Some of the initiatives taken by Ram Vilas Paswan after he took over as the Union minister for chemicals and fertilizers in the new government is certainly in the right direction. His first priority seems to be checking high prices of essential drugs. Whether this move is a part of the populist policy of the Congress-led government or otherwise, he has reasons to act on this front. There is a total chaos on drug pricing in India today despite having a Drug Price Control Order in this industry for a long time. DPCO has not been very effective either on account of certain loopholes in the Order or because of the continuing non-cooperation of pharmaceutical units with National Pharmaceutical Pricing Authority. Ever since DPCO 1995 was notified, pharmaceutical companies have been taking NPPA to court either for inclusion of some drugs under price control or for fixing the drug prices. Many such cases filed by these companies are frivolous and they have been, in effect, preventing NPPA in enforcing various provisions of the Order. With the result, a lot of unfair practices are going on in the marketing of drug formulations in the country. No minister in this department ever cared to look into this issue despite the fact that the matter used to be reported in the media several times in the past.
One of these widely prevalent unethical trade practices is the profiteering in generics by the pharmaceutical trade. Everyone in the industry knows that generics are priced as high as brands although pharmaceutical companies incur no promotional expenditure in marketing generics. And the huge trade margins on generics are directly passed on to the trade by the pharma companies. The very objective of marketing generics is to make available expensive drugs at lower prices for the poor consumers. In most countries generics are available at far lower prices than the brands. Only in India MRP of generics and brands are not much different. Paswan himself found this out when he ordered a market study of formulations of three widely used drugs namely nimesulide, omeprazole and cetrizine in the Delhi market. Take the case of nimesulide as an example. The study shows that while the wholesale price of generic nimesulide 100 mg is only Rs.1.20 for a 10 tablet strip, its MRP is a high as Rs 30 in case of one company. At the same time, the MRP of Dr Reddy's brand, Nise, is Rs.38.61.Many such products with wide price variations have been brought out by the study. A nationwide study of generic pricing could be much more revealing than the Delhi one. While it is important to act upon such unhealthy practices in this industry, Paswan should also see that the new drug policy with a further dose of liberalization is announced without much delay to meet the challenges of the post 2005 era.