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Companies wary about plan to revamp drug price control order

Kishori Gopalkrishnan in Bombay

Indian and multinational pharmaceutical companies are apprehensive about Union Chemicals and Fertilisers Minister M Arunachalam statement to revamp the Drugs Price Control Order in India. Arunachalam had indicated that his ministry was keen to table a new list, in accordance with the World Health Organisation stipulations, in Parliament. However, with the political situation in a flux, the move is likely to remain stillborn.

Maintaining that research and development in the pharmaceutical industry would be encouraged, Arunachalam maintained that the new list of drugs under the DPCO would be prepared by his ministry on a priority basis, following consultations with trade and industry. The minister was addressing a two-day seminar organised by the Organisation of Pharmaceutical Producers of India in New Delhi last week.

The DPCO controls the domestic prices of major bulk drugs and their formulations. The DPCO, as per government's Drug Policy guidelines, ensures that bulk drugs (and their formulations) are kept under price control. Ceiling prices for the DPCO bulk drugs are notified by the government authorities and periodically revised.

Arunachalam added that certain drugs, especially life saving products used by the poorer sections of society, which were beyond tax control, would soon be covered by the DPCO. He maintained that his primary goal in the present office was to make essential medicines affordable to the common man.

The minister's announcement, made at a well-attended gathering of international and domestic pharmaceutical manufacturers and traders, has sent waves of apprehension through the industry, according to informed sources. While the industry has been egging for a dilution in the DPCO, a revamp could also bring in other drugs under price control, sources added.

A representative of several multinational corporations who were present at the meeting, speaking on the condition of anonymity, queried the motive of the move. ``One cannot quite understand this move,'' said a prominent pharmaceutical manufacturer. ``With 80 per cent of the pharma industry already under strict price control, profitability has fallen steeply with new investments in the sector dwindling and MNCs discontinuing many products,'' he said. ``In this worst case scenario, introducing more changes will bring about a severe dip in profitability,'' he added.

A similar note of apprehension was voiced by a senior official of a multinational concern. ``It is no secret that there is strong lobbying to delete 17 drugs from the price control list. But to have yet another batch added to the list brings on several negative implications,'' he pointed out.

Adding that the step ``could be construed as a wrong signal to the investors both from within the country and outside,'' the official claimed that it would be a setback to the ``R&D efforts for the discovery of newer and better medicines, particularly at a time when some companies have initiated larger investment in R&D.''

A representative of Rhone-Poulenc, however, pointed out that the minister was keen in seeking cooperation from the trade and industry before bringing about the said changes. In this regard, he added that a meeting has been scheduled in the first week of December.

The decision, to include more bulk drugs under price control, was termed ``shocking and unwarranted'' by some members of the Indian Drug Manufacturers' Association and the Organisation of Pharmaceutical Producers of India.

Sources pointed that soon after DPCO 1995 was announced, both IDMA and OPPI had been assured by the ministry that the reported ``errors'' made in including certain drugs under price control would be looked into and corrected. They added that the ministry's assurances were reconfirmed in subsequent meetings.

However, IDMA sources added that by including more drugs under the DPCO, the government is ``not keeping to its original intention of operating in a transparent, objective and balanced manner, so that the interests of both the consumer and the industry are protected.''

An IDMA representative maintained that the government should consider, for the purpose of determining competition, not only the number of bulk drug producers in India but also bulk drug producers worldwide as imports can now be freely made.