Pharma sector draws hope from Survey proposal on price controlsThe pharmaceutical industry may not have to face price regulations anymore if the government acts on a recommendation of the Economic Survey 2008-09.The survey has proposed that the government should control prices of essential drugs that have limited manufacturers and decontrol all other medicines.

This comes at a time when the department of pharmaceuticals, headed by MK Azhagiri, is set to revive the pending drug policy and extend price control from the current 74 to 354 essential medicines. “Drug price control should be limited to essential drugs in which there are less than five producers. All others should be decontrolled,” the Survey said. 

The Supreme Court had directed the government in 2003 to develop appropriate criteria to ensure that essential medicines do not fall out of price control. The recommendations made in the Survey are in strong contrast to the drug policy proposed by the department of pharmaceuticals. The draft policy aims to reduce the price of costly ‘essential’ medicines by 30-70% and that of low-end brands by 10-30%.

The proposed price reduction would cover painkillers, cardio-vascular drugs, anti-hypertensives, antibiotics and costly cancer drugs. Implementing the policy in its present form would add about 8% of the domestic retail pharmaceutical market to the about 25% already under price control.

Experts raised concerns about the recommendations made in the Survey as in pharmaceuticals; the level of consumer awareness is low. The common person is not aware of all the options available in the market and is guided by doctors and pharmacists. In such a situation, decontrol of medicines would hurt the common man’s interest, a health activist and expert said.

“The recommendations are absolutely absurd. For any market force to operate, the consumer should be able to make an informed choice. In pharma sector, this is not the case as consumer takes his decision under conditions of distress. The pharma market is not a free market and therefore, price control is necessary,” pharmaceutical expert and editor of a medical journal CM Gulati said. In India, there is also lack of universal health insurance for common people.

However, as expected, the industry that often argued that competition is a better way for making medicines affordable, has welcomed the observation. “What is enunciated in the Economic Survey is a step forward in the right direction. Intense competition in the Indian pharmaceutical industry has led to almost all drugs being available at the lowest possible price in the world,” Ranbaxy president Ramesh Adige said.

According to PricewaterhouseCoopers (PwC) associate director Sujay Shetty, the recommendations, if implemented, would provide a big boost to research and development (R&D) intensive industry. “India is as it is one of the world’s most price sensitive markets, and there is no need of government’s price control. There are several players manufacturing the same drug and competition controls the prices,” he said.