Will suffer losses due to new pricing norms: Pharma cos

In a series of submissions to the government, the pharma industry has said it would incur huge losses if the cost-based pricing mechanism for medicines is extended to all 348 drugs in the National List of Essential Medicines along with their combination drugs and all strengths. This is what the finance ministry has proposed alongside recommending that bulk drugs should not be spared from price control.

According to an analysis by industry association Indian Pharma Alliance, the sales of 10 commonly used drugs such as Paracetamol, Cetrizine, Atorvastatin which post around Rs 756 crore annually would be eroded by 83% and the market would shrink to Rs 130 crore, if cost based method is applied. The industry's gripe is that the 'normative' costing system lacks transparency, and bestows too much discretionary power in the hands of officials, which when used unscrupulously is prone to manipulation. It also leaves no incentive intact for drug firms to use world-class technologies in manufacturing, the industry protests. Going Beyond NLEM and including all formulations of 348 bulk drugs will bring 75% of the market under price control, as against current level of 18%, asserts IPA. Industry chamber Assocham has made a similar submission to the finance ministry.

Continuation of cost-based method "will result in 70 % of the Indian pharmaceutical market put under the inconsistent and inefficient cost based price control mechanism of Drug Price Control Order (DPCO) 1995".On the contrary, the GoM recommended formula will result in over 20% price reduction in 60% of the NLEM medicines, it said.Assocham contends that the existing cost-based policy has shifted bulk drug production out of India to countries like China, escalated prices for select medicines, reduced the number of industry players, reduced innovation in cost control medicines and limited new introductions, and above all, failed to help medicines reach patients located in rural areas.

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