The SME Pharma Industries Confederation (SPIC), a confederation representing small pharma companies, has urged GoM chairman Sharad Pawar to levy MRP-based excise on all 354 drugs under NLEM (National List of Essential Medicines) instead of brining more medicines under price control as MRP-based excise will bring down the prices. Since DPCO has failed to bring down prices of medicines in the country, MRP-based excise could act as an effective deterrent against price rise of medicines, SPIC said.
It argued that experience has shown that DPCO has failed to act as deterrent against price rise owing to litigations, causes shortages in view of API price rise and 10 per cent stipulation of NPPA and finally new drugs replace useful and affordable old drugs. Experience has also shown that MRP-based excise is the most potent weapon on price control. In one stroke it will not only provide a level playing field and but will also bring down prices of all the essential drugs under NLEM list by as much as 50 per cent. Besides, it will also provide more revenue to government.
That the DPCO has failed to act as a deterrent is clear from that fact that owing to violations of DPCO, a sum of about Rs.1500 crore is payable by pharma companies to NPPA for overcharging. Out of this amount one company alone owes Rs.1100 crore to the NPPA. The companies refuse to accept DPCO as being legally sound and recoveries are tangled in litigations.
Claiming that the DPCO has become a farce, the SPIC said that when a drug is hammered by DPCO, companies come up with alternatives. New molecules replace existing drugs covered under price control. Recent example is an anti asthmatic drug doxophylline replacing theophylline. The new drug doxophylline is not even half as effective but costs Rs.45 to Rs.85 whereas theophylline costs Rs.3 for 10 tablets.
Most of the times when companies have violated DPCO, they have not paid excise on MRP as they have operated from excise free zones from where 75 percent of medicines are being sourced today. NIPER report to Chemicals ministry has shown that prices of some medicines have risen 326 percent when produced in excise free zones. This not only proves the point but overcharging is practically not possible when excise on MRP is applicable because it increases the ex-factory price which does not favour competing in the market. The 10 per cent stipulation of NPPA can also be waived and there will be no fear of new drugs replacing old drugs if excise is levied on MRP throughout the country. Fiscal and administrative solutions are always better than policing, the SPIC letter to Pawar said.