Prime Minister Manmohan Singh has asked the ministry of chemicals and fertilisers to look into various alleged unethical practices in the pharmaceutical industry after a Parliament member approached Singh demanding a detailed investigation.
Bahujan Samaj Party leader Bali Ram confirmed to FE that he wrote to the Prime Minister on March 11, bringing to his notice various anti-consumer practices adopted by the pharmaceutical industry to maximise profits. The allegations that Singh now wants the ministry to particularly look into include overcharging, excise duty evasion, circumventing price controls, huge trade margins and massive sales promotion expenses at the expense of the consumer.
Earlier, the UPA government had made a serious crack down against offenders and introduced a 10% cap on the price rise of all de-controlled medicines in any given 12 months. Although the price watchdog National Pharmaceutical Pricing Authority combs the market routinely and nabs offenders, it is difficult to discipline the entire market considering the large number of brands coming out every month.
Bali Ram alleged that drug makers who get their products manufactured in excise-exempt states such as Himachal Pradesh, Uttarkhand, Jammu & Kashmir and the north eastern states do not pass on the benefit to consumers. Despite the exemption, companies charge excise duty from the consumer but do not remit it to the government, the parliamentarian said. Companies sell the same drug produced at excise-exempt states and in the rest of the country at the same price.
Excise exemption is an incentive given to attract investment in backward regions. Recently Panjab chief minister Parkash Singh Badal had told the central government that this exemption has made companies in his state to shift to neighbouring states.
Another issue that the Prime Minister wants the ministry to examine is the practice of companies allegedly substituting ingredients of a drug with cheaper ones without changing the drug?s brand name. Quoting pain and fever drugs, cough syrups and asthma drugs, Bali Ram said companies resort to this practice to circumvent price controls. The BSP leader demanded an action against drug makers who change the composition of drugs and still retain the same brand name.
The parliamentarian also said the 10% cap on the annual price increase of de-controlled medicines should be applicable to price controlled medicines, too. Price revisions of controlled medicines are based on a cost study and if the rise in input costs justifies, price increase of above 10% is also allowed now. He also suggested that the 10% on price increase should be applicable to the main ingredients of drugs (called bulk drugs), too. He also demanded that prices of all cancer and AIDS medicines should be controlled.