The Supreme Court on Thursday said it will ?test? the new National Pharmaceutical Pricing Policy-2012 for fixing prices of essential medicines in the country and also the Drugs (Prices Control) Order, 2013 (DPCO 2013), notified by the government in May.
Observing that the Centre is being guided by market-driven forces, a bench headed by Justice GS Singhvi sought a chart from All India Drug Action Network (AIDAN), an NGO, giving comparative analysis including the impact of the new policy on the ceiling prices of drugs.
It asked the government why the new drug pricing policy, which intends to put a cap on prices of 348 essential medicines, had changed the formula for deciding the cap from a cost-based mechanism to a market price-based mechanism.
?The government is being guided by market-driven forces,? the bench said, adding that ?theoretically, you (AIDAN) are right but you have to prove it from statistics. We are concerned about the patients.?
?This DPCO will encourage profiteering of medicine brands prescribed by doctors,? the bench said, after senior counsel Colin Gonsalves, appearing for the NGO, alleged that under the new policy the margins for the drug manufacturer and the dealer has increased multiple times.
AIDAN in its new application had sought quashing of both the 2012 policy and DPCO 2013, which would reduce prices of 348 essential medicines, notified by the Department of Pharmaceuticals on December 7, last year and May 15, respectively.
AIDAN told the court that the new policy, which puts a ceiling on drug prices based on average market prices, would lead to a higher cap than the earlier one and the new policy will ?institutionalise the super profits? made by pharma companies.
Denying that the new policy will lead to higher drug prices than before, the government said that the 2012 policy bars companies selling cheaper drugs from raising their prices significantly. Additional solicitor general Siddharth Luthra submitted that there is nothing wrong with the policy and there is a difference in retail and bulk prices of medicines.
The court was hearing a PIL filed by the NGO All India Drug Action Network, which contended that market-based pricing is never used for price regulation and and, under the new policy, simple average ceiling prices in many cases exceed the market leader price.
While seeking an amendment of its earlier 2003 petition, AIDAN, among various other prayers, has sought a direction to the government to continue with cost- based ceiling prices of all essential drugs in NLEM 2011 as per DPCO 1995.
Stating that the government had undermined the apex court?s directive that medicines should be made affordable for the common man, AIDAN stated that it had done this by making a pretense of price control by introducing market-based pricing (MBP) rather than cost-based pricing (cost of raw material plus costs of conversion plus a margin) followed since 1979.
Gonsalves said that the ?simple average formula? is as faulty as other market-based mechanisms (like weighted average price of brands with more than 1% market share) as it has no relation to the cost of production. Besides, prices of brands reflect brand value rather than the actual cost of production and as a result unreasonable super profits are earned by drug makers to the tune of 200-4,000%, and such unreasonable profits are being used for questionable marketing practices in the name of brand promotion, the application added.
