Issues related to Price of Essential Medicines and Medical Devices

As per Drug Price Control Orders (DPCO) 2013, the NPPA is authorised to cap the drug prices in the country. This is to ensure that companies do not exponentially raise the prices of essential drugs and they are available even to economically weaker sections of the society. The DPCO also mandates the companies to make certain disclosures and list their products on the Authority’s online database called Integrated Pharmaceutical Database Management System (IPDMS) to ensure compliance and transparency with the government. If the companies fail to do so, there are provisions for the NPPA to take necessary legal actions against the companies under Para 29, Para 30 of the DPCO 2013.

Why Pricing Issue was in news?

In recent years, many pharmaceutical companies in India have failed to comply with the DPCO 2013, and are said be involved in “wilful violation” of the drug pricing control rules. Recently, the prices of many essential medical devices like bioresorbable stent, facemask, syringes and needles, etc. suddenly surged in the market. To cope up with the problem, the government decided to include certain medical devices under the National List of Essential Medicines (NELM) to cap their prices.

What is the Indian drug pricing framework?

Drug Price Control Orders (DPCO) is issued by the Government under section 3 of the Essential Commodities Act, 1955. The DPCO contains provisions to list the drugs under various schedules. Since price control mechanism is generally applied on drugs listed in schedule-I, the National List of Essential Medicines (NLEM) released by the health ministry decide the components of Schedule-I drugs. The Drug (Price Control) Orders (DPCO) allows the government to set price ceiling for essential and life saving medicines and devices.

How are the prices of medical devices capped?

If the drug/medical device is already listed in the schedule-I of DPCO, the NPPA can directly set price ceiling for the same. If the drug/medical device is not listed under schedule-I, then the government first introduce that particular drug/medical device under schedule-I and then NPPA fixes the price ceiling for the same. Thus, it hardly depends whether a drug or medical device is listed under which schedule or it is unscheduled. Government can even bring the non-scheduled and non essential drugs under Para 19 of DPCO 2013 if it thinks that it is in public interest, and then decide the prices for them. Furthermore, to set the price caps for medical devices/medicines, the DPCO uses market-based mechanism, and the ceiling price is decided by taking the simple average of prices of different brands with more than 1% market share.

Who are included under such a price-control mechanism?

As per the provisions of NPPP-2012, all the manufacturers/importers manufacturing/importing the medicines as specified under NLEM-2011 are under the purview of price control mechanism.

What are problems associated with such price mechanism & what needs to be done?

As per the data collected by the NSSO, nearly 67% of the out-of-pocket expenditure of Indian households is on medicines, medical devices and similar equipments. Also, as per WHO reports, almost 65% of the country’s population lacks access to essential medicines due to high prices. It has been also found that the price difference between a branded drug and its generic in some cases is as high as 17 times. All such things makes it imperative for the government to do away with the existing price control mechanism, and draft new set of regulations to tackle the problem.