After directing the manufacturers of all scheduled formulation packs to pass on the benefit of cut in excise duty to the customers by revising the prices with immediate effect, the Chemicals Ministry and the NPPA may ask the drug units making non scheduled formulations also to follow the suit.

As the National Pharmaceutical Pricing Authority (NPPA) has its powers limited to crack the whip on the non-scheduled segment, the Chemicals Ministry may meet the industry associations and representatives to take a suo motto action to reduce prices of the drugs following the 8 per cent cut in excise on all drug products, sources said.
"We are looking at the market closely to see how the cut in the duty will be incorporated by the companies to slash the prices of drugs in the non-scheduled category. We will act accordingly,'' sources said.

Meanwhile the price revision in the scheduled category, covering the 20 per cent of the total market, was made effective with immediate effect since the new excise and customs duties came into effect from March 1 as per the Finance Ministry notification. The NPPA revised the maximum retail price for all scheduled formulations by 4.85 per cent.

The senior officials in the Chemicals Department have also held meetings with the NPPA officials to explore the possibility of reining on the pharmaceutical companies who may just refuse to pass on the benefits on the grounds that their products were being manufactured in the excise free zones mostly and hence they would not be in a position to reduce the prices on all products.

If the industry does not effect reduction in the prices on their own, the price regulator may step in to issue a general notification to urge the companies along with a similar appeal from the Chemicals Ministry. And the agency would then take the route of the 10 per cent ceiling limit on price increase per year. The possible reduction in prices due to slashing of excise duties would be worked out and the action would be taken accordingly for overcharging, sources indicated.

According to the industry, the prices of drugs in the decontrolled sector could be brought down maximum by 3-4 per cent, because of the reduction in the abatement rate from 42 per cent to 35 per cent and no excise relief on raw materials. They also suggest that prices of a product are controlled by many factors like competitive pressure, not just excise duties and abatement rates.