ESSENTIAL MEDICINES PRICING MECHANISM IN INDIA - SCI & TECH

ESSENTIAL MEDICINES PRICING MECHANISM IN INDIA - SCI & TECH  

News: Prices of essential medicines set to see a hike from April 1

What's in the news?

●       Prices of 384 essential drugs and over 1,000 formulations are set to see a hike of over 11%, due to a sharp rise in the Wholesale Price Index (WPI).

What is the National List of Essential Medicines?

●       As per the World Health Organization (WHO), Essential Medicines are those that satisfy the priority healthcare needs of the population.

●       The Ministry of Health and Family Welfare hence prepared and released the first National List of Essential Medicines (NLEM) of India in 1996 consisting of 279 medicines.

○       The list is made with consideration to disease prevalence, efficacy, safety and comparative cost-effectiveness of the medicines.

○       Such medicines are intended to be available in adequate amounts, in appropriate dosage forms and strengths with assured quality.

○       They should be available in such a way that an individual or community can afford.

●       The Health Ministry prepares a list of drugs eligible for price regulation, following which the Department of Pharmaceuticals incorporates them into Schedule 1 of DPCO.

●       Drugs listed under NLEM - also known as scheduled drugs - will be cheaper because the National Pharmaceutical Pricing Authority (NPPA) caps medicine prices and changes annually, only based on wholesale price index-based inflation.

○       The list includes anti-infectives medicines to treat diabetes such as insulin - HIV, tuberculosis, cancer, contraceptives, hormonal medicines and anesthetics.

○       They account for 17-18 percent of the estimated Rs 1.6-trillion domestic pharmaceutical market.

●       Companies selling non-scheduled drugs can hike prices by up to 10 percent every year.

●       Typically, once NLEM is released, the department of pharmaceuticals under the ministry of chemicals and fertilizers adds them in the Drug Price Control Order, after which NPPA fixes the price.

National Pharmaceutical Pricing Authority:

●       NPPA was constituted by the Government of India in 1997 as an attached office of the Department of Pharmaceuticals (DoP), Ministry of Chemicals & Fertilizers as an independent Regulator for pricing of drugs and to ensure availability and accessibility of medicines at affordable prices.

●       It was made to fix/revise prices of controlled bulk drugs and formulations and to enforce price and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995-2013 (DPCO).

Mandates:

1. To implement and enforce the provisions of the Drugs (Prices Control) Order in accordance with the powers delegated to it.
2. To deal with all legal matters arising out of the decisions of the NPPA.
3. To monitor the availability of drugs, identify shortages and to take remedial steps.
4. To collect/maintain data on production, exports and imports, market share of individual companies, profitability of companies etc., for bulk drugs and formulations and undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals.

As of now:

Concerns of Drug manufacturers:

●       The pharma lobby is now asking for at least a 10% increase for scheduled drugs too rather than going by the WPI.

●       As over the past few years, input costs have flared up. One of the reasons is that 60%-70% of the country’s medicine needs are dependent on China.

Rationale behind price hike:

●       Heavy regulated price will impose losses to manufacturers

●       It lead to shortage of medicines and impact on availability

●       The mechanism of annual price hike based on WPI (in a regulated manner for scheduled drugs)  will benefit both manufacturers and customers.

●       It ensures both availability as well as accessibility