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Essential drugs may become cheaper once the Cabinet approves ministry of chemical's proposal of bringing more medicines under price control. With more drugs added to the existing list of price-controlled medicines, nearly 32 per cent of the domestic pharmaceutical market will be under price control. A look at the issue of drug price controls and what the new order entails. Drugs and formulations have been subjected to price control for more than three decades now. The economic reforms initiated by the Government of India in July 1991, trickled down to the Pharmaceutical Industry only in 1994 and that too partially. At present, prices of 74 drugs are fixed and revised by the National Pharmaceutical Pricing Authority. This is because the ministry has proposed to continue price control on all the 74 drugs which are under Drug Price Control Order (1995). Also, a majority of the 354 drugs specified under National List of Essential Medicines will be brought under price control, as per the existing cost-based method. A lower price will be determined for public health system and poor people. While, some non-patented imported drugs will be subject to a price ceiling, rest of them will be subject to a stringent monitoring mechanism. In other words, consumers can look forward to a reduction in their medical bills. The issue here is about measures to make quality medicines available at reasonable prices. Some believe that price control is the only way to achieve this objective. In support of their contention, they quote regulations in many developed countries that have mechanisms to oversee the prices of new products. But they do not distinguish between mechanisms for single-source product and multi-source products. Most developed countries use various mechanisms for price regulation of single-source product to pre-empt abuse of the monopoly situation and to contain their expenditure on health care. But, when it comes to the multi-source products; they leave it to competition to check the prices. This system works well both for the
consumer and the producer. The consumer has access to quality products at
competitive prices and the producer has an incentive to develop the
generic version of the products going off patent. India has been a multi-source products' market since 1972. However, with the adoption of the product patent regime from 2005, it will now see the emergence of single-source products. It would, therefore, be imperative to put in place an infrastructure that can pre-empt abuse of the monopoly situation that invariably go with the product patent regime. The various mechanisms available for this include cost-benefit analysis of the new medicine to determine its optimum price and the method of reference pricing. What is important, however, is transparency and uniformity of practice to instil confidence among innovative companies. As regards multi-source products, the country has already witnessed both the beneficial and disastrous effects of the government intervention. The intense competition in the post-1995 period has seen the benefits of increasing access, easy availability and quality products. On the other hand, the irrational controls in the post-1979 period have seen the pangs of limited access, rampant shortages and flurry of spurious products. Secondly, unreasonable and excessive controls harm in more ways than one. The most damaging among them is its influence on switching the prescriptions to more potent and expensive medicines. The post-2005 period will see the gradual erosion of multi-source products and increasing dependence on single-source patented products of foreign companies. At that point, even if the government musters the political will to control the prices of single-source products, it will not be able to do so effectively. This is not to say that the government has no role or should not intervene to make medicines available at reasonable prices. But, the government has to first set its priorities right by allocating adequate funds for the health care sector, developing a functional delivery mechanism for providing health services, and frame policies appropriate to the needs. It should do not this through price control on multi-source products. Instead, it should focus on all anti-competitive practices, work to promote competition, set-up a transparent mechanism to monitor prices of essential medicines and regulate them through mechanisms such as reference pricing by partnering the trade, industry and the medical profession. Even to evolve a workable framework of policies, the government cannot but seek the help of quality producers, enlightened dispensers of drugs and conscientious medical practitioners. This, not price controls, will help create a long-term solution to the health-care needs of the people.
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