GoM makes key changes in essential drugs’ pricing policy
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The Group of Ministers (GoM) on pharmaceutical pricing policy has decided to forward its recommendations on the ceiling price of medicines listed in the National List of Essential Medicines 2011 to the Union Cabinet with three major changes. Finance Minister P Chidambaram attended the meeting on Wednesday as a special invitee.
The GoM, headed by Agriculture Minister Sharad Pawar, has proposed that the ceiling price of essential drugs would be open to revision by the National Pharmaceutical Pricing Authority (NPPA) depending on market changes.
Secondly, the ceiling price should be the simple average and not weighted average of all brands. Thirdly, any company that wants to stop the manufacture of a particular drug should give a six-month notice.
Earlier, the GoM had proposed that the ceiling price of essential medicines should be the weighted average price of brands that have a market share of at least 1 per cent.
The move to replace weighted average with simple average effectively removes the bias towards higher selling brands, which are often the costliest ones in the market. By doing so, the GoM has at least partially accepted the Finance Ministry's stand that a market-based system is likely to price drugs on the higher side.
However, by empowering the NPPA for both upward and downward revision of ceiling price, the GoM has also accommodated the concerns of the industry.
The new policy will be tabled in Thursday's Cabinet meeting as the government needs to notify a policy before November 28. "It (the new policy) will be worked out tonight. The Finance Minister left the meeting after airing his views and it was decided that a supplementary note would be drafted," said Srikant Jena, MoS in the Ministry of Chemicals and Fertilisers.
The GoM had to be revived after the Finance Ministry raised objections to its earlier recommendation. It had argued that for many drugs in the market, the pricing is actually a reflection of their "brand value" rather than the actual cost of the product. Therefore the current cost-based system of pricing allowing for some profit margin, should continue.
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