The Indian Drugs Manufacturers Association (IDMA) has suggested a new pricing strategy for essential drugs while reacting to the recommendations on the Prime Minister’s task force headed by Dr.Pronob Sen, Advisor, Planning Commission.
The association suggested that drugs in the National List of Essential Medicines (NLEM) having insufficient competition should be considered as controlled products and prices should be monitored as per Pharma Policy 2002. It should consider turnover above Rs. 35 crore with market share 50 % plus and turnover of Rs. 15-35 crore with market share 90 % plus in the case of monopolistic situation, and in the case of combination drugs, mere presence of API which is under price control should not result in the formulation being put under price control.
The recommended criteria for price control in this category should be 25% of total raw material cost and total content of raw materials. Automatic increase of CC PC norms upto 5% linked to WPI, (any cost over and above have to be justified) and increase in cost of special packing materials have to be allowed on request. The cost per day exemption should be considered at Rs. 5 and the notified price implementation (ex-factory) should be within 30 days, instead of the current 15 days.
IDMA suggested that in the case of essential drugs in the NLEM where sufficient competition exists, prices should be set at current actual prices, which will act as ceiling prices for one year. The methodology for calculating the prices should be based on the highest of the actual price of the top 3 brands as per latest data provided by ORG as ceiling price. Automatic review of prices should be done every year as per WPI and all drugs falling under NLEM have to be exempted from Central Excise and all other taxes and levies. The drugs having sufficient competition should be subjected to suitable price monitoring system only after one year.
As reported in Pharmabiz earlier, the task force had recommended to announce ceiling prices for all the 300 odd drugs that come under the NLEM and had suggested the prices should be calculated on the basis of the weighted average price of the top five brands by volume of single ingredient formulations prevailing in the market as on 1-1-2005. In the case of formulations, which involve a combination of more than one drug in the NLEM, exceeding price would be the weighted average of applicable prices of its constituents. For formulations containing a combination of a drug in the NLEM and any other drug, the ceiling price applicable to the essential drug would be made applicable, the task force had recommended.
IDMA disagreed with the proposal of a mark up of 100% over reference price fixed by Government for bulk procurement as the association felt it would be a retrograde step and manufacturers would refrain from quoting prices. The association also disagreed with the recommendation on intensive monitoring and negotiations of products falling outside NLEM with a variation above 10%. IDMA said this would discourage introduction of new molecules in the country thereby depriving the people of the benefit of new medicines. The association also opposed de-branding of drugs citing this proposal was impractical and very hazardous. The move would shift the responsibility of making the right choice from doctor to the pharmacist who promotes sale based on margins, irrespective of the quality. This may also lead to proliferation of spurious and sub-standard drugs.
In the case of Government supplies, IDMA said companies be allowed to compete irrespective of whether they supply Generics or Branded products, and should be offered a special voluntary price of 50% of the MRP. IDMA also suggested that MAPE should be increased from the current 100% to 200% and the excise duty should be reduced across the board from 16% to 8%.