A Central sector scheme of assistance was announced last week to set up price monitoring and resource units (PMRUs) in States and Union Territories to effectively track violations of drug prices fixed by National Pharmaceutical Pricing Authority. Under the scheme, each PMRU will function under the direct supervision of the concerned State Drug Controller and will be operating as a partner of NPPA with information gathering mechanism at the regional levels. The main goal in setting up the PMRUs is to provide necessary technical support to the State Drug Controllers and NPPA for monitoring the notified prices of medicines, detection of violation of the provisions of DPCO and ensuring availability of medicines to the patient community at the notified prices. These Units will have to monitor the price movements of scheduled and non-scheduled formulations based on periodical returns filed by the industry, revision of price of scheduled formulations by the manufacturer based on the annual increase in Wholesale Price Index (WPI) as per the DPCO and oversee that prices of non-scheduled formulations are not increased beyond 10 per cent annually. The whole objective of these state level units is to ensure that the benefits of the DPCO reached the patient community in full and on time. The Central funding for the scheme will be for an initial period of five years subject to a mid-term review after 12th Plan period.

Circumvention and violation of the DPCO by the pharmaceutical companies has been a serious challenge the Central government has been facing ever since the  NPPA was established by the Union ministry of chemicals & fertilizers in 1997. Pharma companies have been overcharging not only drugs listed in the scheduled category but also medicines outside DPCO. The pricing authority has  been rather unsuccessfully attempting to check this widespread breach of the provisions of the DPCO  especially after the notification of DPCO in 1995 covering 74 drugs and their formulations. Now with the notification of the new DPCO in 2013, troubles for NPPA only increased further. The total number of drug price violation cases in the country stands at 1018 for an amount of Rs 3381.91 crore as on March 2014. The  overcharged amounts during the year 2013-14 alone is Rs. 385 crore. And the companies have overcharged consumers to the extent of Rs. 417 crore on sales of various medicines under the new DPCO during calendar year 2014. The recovery of the overcharged amounts has been rather extremely slow because of the court cases. In view of the unabated violation of the DPCO, the government has been contemplating various options to check this practice. The Centre’s move to establish PMRUs in States and Union Territories is a step in the right direction towards controlling DPCO violation. But to make this Central initiative a success, active support of local drug administrations has to be ensured on a regular basis.