Editorial + Font Resize -

PRICE REGULATION BY STATES!
P A Francis | Wednesday, June 18, 2003, 08:00 Hrs  [IST]

The policy of economic liberalization adopted by the government of India since 1991 had injected the right dose for a vibrant growth of Indian economy. Two key elements of this policy initiative that helped to achieve this growth rate are: 1. Phased reduction of Central tax rates. 2. Steady lowering of interest rates. These two measures have effectively contributed to reduced costs and increased competition both in the manufacturing and in the service sectors over the last ten years. Falling prices of fast moving consumer goods, consumer durables and certain key services are all indications of this economic change. But such competition and voluntary price cuts do not seem to be happening in the pharmaceutical industry despite the benefits of lower tax and interest rates. Prices of bulk drugs, intermediates and chemicals have declined steadily over the years. These positives should have motivated the pharmaceutical companies also to effect corresponding reduction in the prices of dosage forms. But, that is not happening. Here, without the intervention of National Pharmaceutical Pricing Authority, no reduction in the prices of controlled drugs is effected by pharma companies. In case of drugs outside price control, only price hikes are resorted to and never any price cuts. In fact, many a time pharma companies refuse or delay implementing the price cuts, as the enforcement of price revision orders does not happen that easily. Circumvention of the provisions of the DPCO is also very common amongst pharma companies to escape from the price control. Promotion of generics directly through trade channels by pharma companies at the same prices of branded products is another practice where NPPA is appearing to be helpless. Thus, the advantage of lower costs of generics manufacturing is being passed on to the trade as promotional charges. Unfortunately, NPPA has no judicial powers to enforce its orders and provisions of DPCO. It is this weakness of its authority that makes the whole exercise of price control in pharma industry a difficult task. However, some state governments are gradually realizing this dilemma faced by the Central government in price administration in drug industry. The move by the Haryana government asking all drug manufacturers, distributors and C&F agents to furnish the price structure of medicines sold by them is a step to discipline the pharma industry and trade. The state government has also asked the pharma trade to provide details like company name, product name, details of ingredients, wholesale price per unit, MRP, etc. How the Haryana government is going to introduce a state level price monitoring mechanism is still not very clear. That may take some time to take shape. But, the state government appears to be quite determined in this matter. Director General of Health Services has made it clear to the trade that information regarding all medicines, including decontrolled, should be provided. Haryana's initiative should serve as a model for other states too for evolving a state level price regulatory system.

Post Your Comment

 

Enquiry Form