In a first, regulator hikes prices of essential medicines

Syllabus subtopic: Issues relating to development and management of Social Sector/Services relating to Health, Education, Human Resources.

Prelims and Mains focus: about NPPA and its mandate, DPCO order 2013; India’s efforts to regulate essential medicines and check price hike

News: To ensure supply of crucial medicines, India’s drug pricing regulator has allowed an increase in the maximum retail prices of 21 drugs currently under price control by as much as 50 per cent.

This is the first time the National Pharmaceutical Pricing Authority (NPPA) — which is known to slash prices of essential and life-saving medicines — is increasing prices in public interest to prevent patients opting for costlier alternatives in the face of shortage of these drugs.

Why?

The Authority is of the considered view that unviability of these formulations should not lead to a situation, where these drugs become unavailable in the market and the public is forced to switch to costly alternatives.

Where will it apply?

The decision by the NPPA, taken at a meeting on December 9, will apply to formulations like the BCG vaccine for tuberculosis, vitamin C, antibiotics like metronidazole and benzylpenicillin, anti-malarial drug chloroquine and leprosy medication dapsone.

Most of these drugs are used as first line of treatment and are integral to public health programmes.

Present scenario of affordable drugs in India

With India still dependent on China for over 60 per cent of its API (active pharmaceutical ingredient) requirement, higher API costs for price-controlled medicines eat into profits and sometimes make production of these drugs unviable here.

For instance, costs of ingredients to make vitamin C went up as much as 250 per cent, leading to a 25-30 per cent shortage of this drug in India last year.

Suppliers of key ingredients do not want to negotiate the prices they charge companies, because they are not affected by price control. In such an environment, firms would begin to exit the market over time.

About Drugs (Prices Control) Order (DPCO)

The Drugs Prices Control Order, 1995 is an order issued by the Government of India under Sec. 3 of Essential Commodities Act, 1955 to regulate the prices of drugs.

The Order interalia provides the list of price controlled drugs, procedures for fixation of prices of drugs, method of implementation of prices fixed by Govt., penalties for contravention of provisions etc.

For the purpose of implementing provisions of DPCO, powers of Govt. have been vested in NPPA. Later, the Drugs (Prices Control) Order (DPCO) 2013 was notified.

Why the DPCO is issued under Essential Commodities (EC) Act ?

Drugs are essential for health of the society. Drugs have been declared as Essential and accordingly put under the Essential Commodities Act.

Are all the drugs marketed in the country under price control ?

No. The National List of Essential Medicines (NLEM) 2011 is adopted as the primary basis for determining essentiality, which constitutes the list of scheduled medicines for the purpose of price control. The DPCO 2013 contains 680 scheduled drug formulations spread across 27 therapeutic groups. However, the prices of other drugs can be regulated, if warranted in public interest.

About NPPA and its mandate

National Pharmaceutical Pricing Authority (NPPA), was established on 29th August 1997 as an independent body of experts as per the decision taken by the Cabinet committee in September 1994 while reviewing Drug Policy.

The Authority, interalia, has been entrusted with the task of fixation/revision of prices of pharmaceutical products (bulk drugs and formulations), enforcement of provisions of the Drugs (Prices Control) Order and monitoring of the prices of controlled and decontrolled drugs in the country.

Why are the prices of medicines rising ?

The reasons for rise in the prices of medicines are :

1. rise in the price of bulk drugs;
2. rise in the cost of excipients used in the production of medicines like Lactose, Starch, sugar, glycerine, solvent, gelatine capsules etc.;
3. rise in the cost of transport, freight rates;
4. rise in the cost of utilities like fuel, power, diesel, etc.;
5. for imported medicines, rise in the c.i.f. price and depreciation of the Rupee;
6. changes in taxes and duties.