Government weighs linking drug prices to WPI inflation
NEWDELHI:The government is considering linking the annual increase in prices of drugs that are outside price control to the Wholesale Price Index (WPI) as it seeks to hold down costs of medicines, a move that local drug makers say will deal a body blow to the industry.
NITI Aayog has recommended that prices of non-scheduled drugs be also linked to WPI through an amendment to the Drug Price Control Order (DPCO) 2013, to regulate them like the prices of scheduled drugs. It has also suggested development of a separate index for pharmaceutical products. “The medicine prices may be linked to pharma commodities WPI rather than general WPI for both scheduled as well as non-scheduled drugs,” said the proposal. Mint has reviewed the copy of the proposal.
Out of the more than 6,000 medicines available in the market of various strengths and dosages, only about 850 drugs are under price control, according to the department of pharmaceuticals (DoP). If the NITI Aayog recom- mendations are implemented, the government will be able to regulate prices of all drugs. “The proposal to link price revision of non-scheduled formulations with WPI is under consideration,” two people aware of the matter said.
DoP, which is a part of the chemicals ministry, and NITI Aayog recently had a meeting with the Prime Minister’s Office (PMO) to discuss the proposed changes in DPCO 2013. According to DPCO 2013, prices of scheduled drugs are revised in line with the WPI of the previous calendar year. As a corollary, the companies are even required to cut the prices if there is a decline in annual WPI.
Currently, manufacturers of medicines outside price control are allowed to increase the retail price by a maximum of 10% a year.