DPCO may be retained in new Drug Pricing Act

New Delhi, July 31 | Updated: Aug 1 2005, 06:57am hrs
The Prime Ministers Task Force on introduction of a competitive market structure for pharmaceuticals is unlikely to favour annulment of the Drug Price Control Order (DPCO).

It would rather propose incorporating the existing DPCO in a new Drug Pricing (Regulation & Management) Act. The proposed Act would have additional provisions such as end-to-end price monitoring and negotiated settlement of prices of new/patented drugs, a source familiar with the task force deliberations said. Non-compliance with the provisions of the Act would invite hefty fines, but no criminal prosecution, they added.

DPCO 1995, being an offshoot of the Essential Commodities Act, contains penal provisions. Under the DPCO, prices of 74 bulk drugs and their formulations are fixed by the government, as per a specified formula, that allows 100% margin on ex-factory cost. Besides, "price changes" of the remaining drugs are monitored. Entry prices, however, are taken for granted. The source said the proposed Act would take into account the fact that the price of a new drug can be high to begin with, demanding an intervention.

Essentially, the task forces attempt would be to establish consumer sovereignty through a variety of means and thereby create price competition among manufacturers. It would lay emphasis on cutting promotional expenses that contribute majorly to the price of the drug and little to its quality.

Although there would be no mention in the task force report about the number of drugs under price control, it would speak of making available all essential drugs to the consumer at reasonable prices. Price control list cannot be static either, the source said.

Despite industrys opposition, the task force would seek to establish the role of generics in reducing the cost of drugs to the consumer through de-branding of select drugs.