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Scrutiny
  
Learn from past
Price control is not the solution
15/05/2008

As drug industry in India witnesses robust growth, ministry is brazenly pro-active to come up with a disastrous drug policy to balance the interest of both common men and industry. But, it seems that the very solution may turn out to be the biggest barrier for it.

A group of ministers headed by Agriculture Minister Sharad Pawer is all set to sit on 30th April to come up with a new drug policy in favor of price control for necessary drugs so that these are available to the common people at cheaper rates. Currently there are 74 drugs under Drug Price Control Orders (DPCO) which is likely to be extended to 300 medicines. But perhaps, the ministry has forgotten that price control was in operation in India in 1963 under various DPCOs. Later, realising its ineffectiveness, price control had been shortened from 347 in 1979 to 142 in 1987 and finally to 74 in 1995. Sales of those 74 drugs which constituted 50% of the market value in 1995 came down to 21% in 2006. Most of the medicines under price control have vanished from the market.

The fact is price restriction only discourages supply, export and even R&D in the long run. Importantly, cost of the medicines in India forms hardly 15% of the total healthcare cost even for diseases like cancer. In 2006, the Sen Committee assigned by Prime Minister Manmohan Singh recommended to focus more on non-price control policies. Most of the ministries, stakeholders, be it Dept. of Chemicals, health NGOs, National Pharmaceutical Pricing Authority (NPPA) had defended the need for a sticker pricing control policy. Hence price control seems to be an unsolicited and less intellectual option. Interestingly, only an efficient drug market can lower the price which the ministry can easily encourage by reducing taxes and excise duty on essential medicines.

By:- Akram Hoque
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