Drug price increase: on whose side is the govt?

The Central government, adding to the misery already inflicted on the people by raising petrol, diesel and cooking gas prices, has put further burden now on them by raising prices of medicines by ten per cent. In one stroke, prices of 800 essential drugs are being raised with effect from next month. It is for the category of medicines under National List of Essential Medicines - whose price determination is vested with the government - that the National Pharmaceutical Pricing Authority (NPPA) has approved price escalation upto 10.76 per cent. The list covers almost all medicines that are commonly used for widespread ailments, including paracetamol, antibiotics like Azithromycin, pain relievers, disinfectants, medicines for heart diseases and ENT ailments and antiseptics. The decision was taken by the Department for Promotion of Industry & Internal Trade under the Union Ministry of Commerce Industry, based on the the data provided by the Office of the Economic Advisor of the Ministry, on the Wholesale Price Index from the next financial year. As per the amendment of the Drugs (Prices Control) Order amended, 2013, NPPA is the authority to regulate the prices of drugs listed under the table of essential drugs.

Quite predictably, pharmaceutical companies have welcomed the government decision. In fact, they are of the opinion that the scale of hike is inadequate. They argue that price increase is inevitable because the price of raw materials and freight charges for imported ingredients have gone up. At the same time, the government apparently is not much concerned about how this big an increase on an essential item people rely on like food, will squeeze the people. In fact the NPPA is an authority formed in 1997 to ensure the availability of essential drugs to the people at affordable prices and to protect them from predatory pricing by pharma giants. It is this authority that takes steps against charging of exorbitant prices by pharma firms. As per information disclosed by the related minister in parliament in last February, during the period from the formation of the authority in 1997 till then, 2116 cases were filed related to charging of high prices by drug producers. Out of this, 881 cases still await completion. An amount of Rs 8180 crore was charged by these firms as excessive prices. In 234 cases pending before courts, the excess billing involvse Rs 6550 crore. Last year, when due to Covid phase two the number of patients rose sharply, pharma firms had a field day charging patients with greedy pricing. When demand shot up for Remdesivir injection, and prices were jacked up disproportionately, it had hit news headlines. However, thanks to the timely intervention of NPPA, producers 'voluntarily' came forward to reduce the price of Remdesivir.

Leading pharmaceutical firms are involved in legal defence related to predatory pricing. However, the NPPA strategy of making drug producers caught in court cases and fines as a deterrent against exorbitant pricing in future, is becoming a non-starter. Ultimately, it has come to a paradox that the very authority that was formed to hold drug prices in check, is becoming an instrument to raise the prices. The reasons given for allowing price rice to the extent of strangulating the common man are the rise of prices of ingredients imported from China, increase in fuel price, transportation costs and taxes, all in the name of Covid crisis. But the prices of not merely Covid therapy substances, but most medicines are being increased under this cover. The decision for government control on essential drugs was meant to hold prices in check in the interest of consumer public. But if the government gives weightage to the commercial aspect, people will be left in the lurch. The statement by the Secretary of the national organisation of pharmaceutical firms, Indian Drug Manufacturers Association, Daara B Patel is itself sufficient to bring out the exploitation in price determination. He said to the effect that it is certain that the consumer will have to bear some burden, but with the existence of multiple producers and different methods of production, not all manufacturers will necessarily increase prices; however, since the government has approved ten per cent increase, no body will let go of the opportunity. Thus, he himself gives the hint that drug manufacturers can opt to raise prices. That way, the new price hike is giving to the industry more than what they asked for, and opening the doors for them to exploit the situation on their own under that cover. And the government does not have any mechanism to rein them in. Just as the fuel price determination was transferred to the companies, in the case of drugs price determination has been passed to an authority; but then it is certain that the body will give at least a marginal edge to the interests of the producers. Therefore, through price control, the government is strangling not monopoly manufacturers, but the people who are forced to make intake of antibiotics and vitamin supplements a part of their life style.