The Parliamentary standing committee on Health and Family Welfare led by Rajya Sabha MP Amar Singh has recommended to the government to put a blanket cap on the profit margins of all medicines irrespective of whether they are under DPCO or not as a measure for making available quality medicines at affordable prices to the common people of this country.

In the 45th report on 'issues relating to availability of generic, generic-branded and branded medicines, their formulation and therapeutic efficacy and effectiveness', the committee said that this step would do away with the need of monitoring prescriptions, identifying the manufacturers supplying low-priced medicines and without any need to prefer generic over branded products. The report was presented to the Rajya Sabha on August 4, 2010.

Launching a scathing attack on the racket between the manufacturers and the doctors, the committee said that considering the current ground realities in the country where more than 80 per cent population is dependent on private medical care and nearly 45 crore people live below the poverty line, the most effective and direct approach would be to put a blanket cap on profit margins of all medicines across the board. Medicines are the only item where the decision to buy is not taken by the purchaser but by a third party i.e., doctor. Therefore, if prescribers and producers join hands and take advantage of a patients’ helplessness, only state can stop them.

The report observed that if fixation of MRP is done by NPPA based on a fair, transparent system keeping interests of all stake holders in mind nearly all issues on pricing would get resolved. This system is already in vogue in many other fields such as electricity rates, bus and taxi fares, interest rates, insurance premium just to mention a few.

With the floating of an open tender in the market, all drug manufacturers or stockists would come forward with the offer of lowest possible rates. The Committee is aware that a legal framework is available by way of Essential Commodities Act 1956 under which the Government can put a cap on profitability. The Committee has also been informed that in the original Drug Price Control Order (DPCO), there was a proposal that in addition to price control on individual drugs, there should be a cap on the overall profitability of the drug manufacturers. The objective was to discourage manufacturers to shift from Price-Controlled (less profitable) to uncontrolled (hugely profitable) medicines. The proposal was, however, never implemented, the report regretted.

Taking into account all the above facts, the Committee, recommends that the Department of Health and Family Welfare in coordination with the Department of Pharmaceuticals immediately move the Inter-Ministerial Coordination Committee and initiate a process of examining the issue of putting a blanket cap on profit margins of all medicines across board. The Committee desires to be kept apprised of the action taken in this regard.