For the first time since 2005, the number of medicines (packs) in which the drug price regulator National Pharmaceutical Pricing Authority (NPPA) allowed a price increase exceeded the number of medicines on which it announced a slash in price. Although the pharma industry has traditionally resisted the entire exercise of price regulation by the government, according to the latest statistics of the department of pharma, the NPPA has allowed an increase in 190 drugs as compared to 89 medicine packs on which it has affected a price decrease in the year 2008-09. In the three preceding years, the drug price regulator had allowed an increase on 308 drug packs in total, while it had slashed the price of 1,160 drug packs.
Drug manufacturers in the middle of last year had cited adverse impact resulting from currency fluctuation and rise in input cost (which accounts for 65% to 70% of the cost of drug production) as factors for the drug price regulator to consider a blanket hike in retail prices, a demand which the drug price regulator had refused to accept.
However, the NPPA had then asked the companies to individually submit applications for price revisions along with documents to support such an upward revision. The bulk drug firms in India (which depend on China to source around 60% to 65% of raw material) had also come under tremendous pressure during the Olympics last year when China had shut down pharma industries to keep pollution levels under control. This shortage of raw material had led the bulk drug-manufacturing firms to seek price hike on drugs. They had also cited the prices of ?active pharmaceutical ingredients?, which had shot up to 40% in some cases during that period.
The drug price regulator affects price change decisions either suo-moto or based on applications of manufacturers. Executives in drug firms point out that in principle, the drug price regulator doesn?t affect increase in prices of medicines suo-moto and takes such decisions only on the basis of applications of manufacturers. However, decisions on price slashes are taken suo-moto.
Pharma firms aren?t buying the government data on face value. ?Unless we see the break up, check the quantum of increase on these packs, it is difficult to conclude anything,? said a senior official at a drug firm. Also the fact that the National Pharmaceutical Pricing Authority considers each strength as a different drug pack could lead to misleading inference, said pharma players.
The coverage in terms of volume of drugs that come under price net has increased over time. A total of 4,297 drug packs have been brought under price net till now, of which 1,256 drug packs were brought under regulation in the year 2008-09 and 1,429 medicines were added the year before. In 2005-06, the drug price watchdog had brought 480 drugs under regulation while the next year had witnessed 522 more medicine packs regulated. Under the provisions of DPCO 1995, NPPA controls the prices of 74 bulk drugs, included in the schedule I and the formulations containing any of those Scheduled drugs.