Letter to Minister of Chemicals and Fertilizers by Tapan Sen MP on Drug Pricing

29th August 2014

Dear Shri Ananth Kumar ji,

I request your urgent intervention in bringing about effective corrective action to the gross perversion created in the market of the essential and life savings drugs severely affecting the right to access to those essential and life saving drugs at affordable price for the mass of the common populace through the Drug Prices Control Order, 2013(DPCO, 2013),  introduced by the previous government. The DPCO 2013 brought 387 odd drugs under the price-control regime but simultaneously the basis of stipulation of the ceiling price was changed from the cost-based approach prevalent earlier to market-based average price regime thereby rendering the price-control meaningless rather deceptive. Moreover the manner, drugs have been listed under DPCO suffered from serious inadequacies in terms of coverage of the actual medicinal necessities/usage by the common people, defeating the very purpose of price-control of essential and life saving drugs for the benefit of common people. Therefore, the DPCO, 2013 needs a thorough overhauling both in respect of enlisting the essential drugs ensuring full coverage of the drugs needed and used as essential and life-saving and also in respect of basis of stipulation of celing price to be made on a cost-based approach.

The basic issues involved may be presented as following:    
1.     The previous UPA-II Govt. introduced a Drug Prices Control Order(DPCO), 2013 following direction of the Supreme Court. But Supreme Court never directed a switch-over from cost-based pricing to market-based average pricing for drugs listed in the control order.
2.    But the order departed from the policy so far followed  to determine ceiling prices of medicines from cost based regime to market based regime which is average of prices of brands of a particular medicine of all the brands sharing one per cent and above of the total sale. This resulted in increase in the prices of essential drugs, both within and outside control on the one hand and also phenomenal increase in the profit of the already high-profit-minting drug barons. Is that the purpose of the Drug Prices Control Order, 2013?
3.    This departure is unwarranted since nowhere in the world,  price control measures of medicines have been determined on the market based prices only.
4.    The National Pharmaceutical Pricing Authority (NPPA) was given the task of determining the ceiling price of all the medicines given in the National List of Essential Medicines (NLEM) prepared in 2011.
5.    The UPA-II Govt. took decision of changing to market based pricing in their National Pharmaceutical policy, 2012 when amidst the cost based pricing system itself, the pharmaceutical industry had been earning large amount of profit and was growing by 15% annually. The decision was more to promote the profit of the drug-barons, both domestic and foreign, than giving relief to people in respect of their health-care needs.
6.    Moreover, drugs listed under DPCO, 2013  had covered only about 18% of the existing market of essential and life saving drugs, thereby leaving 82% of the drugs of regular necessity to Indian people out of any price-control.  According to NPPA’s calculation this became further less to 15% in the year 2013-14.
7.    As per NPPA’s own recorded observation, DPCO, 2013 covers very little in the important as well as regularly availed/used therapeutic segments like-antidiabetics (14%);antimalarials (12%); anti-infectives (37%); anti-TB (19%); blood related (01 %); cardiac (29 %);derma (10%);
gastrointestinal (15%); gynaec (14%); hepatoprotectives (00%); HIV/ AIDS related (27 %); hormones (44%); neuro/ CNS (18%); opthal/ otologicals (06%)/01%); ;pain/analgesics (10%); respiratory (06%); stomatologicals (00%); vitamins/ minerals/ nutrients (01%); vaccines (32%)
8.    This shows that the so called price control through DPCO, 2013 ultimately turned out to be a deception of common people, in reality, generous relief has been provided to the already high profit earning pharmaceutical companies including the multinational companies fleecing the mass of the common people, sometimes forcing them sell everything including themselves to survive from various ailments thrust upon them both by the society, environment and the nature.
You will definitely appreciate, such a situation must not continue and urgent measures are required to correct perversion created in the pricing of essential and life-saving drugs by DPCO, 2013. The pricing regime for the purpose of price control must be brought back to the cost-based regime and the list of drugs under control need to be thoroughly overhauled to include all drugs of essential necessity from all therapeutic segments. All the stakeholders including the consumers and the trade unions in the concerned sector should be consulted for the purpose.   

I request you to please appreciate the gravity of the issue and do the needful  in due consideration of the observations and suggestions given hereinabove.

With regards,
Yours sincerely,

Shri Ananth Kumar
Minister for Chemicals and Fertilisers
Govt of India
Shastri Bhawan
New Delhi

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