seek clarity from the ministries of law and finance on the Supreme Court’s observation at a previous hearing in a case related to the formulation of the policy. There was concern the proposed policy, based on the recommendations of a group of ministers (GoM) headed by Agriculture Minister Sharad Pawar, might trigger an adverse reaction from the apex court, as the court, at a hearing on October 3, had said, “The government should not alter the price structure of drugs.”

However, Additional Solicitor General Siddharth Luthra said there was no legal hurdle in the Cabinet considering the GoM’s recommendations. Even if the policy did not conform to the court’s observations in a previous order, there wouldn’t be any adverse consequence because framing a policy was the government’s prerogative, he said.

According to the GoM’s recommendations, the prices of all regulated medicines would be revised annually, based on the Wholesale Price Index, with a cap on the upper limit. Currently, the government caps the prices of 74 bulk drugs and all formulations containing one or more of these drugs. For other drugs, pharmaceutical companies are allowed to raise prices by up to 10 per cent annually. For any increase beyond that, they have to seek an approval from the National Pharmaceutical Pricing Authority.

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