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New drug pricing policy fails to bring in relief for patients

The National Pharmaceutical Pricing Policy approved by the Cabinet on Thursday could bring only little relief to patients in terms of price reduction because cheaper brands could turn costly. In addition, many drugs remain out of the price control mechanism.

Savita Verma   New Delhi     Last Updated: November 24, 2012  | 09:06 IST

The National Pharmaceutical Pricing Policy approved by the Cabinet on Thursday could bring only little relief to patients in terms of price reduction because cheaper brands could turn costly. In addition, many drugs remain out of the price control mechanism. And for several drugs under price control, dosages remain unregulated, warn health experts.

According to the Policy, 348 medicines which are in the essential list will come under price control. However, prices of these medicines will be determined by the market . Price of a medicine will be capped by taking average of all brands which occupy more than one per cent of market share instead of input costs.

"Prices of products are determined world over by taking into account input costs and profit margins. Market-based pricing is unfair especially for life-saving medicines," Dr C.M. Gulati, editor, Monthly Index of Medical Specialties, said.

"Once the maximum retail price of a drug is determined, prices of some brands will be above while others will be below permitted levels. Producers of drugs falling above the permitted price will be required to reduce prices. Instead of reducing prices, manufacturers will either migrate to alternative drugs outside price control or shift to dosage outside control. On the other hand, manufacturers of cheaper products will hike prices to benefit from government-sanctioned higher price," Gulati added.

The cost-based formula has been in use so far for determining prices of 74 medicines. Under the formula, the ceiling price of a drug is calculated by adding a markup called maximum allowable post-manufacturing expenditure on the cost of manufacture of a drug.

"This is a clear ploy to minimise the reduction in drug prices to allow pharmaceutical companies to continue to charge inordinately high prices," Dr. Amit Sen Gupta, of Jan Swathya Abhiyan, said. Retail prices of various brands of medicines are 10, 20, 50 and even 70 times the prices at which the Tamil Nadu Medical Services buys quality generic medicines.

It is also known that top-selling brand of a drug may cost five to 10 times or more that of another company. For example, Atorva, a brand of Atorvastatin, used for reducing blood cholesterol, is priced at Rs 104 for 10 tablets in contrast to brands of other reputed companies that sell it for Rs 20. Such exorbitantly high prices are sustained by the ability of drug manufacturers to influence doctors into prescribing costly brands though much cheaper alternatives are available, according to Gupta.

The new mechanism will not benefit much. For example, Atorvastatin, used to reduce high blood pressure, will be capped at Rs 127 while cost-based based formula can reduce its price to Rs 17. Even among 348 drugs, only 614 specified dosage forms will have a price cap.

Courtesy: Mail Today 

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