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LATEST NEWS UPDATES | GoM on drug pricing to meet FM for final draft

GoM on drug pricing to meet FM for final draft

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published Published on Nov 21, 2012   modified Modified on Nov 21, 2012
-The Economic Times

MUMBAI: The ministerial panel entrusted with framing the country's drug pricing guidelines will meet Finance Minister P Chidambaram on Wednesday to discuss its final draft policy.

The Group of Ministers, led by Agriculture Minister Sharad Pawar, has decided to keep the market-based pricing mechanism but tweak the methodology used for calculating the price increase, a move it hopes will address the concerns of the finance ministry.

The ministry was initially against tweaking the cost-based mechanism.

"The yearly price rise of drugs will not be according to the wholesale price index, it will be capped at 10 per cent," said an executive closely associated with the drafting of the policy.

"It appears that the finance ministry has grudgingly agreed to the market-based pricing mechanism," the executive, who did not want to be named, added.

The government has to take a call on the issue by November 27, failing which the Supreme Court has said it will pass an interim order.

The court had rapped the government for not finalising the drug policy, which has been stuck for almost a decade.

Stakeholders are sharply divided on the methodology of fixing the price of drugs, making the government's task of finalising the policy difficult.

While the finance ministry is not comfortable with tweaking the cost-based pricing mechanism, the health ministry also objected to the market-based pricing formula.

Last month, the GoM had presented a draft policy that brought all 348 drugs from the National List of Essential Medicine under price control, up from the current practice of subjecting medicines made using 74 ingredients to price control.

The draft policy, which fixed prices using the weighted average price of all brands having at least 1 per cent or more market share by volume, was struck down by the Supreme Court, which issued a directive that the price structure of essential medicines should not be altered.

With the market-based pricing mechanism, which has the backing of pharma companies, the 70,000-crore Indian drug market will see a reduction of 2 per cent.

However, this mechanism does not find favour with activists fighting for a sharp reduction in cost of essential drugs.

"If what we hear is true, and if the finance ministry has indeed agreed to market-based pricing, it is shocking," said S Srinivasan of All India Drug Action Network, one of the petitioners in the case.

The Economic Times, 21 November, 2012, http://economictimes.indiatimes.com/news/economy/policy/gom-on-drug-pricing-to-meet-fm-for-final-draft/articleshow/17301947.cms


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