New drug pricing policy flawed, say critics

the Union ministry of chemical and fertilisers has from November 2, 2006, enforced a new drug pricing system covering 886 generic medicines produced by 11 pharmaceutical companies. As against the 200 per cent and more margin earlier charged by wholesalers and retailers, now the former will get a 15 per cent margin while retailers will get 35 per cent over the manufacturing cost of non-branded and generic medicines. The Drug Price Control Order was issued on September 29, 2006. However, retailers said they couldn't come under this regime so fast. Thus a grace period of a month was offered. Under the new pricing system, the label will bear the maximum retail price inclusive of local taxes.

However, there has been criticism. Critics say the policy accounts for only 4 per cent of drugs sold.Rajiv Dubey of Financial Express writes that it is a large list of drugs but brings under purview only Rs 1,500-crore of the Rs 35,000-crore drug industry. The list also doesn't include the largest selling essential drugs in the industry like Pfizer's cough syrup Corex and vitamin B complex capsules, Becosules, India's largest selling brands in 2005. The negotiations also did not cover other high-selling drugs.