Price controls on hygiene products a bad decision; government can consider other options
While NITI Aayog setting up a standing committee to make recommendations to the drug-price regulator, the National Pharmaceutical Pricing Authority (NPPA), seemed to be a good move—NPPA seemed to be guided more by an anti-pharma-MNC agenda than any lofty regulatory ideal—given the recent arbitrariness of its decisions there does not seem to be much difference between the two. News reports suggest that Niti Aayog is planning to create a new list of hygiene products to put under price control. Although the National List of Essential Medicines already contains 384 categories, a Times of India report highlights that the government is preparing a separate list for hygiene products. The new list is expected to have two groups and may include items like handwash, adult diapers and sanitary napkins. The primary category is expected to have a price control, and the secondary may operate with trade margin limits. Although the intention is to provide low-cost solutions, given the competition, there is little rationale for this.
For one, price controls may force companies to discontinue low ranges. Worse, the quality of the lower-grade products may decline. Take the case of sanitary napkins, the cheapest ones are already priced at Rs 3. With many social enterprises working in the field and selling napkins at Rs 1.5, there is not much room to introduce price caps. Moreover, if there is a serious concern over hygiene, the government can always dispense sanitary pads free via its Asha and Anganwadi centres—it recently announced that it would sell them for Rs 1 at , —like it had done for contraceptives under National Programme for Family Planning. A price cap would do nothing, but deter companies from creating products for the lower end of the market. It shall also bring forth the arbitrariness of the regime, which was a significant reason for defanging the NPPA.