The Supreme Court on last Wednesday gave the government a week to come up with a timeline for implementing its new drug-pricing policy. In the event of failure to comply with the Order, the Court will issue an interim order placing all the 348 medicines within the ambit of price-cap regime based on a product’s manufacturing cost. [See here for Livemint report.] I blogged on the issue earlier. [See here.]
The Group of Ministers (GoM), headed by Agriculture Minister Mr. Sharad Pawar had earlier given approval to the policy bringing 348 essential drugs under the government’s price control regime. According to GoM, the weighted average price of all the drugs which have a market share of more than one percent shall be taken for pegging the prices. The market-price based formula proposed by the GoM gave a sigh of relief to the pharmaceutical industry. The formula, however, raises some concerns.
The proposed formula is not prima facie linked with the manufacturing cost of medicines. It is to be noted that the idea behind the policy is to make medicines affordable and not to control the price of top brands. According to Livemint, the Supreme Court echoed the concern that the formula proposed by the GoM is ineffective. The proposed pricing policy also needs to pre-empt and tackle attempts by drug companies to avoid price-control by tweaking their formulation or adding another drug and making it a combination medicine.