The National Pharmaceutical Pricing Authority?s new chairman SM Jharwal told FE that while fixing the prices of brands, which are in the control-free segment of the market that accounts for four-fifth of the retail pharmaceutical market, the regulator would strike a fine balance between the interests of the producer and the consumer. ?If we do not serve this, we do not serve the consumer?s interest,? said the chairman. Jharwal had previously worked in capacities that involve pricing in the agriculture and telecom sectors.
The public interest clause-para 10.b of the Drug Price Control Order-was used extensively during the previous UPA government to reign in the spiraling price of medicines that are outside price control. At one stage, NPPA was even willing to err in favor of the voiceless consumer while trying to bring discipline in a market, where consumers do not have any decision making power. Later, the pace of fixing prices in the de-regulated segment slowed down apparently because this provision turned out to be a major deterrent against arbitrary price increases. Now, after that brief lull, the regulator is set for a more dynamic regulation of brands, which are normally outside its direct control if there is a sudden and sharp rise in prices.
The price regulator has the power to fix the price of any brand in public interest if it becomes costlier by more than 10% in any consecutive 12 months. Companies argue this should be either a financial year or a calendar year but the government hasn?t agreed yet as the idea is to dissuade companies from raising prices in one go.
During the last decade of its existence, NPPA?s intervention has seen companies reducing prices of 62 brands which are outside price control, Jharwal said. The regulator also fixed the prices of 27 such brands, he added.
Some of the brands where the regulator fixed prices include Lupin?s Rablet Vial 20 mg 10 ml, Nicholas Piramal?s Phenargan Elixir 5 mg 60 ml, Novartis India?s Urclar Film C 250 mg* 4 and GlaxoSmithKline?s Tenovate-GN cream 10 mg. Many firms including J B Chemicals & Pharmaceutical Ltd, Cadila Pharma, Emcure, Torrent Pharma, IPCA Labs and Modi Mundi Pharma have lowered prices of some of their brands when the regulator took the matter with them, said an informed person, who asked not to be named.
Independent observers, however, are doubtful if NPPA?s interventions are indeed providing succour to the low-imcome consumers. As it is, just 20% of India?s retail pharma market is under its control and this constitutes a set of 74 drugs which were brought under control more than a decade ago. Many of these drugs are not indispensable from the consumer?s point view as better alternatives are available in the market. There has also been a tendency among companies to discontinue production of controlled drugs. ?Out of the 74 drugs whose prices are controlled, only 45 are currently being manufactured,? Jharwal said.
The NPPA chairman also stressed on the need for the regulator to interact closely with the Drugs Controller General of India, the quality regulator. NPPA is dependent on the machinery of the state drug controllers for enforcement of its orders.
NPPA has also recovered Rs 173 crore from drug makers as the amount they overcharged from the consumer on various products under price control. About Rs 2,000 crore is under litigation now. The most prominent case that involves Cipla, one of the world?s largest generic drug companies, is at a decisive stage with the Supreme Court. The regulator is also in the process of strengthening its enforcement activities. It has sought the Planning Commission?s nod for setting up state level cells to keep a closer tab over drug prices across the country.