Pharma industry needs a free pricing environment with stringent dos & don’ts

Making available quality medicines at affordable prices with the right components thrown in should be the focus of any sensible drug policy. Four years ago, the drug pricing control order (DPCO) was laid out as part of the government’s efforts to introduce logic and reasoning in consumer prices of formulations sold across the counter and prescription drugs. Now again, the government is in the midst of amending the DPCO 2013 to bring in more drugs under pricing controls. If the new pricing formula were to be implemented, the government will fix the price to be paid by consumers even for non-essential drugs. Drug industry regulator National Pharmaceutical Pricing Authority (NPPA) and the nodal department of pharmaceuticals will jointly determine prices of drugs by computing the average rates charged by all firms with over one per cent market share for similarly branded drugs.

Should it be the job of government to fix prices of — branded or unbranded, prescription or over the counter formulations — is the moot point. Already, 821 drugs, considered essential, are under price control. But to bring non-essential drugs, also under it, is against the spirit of free market economy. Frequent tinkering with prices may not be the solution to making quality medicines available to people at affordable rates. Inefficiencies, sweet heart deals and illogical pricing is bound to creep into the system already burdened under a bureaucracy, seen as intransigent and corrupt. Imagine the finance ministry’s involvement in designing insurance policies by 18-odd large players while regulator Irdai twiddles its thumb.

Instead of empowering NPPA to deal with anomalies and standardising procedures to allow orderly development of the pharma industry, the government should not usurp powers relating to delicate issues like pricing of drugs. Allowing pharma companies to operate in a free pricing environment with stringent dos and don’ts will be the right approach. Recently, the NPPA cracked down on over-pricing of 39 drugs used in ailments like cancer, hepatitis B, tuberculosis, measles and malaria. Similarly, a huge cut in prices of stents that were sold at illogically high rates sent a strong message across the industry.

The $15-billion pharma industry, with both domestic and transnational corporations, has not exactly covered itself with glory while fleecing consumers even in life threatening situations. This greed to profiteer at the cost of consumers seems to have pushed the government and NPPA to mull pricing controls. Unless this piquant situation changes, there’s no way the hugely expanding pharma industry will survive in India.

For starters, one may recall recommendations in the past that pushed for a virtual winding up of the department of pharmaceuticals. Barring a small policy group, the huge set up must be disbanded. All regulatory and pricing issues must be transferred to the NPPA, which has for long turned itself into an extended arm of the government. Getting rid of bureaucrats from NPPA and revamping it with public policy, health and pharma experts will be the starting point. An empowered NPPA will have to draw up punishment and penalties for erring firms that are out to defraud customers. Additionally, putting in place a redressal mechanism for all stakeholders to sort out their disputes should be a priority.