Indian pricing policy case postponed to Dec 12
This article was originally published in Scrip
The Supreme Court has adjourned the crucial case concerning India's long-pending drug pricing policy to 12 December, after the government is said to have sought time to place the policy details before the court.
The adjournment comes even as the All India Drug Action Network (AIDAN), an independent network of several NGOs working to increase access and improve the rational use of essential medicines, is said to have filed another petition on 23 November expressing concern over the shift to a market based mechanism for price control from a cost-based one, among others.
Industry sources in the know told Scrip that the department of pharmaceuticals had yet to receive the minutes of the tweaked pricing policy approved by cabinet last week. Once the modifications are incorporated by the department, typically the chemical and fertilizers minister may, if parliament is in session, also seek to lay the policy on the table of the house before it is in the public domain.
It is possible that some NGO concerns about large price hikes may also be addressed in the policy. Sources suggested that,in the case of price-controlled essential medicines, manufacturers selling below the ceiling price will only be allowed an annual increase of 5%.
Last week, the cabinet endorsed the pricing policy put forth by a group of ministers headed by India's agriculture minister Sharad Pawar. The policyproposes to control prices of essential drugs using the simple average of prices of all brands,with more than 1% market share in a particular segment,as against the weighted average price methodology previously proposed. The new approach marks a shift to a market-based mechanism to control prices from the four decade old cost-based one.
The last minute tweaks came against a backdrop of opposition from India's finance ministry. The pharmaceutical industry said the new simple average method will wipe off large chunks of its profits (scripintelligence.com, 26 November 2012).
The group of ministers had earlier proposed a market-based pricing approach that aims to fix prices of all 654 formulations of the 348 bulk drugs specified in India's national list of essential medicines by considering the weighted average price of all brands that have at least 1% or more market share by volume (scripintelligence.com, 27 September 2012).
Meanwhile, NGOs said they were unclear about the rationale for the government’s shift to a market-based pricing mechanism from a cost-based one. Dr Mira Shiva, a founder co-ordinator of The All India Drug Action Network (AIDAN), told Scrip that when prices for telephone charges, travel etc are cost-based, why should those concerning medicines be market-based.
"We don't say that that industry should suffer losses or not make reasonable profits, but how much is reasonable?" Dr Shiva said, adding that it was important to note that a bulk of healthcare expenditure in India is out of pocket expenses. Currently, an estimated 78% of the entire health expenditure in the country is out of pocket expenses, with the purchase of medicines accounting for 72% of these.