SubscriberWrites: Drug Price Control – A boon or bane?

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Drug prices in India are regulated by the union government through National Pharmaceutical Pricing Authority (hereafter referred to as NPPA), which periodically fixes the prices of essential medicines both for chronic & acute diseases.

Readers must be wondering even after more than three decades of celebrated liberalization reforms initiated by former Prime Minister Mr. P.V. Narasimha Rao & then Finance Minister Mr. Manmohan Singh, still we are forced to discuss the issue. But till today reforms have eluded India’s Drug industry even despite best efforts by some of famous reformers.

The government’s intent behind regulating the prices of essential Drugs is noble- no two opinions about it. But like every government policy, it suffers serious issues in implementation resulting in desired benefit not reaching the end customers. The main reason for this is the manufacturers are not made accountable for not aligning the prices as per the notification issued by NPPA. But instead, marketing companies are held responsible. Most of the time manufacturers are not even aware of the notification issued by NPPA. The procedure adopted by NPPA in implementing the price reduction is really beyond comprehension. After the publication of the notification by NPPA, the companies are expected to trace all the stocks of the products selling in the various retail stores across nook & corner of India for which prices have been reduced in the notification. The stocks must be recalled & labelled with stickers of reduced price. This is really a logistical nightmare. In case this is not possible, companies are given the option of reducing the price in line with the notified price without changing the printed price on the packs while invoicing to wholesalers who in turn will follow the same procedure while invoicing to retailers. But there is a catch here – there is no method to monitor whether the retailer is passing on the benefit of price reduction to the customer since the printed price has not been reduced. Finally, the customer for whose benefit all this is claimed to be done ends up getting nothing.

Further, NPPA periodically tracks the prices & penalizes the companies by charging the difference in price along with penalty & interest. But this process is struck in litigation which is generally long drawn & thus hardly acts as a deterrent for companies. This results in the level playing field getting distorted for small & medium level companies as they cannot bear the cost of litigation & larger companies getting away. Added to this many pharma companies (38 to be precise) having contributed to the electoral bonds has them helped largely in escaping from the government’s radar.

Therefore, a question mark hangs over this well-intentioned policy – whether it is worth all the official paraphernalia is anybody’s guess.

These pieces are being published as they have been received – they have not been edited/fact-checked by ThePrint