Drug firms seek to trade off controls

NEW DELHI: Drugmakers, worried about the prices of more brands in the market coming under regulation, have offered to sell essential medicines to the government at 50% of their maximum retail price (MRP). They have also offered to finance a mechanism to deliver these drugs at a concessional price by contributing 0.25% of their total profits to the government, which could be a little less than Rs 10 crore. If the government accepts this proposal, it could signal a major shift in the way rising healthcare costs are addressed in the country.

However, these offers come with a condition. The government will have to agree not to increase the scope of cost-based price control. The proposed new drug policy, which is being examined by a panel of ministers, seeks to extend cost-based price control to 354 medicines classified as essential by the health ministry, from the existing 74. While the government says this would expand the extent of price control by merely 7% to about 32% of the Rs 32,000-crore market, the industry says nearly half of the market would come under direct or indirect government control.

According to an ORG-IMS survey covering about three-fourths of the National Essential Drug List, the new policy would lower the prices of more than 7,000 ���formulation packs���. These are strips of different sizes (say, 10 or 20 pills in one) of various strengths (say, 5 or 10 mg) of these 354 medicines, covering 27 therapeutic segments like painkill-ers, antibiotics, psychotic drugs, cancer and HIV drugs. Cost-based price control has been referred to as an aberration in a free market economy by experts.

With the price regulator claiming that price monitoring has been a success in keeping a check on spiralling prices, the industry wants to shift to a monitoring system from the cost-based system. The Indian Pharmaceutical Alliance (IPA), the leading industry association of research-focused companies like Ran-baxy and Sun Pharma, has told the government and regulator that the country should move away from the cost-based system of price control to a monitoring system.

IPA secretary-general DG Shah told ET: ���The industry has made a conditional offer to sell essential drugs to the government at half the MRP. Also, the industry is willing to contribute a quarter of a percent-age of their total profits to the government for setting up a medicine delivery system to the masses, if the government does not expand the number of drugs under price control to 354 from the existing 74, based on cost-based price monitoring.���