Pharma cos concerned over draft drug policy

the cabinet is supposed to clear a new, more liberal drug price control policy when it meets on february 5. but there are fears that the draft policy drawn up by the government is seriously flawed. the government currently controls the prices of 67 drugs out of which 12 are imported, so that 55 drugs made by companies in india figure on the drug pricing control order (dpco) list. the number of drugs that will figure in the new price control list could range from 45 to 29, says b s baswan, chairman, national pharmaceutical pricing authority (nppa), which recommends the drugs that should figure on the list. meanwhile, pharmaceutical companies are concerned about the business implications of the price control policy. the original 1994 policy said that any drug having a brand turnover of rs 4 crore or more and a marketshare of 50 per cent would automatically come under price control. a revision to the guidelines in 1999 raised the turnover criterion to rs 20 crore. today, pharma majors are worried that the turnover criterion would be maintained at rs 20 crore, instead of being raised to rs 30 crore or higher to account for inflation, rising costs and rising margin payments to wholesellers and retailers. the whole idea of arithmetically-determined criteria is not acceptable. the government's norms for cost-plus pricing are also arbitrary and can't be a long-term solution, says rajiv gulati, chairman and managing director, eli lilly and company (india) pvt ltd. i'm against the policy per se. the turnover criterion makes no sense and is arbitrarily. competition can take care of the prices of most drugs. for example, the flox and norflox drugs are made by 75 to 85 producers who compete against each other, so what's the point of capping its price? asks a senior executive of cipla. there are other problems as well. the new policy is likely to shift focus from controlling bulk drug prices to formulations using particular bulk drugs. this is being resisted by industry majors. pharma companies point out that the size of the indian formulations market today is rs 15,000 crore, and it's irrational to term a rs 20-crore brand — with 0.1 per cent of the total market — as a dominant player. the earlier policy was confined to bulk drugs. but if the criterion for controlling prices is shifted to formulations, then a larger number of drugs will come under price controls. for example, the policy may list vitamin e as one of the bulks under dpco, which will automatically include any formulation that uses vitamin e in the list, says kanwal handa, finance director, pfizer india. further, under the dpco, the government caps maximum allowable post manufacturing expenses (mape) — which includes freight, marketing and selling expenses, financial overheads and trade commissions — at an arbitrary level of 100 per cent over production costs.

Pharma cos concerned over draft drug policy

THE Cabinet is supposed to clear a new, more liberal drug price control policy when it meets on February 5. But there are fears that the draft policy drawn up by the government is seriously flawed.

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