New Delhi, Sept. 27: A panel of Union ministers today finalised a market-based drug pricing policy that public health experts say cold-shoulders concerns expressed by the health ministry and threatens to legitimise high prices for medicines.
The policy finalised by the group of ministers (GoM), led by Sharad Pawar, will apply to 348 essential drugs to cover virtually all common ailments ' from painkillers and antibiotics to asthma medications and drugs against high blood pressure.
The GoM has picked an option under which the maximum price of a medicine would be determined by the weighted average price of all its brands that have a market share of more than one per cent, said chemicals and fertiliser minister Srikant Jena, a GoM member.
"There were three or four options in front of the GoM, but I think a broad agreement has been made on the option of one per cent market share," Jena said.
However, GoM sources said a pricing policy proposed by health minister Ghulam Nabi Azad, also a GoM member, had been rejected in favour of the market-based policy.
Senior health ministry officials and public health experts have long been arguing for a drug pricing policy determined by the actual cost of production.
A cost-based pricing policy determines prices by taking into account the costs of the raw materials needed to manufacture the drug, as well as the costs of marketing, distribution and retail commission, and allowing reasonable profits for the manufacturers.
"The weighted average pricing policy adopted will skew prices in favour of higher priced medicines," Amit Sengupta, a physician and convener of the Jan Swasthya Abhiyan (JSA), a network of non-government public health groups, told The Telegraph.
"This is because the more expensive brands of medicines also have the highest market shares."
In the weighted average policy, weights are assigned to prices according to the share of a brand in the market ' the maximum price at which a medicine can be sold will then be influenced more by brands with large market shares than those with lower figures.
"This will only legitimise the rampant overpricing of drugs by companies," the JSA said in a statement. Public health experts say the wide price differences of drugs ' from 100 per cent to 5,600 per cent ' suggest the prices of brands fixed by companies do not always reflect the actual cost of production.
Expensive brands often have large market shares because their manufacturers typically promote such brands through high levels of incentives to doctors and retail chemists, said Sakthivel Selvaraj, a health economist with the Public Health Foundation of India.
Agriculture minister Pawar told reporters that the policy would now go to the cabinet for a final view. "We will send it in a week's time," Pawar said.