Supreme Court to examine drug pricing policy

Asks Centre about very high profit margins allowed to manufacturers and dealers under Drug Price Control Order for essential medicines

By Kundan Pandey
Published: Tuesday 06 August 2013


The Supreme Court on Tuesday agreed to examine the new national pharmaceutical pricing policy framed by the government. The policy was framed for fixing prices of essential medicines in the country.
A bench headed by justice G S Singhvi asked the Centre to file its response on a petition filed by the health experts, challenging the prices fixed by the government.

The bench, while admitting the petition, observed that the margin of profit for manufacturers and dealers ranges from 10 per cent to 1,300 per cent of the cost of manufacture of a drug even under the lowered drug prices fixed by the government. It is another matter that drug manufacturers are not agreeable to selling essential drugs at the revised prices fixed by Central government and have obtained a stay against it
The observation of the apex court bench was based on the calculations furnished by the petitioners for samples of 50 medicines which proved that profit margins of manufacturers and dealers are very high even with the government Drug Price Control Order.

One of the petitioners, S Srinivasan, said: “We provided price of 50 medicines and calculated the cost based on new pricing policy, which shows that the manufacturers are still earning around 1,300 per cent more than the manufacturing cost.”

The bench of two judges criticised the Central government for dilly dallying on the issue of price fixation for the past 10 years. The bench further said that the Centre has done nothing except appointing several committees.
Srinivasan said there are many flaws in the existing pricing policy. Giving an example, he said that a company’s particular product will come in the price control criteria if it is 500 mg. But the price of same product would not be regulated by this policy, if the amount is increased to 510 mg.

He also said that the government has not brought sufficient number of drugs in the essential drugs list. The government should also include various combinations of the drugs in the policy, he said. The court also criticized government for not including more drugs under the Drug Price Control Order after 1999.

Giving the background to the public interest litigation on in the apex court, Srinivasan said that the case began in 2003 when the All India Drugs Action Network (AIDAN) filed the first PIL and said that the prices of medicines were too high. The network also wanted more drugs to come under price control. At that time the prices were fixed as per the drug policy of 1994.

Eight years after initiation of the PIL, the ministry of chemicals and fertilisers formed the first draft of National Pharmaceutical Pricing Policy in 2011. It was widely criticised by health experts for fixing a formula for drug pricing in such a way that would make drugs unaffordable.

Recently, many drugs manufacturing companies and their organizations obtained  a stay order from the Delhi High Court  on the Centre’s Drug Price Control Order for 151 essential drugs. The companies were supposed sell the listed drugs at prices fixed under the National Pharmaceutical Pricing Authority's (NPPA’s) Drug Price Control Order from July 29. The pharma lobby is also planning to move court against the government's formula for pricing of essential medicines.


Subscribe to Daily Newsletter :
Related Stories

Comments are moderated and will be published only after the site moderator’s approval. Please use a genuine email ID and provide your name. Selected comments may also be used in the ‘Letters’ section of the Down To Earth print edition.