The Supreme Court has warned the government against altering the mechanism for pricing of essential drugs and sought its response on concerns that the revised drug policy will push up the already high cost of healthcare in the country.
“We make it clear that the government should not alter the price system as notified on July 13, 1999, and similar subsequent notification,” a bench of justices GS Singhvi and SJ Mukhopadhyay said on Wednesday. The bench fixed October 9 for hearing the Centre’s reply, which could take into account the decision taken last week by a group of ministers (GoM) headed by agriculture minister Sharad Pawar to alter the pricing mechanism while increasing the basket of essential drugs to 348 from the current 74.
The mandate came during the hearing of a public interest litigation (PIL) filed by the All India Drugs Action Network (AIDAN), a non-governmental organisation, in 2003.
The judges asked additional solicitor general Sidhartha Luthra to realise the importance of the PIL and see how many times it has come up for hearing. “For the last 10 months, this bench has adjourned this matter six times to enable the Union government to take appropriate decision on the recommendations made by different departments.”
“We are directly concerned with the issue (medicine prices) and it needs intervention by the court,’’ said the bench, noting, “one of us faced the brunt of this (high medicine prices). The cost of medicine came to Rs50,000 in two months.”
Under the 1999 mechanism, the prices of essential drugs were based on the prices set by the market leader. The formula used the cost of raw material and packaging for fixing drug prices.
The GoM discarded this and has instead proposed using the weighted average price (WAP) of brands with over 1% market share as a benchmark for fixing prices. For example, if the WAP of brands selling a strip of 10 tablets of fever medicine paracetamol comes to Rs50, manufactures will have to use that price as the benchmark to set prices. Thus, manufacturers selling a strip for Rs60 will have to reduce their price to Rs50, while those selling at a lower price can hike it till the benchmark. The petitioner says this will push up prices of essential drugs.
An official from AIDAN said they have been proposing a mechanism for finding out the drug manufacturing cost and accordingly fix the price, while simultaneously leaving some margin for the manufacturers. During the last hearing on the matter, AIDAN’s counsel had expressed apprehension that the proposed drug policy may lead to a steep hike in the prices of medicines.
Analysts too agree that the GoM’s proposal could push up the cost of low-cost medicines, but feel it would also result in a reduction in prices of several costly drugs.
The Union cabinet was expected to take a final call on the GoM’s recommendations soon.
According to the National Pharmaceuticals Pricing Policy drafted in 2011, the pharma industry’s turnover shot up from around Rs5,000 crore in 1990 to more than Rs1 lakh crore in 2009-10, with the share of domestic market at Rs62,055 crore and that of exports at Rs42,154 crore.
Interestingly, India is the third-largest producer of medicines by volume but the 14th in terms of value, mainly due to the fact that Indian medicines are amongst the lowest priced in the world. The top court has always maintained that the country needs cheap medicines.
In September last year, it had asked Swiss drug major Novartis to cut down the price of its cancer drug in India. “Why don’t you reduce the price… that will be a better and stronger way of establishing your bona fides of helping the poor,” the court had told the drug major’s lawyer Gopal Subramanium during the hearing of its lawsuit for patent. “Rs1.2 lakh per month is too high to afford a treatment’’, the judges had said then, adding, “You have no legal obligation (of proving free medicine).”
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