Why Govt plans to study drug pricing policies of other countries

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Centre is planning to start a study on drug pricing policies of at least 10 countries, including China, Sri Lanka, Bangladesh and the United States. This comes at a time when prices of medicines are going up and the ongoing Covid-19 pandemic has added to the woes. 

The affordability of medicines is a crucial element in availing medical treatment by all sections of the people including the poor. To make drugs accessible and affordable in India the Modi government is going to start this initiative.

Presently, the government is looking for a reputed company that can conduct the study and for this the department of pharmaceuticals (DoP), under the Union Ministry of Chemicals and Fertilizers has rolled out a tender.

Objective of the research

The objective of the research is to understand the drug pricing methodology adopted in the international market covering at least 10 countries.

It also aims to understand the lessons learnt or the best practices from various countries in terms of the availability and affordability of medicine.

It also plans to study the operational implementation of the drug pricing policies in different countries apart from studying other policy aspects.

The study will primarily be based on secondary sources of data and other information available in public domain.

Interviews/ group discussions with foreign missions, relevant trade and industry associations, drug exporters, foreign manufacturers to elicit their feedback.

10 countries/regions to be covered are Sri Lanka, Bangladesh, China, EU, UK, Australia, USA, Brazil, South Africa, and Thailand.

How are prices of drugs regulated?

The Health Ministry, in consultation with experts draws up a National List of Essential Medicines every few years.

These medicines, deemed essential for the treatment of common conditions, automatically come under price control.

The drug price control order (DPCO) is an order issued by the government under the ‘Essential Commodities Act’.

Drug Price Control Order (DPCO) enables government to fix the prices of some essential bulk drugs and their formulations.

Under National List of Essential Medicines 2015, the price of a total 376 drugs and 857 formulations are under price controls.

Under Para 19 of the DPCO 2013, government has special powers to bring any item of medical necessity under price controls.

This provision was used by the government to regulate the prices of cardiac stents and knee implants.

The National Pharmaceutical Pricing Authority (NPPA), enforces these prices and the availability of the medicines under NLEM.

Prior to 2013, the DPCO followed a cost-based pricing mechanism that was based on the costs involved in manufacturing.

Along with this, the cost-based pricing mechanism also involved reasonable profit margins for the manufacturers.

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