The government has proposed a system of price ceiling for its bulk purchases required for public health requirements including government hospitals, various programmes and health insurance while inviting open tenders from the manufacturers.

However, the move that will be binding on public sector undertakings as well as the private players, is likely to dishearten the industry and may lead to the shortages of some drugs in the market, besides affecting the prospects of reviving the ailing PSUs, the industry sources warned.

According to the proposal, being considered as part of the proposed national pharmaceutical policy, for drugs under price control, a ceiling price of 65 per cent of the price fixed by NPPA would be in force. For drugs other than those under the price control and patented drugs, ceiling would be 50 per cent of the MRP. The ceiling will be applied to both branded and generic drugs.

``The proposal will not have its desired effect as leading manufacturers are not inclined to abide by the ceiling and supply the drugs for the public distribution system. It will only lead to shortage of the drugs in the markets, as some may even be tempted to cut the volume of those medicines in view of lower margins,'' said an industry observer.

The new policy also calls for promotion of generic drugs in the bulk purchase by the government as at present, branded drugs dominate the market.

``Public procurement and distribution of drugs through the public health system would preferably be for generic drugs. Quality certification would be provided free of cost to generic drug manufacturers through an appropriate scheme,'' the proposed policy says.

Purchase preference based on the NPPA approved prices is also planned for the public sector pharmaceutical companies. A list of drugs manufactured by the PSUs along with prices (to be certified by NPPA) would be prepared for supply to Government. All departments/hospitals of Central Government purchasing these drugs from the market would be required to first procure these from the PSUs at prices approved by NPPA, according to the proposal.