NEW DRUG POLICY

NEW  DRUG  POLICY

The new drug policy is an all encompassing policy framework that is being drafted by an expert committee to provide guidelines to the pharma industry.

The main objectives of this policy are: 1.      to ensure availability of essential pharma products at reasonable prices; 2.      to strengthen the indigenous capability to produce cost effective and quality products and export pharmaceuticals by reducing barriers to trade in the sector; 3.      to strengthen the system of quality control over production and distribution; 4.      to encourage R&D in the sector; and 5.      to create an incentive framework for the industry which promotes new investment into the industry. Why is the policy critical to the pharmaceutical industry? The industry has been long expecting reforms in the numerous policies that govern the sector. One of the most crucial areas that the policy seeks to address is pricing of drugs, which has been a bone of contention between the industry and the authorities ever since the price control was instituted. How has price control evolved? Control over cost of medicines to the consumer exists in one form or the other in most countries. Government’s control over drug pricing in India had begun in the context of the Sino-Indian war, but a structured price control mechanism was first instituted in 1979 with the issuance of the first Drug Price Control Order based on the recommendations of the Hathi Committee. The DPCO was revised in 1987 and in 1995, leading to reduction of the scope of controls. There is no price control on about 75% of the retail pharma market now. For the rest of the market, the government fixes the prices under the provisions of the Drug Price Control Order (DPCO) of 1995. Currently, 74 bulk drugs are in Schedule 1 of the DPCO, 1995, and their formulations are under price control. What are the criteria for bringing drugs under the DPCO regime? At present, the criteria for bringing a drug under control is the essential nature of the drug. The World Health Organisation defines essential medicines as those that satisfy the priority health care needs of the population. The National List of Essential Medicines has 354 drugs, of which 74 drugs were under price control. The Supreme Court, however, passed a judgement in ’03 directing the government to ensure that all essential and life-saving drugs do not fall out of price control. What are the salient features of the new drug policy? New Delhi , Sept. 6 The proposed new pharma policy has taken steps to plug some loopholes that could be utilised to keep drugs out of price control. According to official sources, the policy proposes to provide suo motu powers to the National Pharmaceuticals Pricing Authority (NPPA), which would be the regulator for the industry, to bring under price control new doses of medicines that are not covered under the existing National List of Essential Medicines (NLEM). The policy proposes to put the 354 essential drugs under control, a move stiffly opposed by the drug manufacturers. These drugs are sold in various standard sizes and add up to 663 medicines (for example, paracetamol 250 mg and paracetamol 500 mg tablets are counted as two medicines). Under the price control regime, the regulator will enjoy powers to monitor production and marketing, and could also set the price at a particular level. However, the policy also provides an avenue for pharmaceutical companies to keep their drugs outside NPPA's control. Out of the 663 medicines in the list, 124 that are available at less than/up to Rs 3 per tablet/dose would be kept out of price control, sources explained. But in order to keep flexibility and to adjust to the changing industrial practices and systems, a provision has been included to empower the NPPA with suo motu powers to also check prices of those drugs not under price control, sources said. This is to prevent companies from changing the strength of a particular drug just to escape price control. For instance, if a particular drug with 500-mg strength is currently available at Rs 6 per tablet, companies would not be allowed to change the strength to 250 mg and price the tablet at Rs 3. The NLEM has also listed such drugs with their specific strengths/doses and forms. The proposed policy includes a clause saying, "There may be a possibility that manufacturers may decide to switch over to the strengths/doses forms which are not covered under price control. In order to avoid this type of unfair trade practice that may impinge on the availability of the essential medicines, the NPPA shall fix the prices of all such formulations suo motu presuming that they are in price control. Such price fixation will be resorted to cover the situation where a company discontinues the production of the specific NLEM drugs and shifts to another strength or dose form of the same drug." Sources said that the benchmark price of Rs 3 was initially suggested by the Ministry of Health and eventually agreed to by the Ministry of Chemicals and Petrochemicals as well as the industry. Sources said that the draft would be finalised only after the new 14-member committee set up last month gives its views for which the date has been fixed at September 30. After the committee gives its views, the Ministry will revise the existing draft. The committee has been asked to give its views on five issues — namely, public-private partnership for BPL families, whether price rise could be contained through competition, R&D, concessional pricing for Government procurement and whether monitoring can replace cost-based price control. The policy could be expected to go to the Cabinet by end of October-end, sources said.