After long drawn debates and discussions over the new drug policy, a draft was prepared by the Union ministry of chemicals and fertilizers for the consideration of the Union Cabinet last week. Now, that draft has been pushed over to the Group of Ministers to take a final view and decision, as the industry is totally opposed to most of the major proposals in the policy document. That is the status of the policy as of now. In the history of policy making for pharmaceutical industry, there has never been so much of inter ministerial discussions and interventions as happened this time. It is interesting, therefore, to take a look at the divergent positions of the pharma industry and its administrative ministry. The chemicals ministry wants more medicines under price control as it considers that is the only way to make drugs of mass consumption at fair prices. The proposal to raise the span of price control to 260 drugs including the 74 already under the 1995 DPCO, is with this objective. Two considerations seem to have led Paswan's ministry to come to this decision. One is the Supreme Court directive of 2003 asking the Central government to bring all NLEM drugs under price control. Second is the government's own assessment of high prices of several drugs prevailing in the country. The ministry has the records of overcharging of several price controlled drug formulations by over two dozen companies during the last 10 years. The total overcharged amount is in the region of Rs 800 crore. Paswan thinks by making bulk drugs outside the price control and granting a MAPE of 150 per cent for the new 186 drugs in the new policy, will ensure fair prices and adequate returns to the pharma companies. But, pharmaceutical industry is not at all happy with these proposals. The main objection is against increasing the span of price control to 260 drugs. Industry leaders feel that the ministry is reversing the policy of progressive liberalization of price control followed by the ministry so far and that too at a time when the industry is on a globalization drive. They are of the view that unlike other industries, pharmaceutical sector needs huge amounts of money to invest in new drug discovery and that is possible only under a regime of price monitoring. The fact is that not many pharma companies are actually spending much on new drug discovery but on other R&D activities. The industry is also dissatisfied with exemption of bulk drugs from price control and the MAPE proposed for formulations of 186 new drugs. There is some lack of clarity here. If the formulations are under control, the costs of bulk drugs have to be determined and it is quite likely that ministry may fix the formulation prices on the basis of market prices of bulk drugs. It is possible that such decisions could be arbitrary or questionable and therefore that proposal needs to be reviewed. Be that as it may, the government stand on the need for control on drug prices is justified in view of the current practices of loading excessive brand promotion expenses and high trade margins to the retail prices of prescription drugs. There is a need to bring an effective control on these unjustified expenditures and they constitute more than 50 per cent of the drug prices.