Is government new drug pricing formula beneficial to the common people?

While on the one hand, government, though after being pushed by various organisations, put 348 essential drugs under price control, it seems the ever so strong pharma lobby prevailed on the government to tweak the rules of new pricing formula for new drugs, which is decidely in favour of the industry and to the detriment of the common people

In the new proposed policy for the drugs under price control, the pricing formula mentioned is the “average of the price of the top three selling drugs”. Department of Pharmaceuticals (DoP) submitted the same in the apex court, while professing that the government is committed to bring all 348 drugs included in the National List of Essential Medicines (NLEM), 2011 under price control.

But if you look at it closely, the proposed pricing formula defeats the very purpose!

All of us are very aware that higher priced equivalents (brands) are prescribed / sold more largely because they are marketed aggressively by the companies to doctors and also pushed by pharmaceutical traders as they get higher margins on them, often through unethical means. So one can actually argue that it is not market determined pricing, but top 3 brands determined pricing. In effect, the top brands (and the higher priced brands) will determine the eventual price, not the cheapest drug in a particular segment. It will lead to continued higher prices for all the essential 348 drugs. For example, anti-worm drug albendazole 400 mg tablets are supplied by companies at Rs. 11 for 10 tablets to government agencies. But the same brand is sold in the market at Rs. 250.

In light of the government submission in the apex court, the All India Drug Action Network (AIDAN) has filed a rejoinder and has strongly opposed the government’s formula of pricing all 348 essential drugs at average of three top-selling brands in each segment. It has rejected the pricing formula in the proposed policy on the grounds that it legitimises and reinforces overpricing which will lead to super-profit for the pharma companies.

As Mira Shiva, founder coordinator of AIDAN said, “It is an extremely unusual formula. Why not the top 10 or average of all brands, instead of the most expensive ones?”.