Why India needs stringent regulations for Price Control of Drugs

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The controversy surrounding the need for stringent regulations in the Indian pharmaceutical market is nothing new. This has been discussed time and again in various platforms by all concerned parties.

It’s beyond any realm of doubt that there are merits and demerits in the arguments put forward by both groups – those who favor government-backed price control and those who don’t. However, in order to get to the bottom of the issue and find a logical conclusion, it is important to analyze the facts and data strictly in an Indian context.

In essence, India is a vast country with a billion-plus population. The country’s socio-economic condition, particularly the two most important criterion that determines the overall prosperity of a nation – distribution of wealth and public health – are indeed in an abysmal state compared to the developed world.

Subsequently, the onus is on the government to ensure that healthcare and medicines (especially life saving drugs) are available to the masses at fair and affordable price. It is important to note here that it is the balance between the “fair” and “affordable” components that has dragged this whole issue down to a confrontational level.

In order to execute price control, the government founded a regulatory body dubbed the National Pharmaceutical Pricing Authority (NPPA) specifically for that purpose in 1997. To make the process transparent and smoother, the government also periodically published a National List Essential Medicine (NLEM). The last NLEM edition was published in 2011.

The government also resorts to relevant acts to regulate the prices of certain non-essential drugs whenever it deems fit.

The NPPA crafted a series of internal guidelines earlier this year and concluded that because it can fix prices for non-essential drugs in public interest, it also needs to determine ceiling prices so as to mitigate the possibilities of brand-differences in product prices.

Following this decision, the regulatory body went on setting the ceiling prices for a whopping 109 drugs used for cardiovascular diseases and diabetes. As per available statistics published by various independent international bodies, India happens to be amongst the top countries worst hit by these two types of diseases.

While patients throughout the country welcomed the NPPA’s move to regulate ceiling prices (prices of some drugs were expected to reduce to as low as 35 per cent of their original price), the decision did not  go down well with pharmaceutical companies.

The matter was eventually dragged to the Delhi and Bombay High Courts. While the Delhi HC refused to stay the NPPA move, the Bombay HC issued an order to the government asking it not to indicate any coercive move on the basis of NPPA notifications.