Boxed into a corner?

Boxed into a corner?

At a recent Open House organised by the Pharmaceuticals Export Promotion Council (Pharmexcil), representatives of pharma companies presented various issues to the government officials on the dais. Even though the forum tried to focus on export-related issues, a recurring complaint was the industry’s grouse regarding price control norms and this time it was more strident, considering that the prices of Active Pharmaceutical Ingredient (API) prices are going through the roof.

There are two main reasons for rising API prices. In the past one year, China has been cracking down on polluting industries ahead of the Olympics, due to start on August 8, in a bid to clean up their dismal environment record. Since chemical plants have been identified as one of the culprit industries, many Chinese API manufacturers have been served closure orders. One is not sure if these norms may ease off after the Games. If so, it will be back to business and API prices may somewhat stabilise.

But the second reason is not going to go away so easily. Some APIs and solvents used in the pharma industry are sourced from petroleum and the crude oil hike has naturally pushed up prices. The hike is here to stay and there is no escaping this fact.

In this scenario, it is no wonder that pharma companies, especially the small and mid-sized ones, have stepped up the campaign for a rationalising of drug prices. Some industry observers have even called for the scrapping of the ‘vicious demon of an National Pharmaceutical Pricing Authority (NPPA)’.

As our cover story points out, Indian pharma companies are in fact already working on options and some of them are keen to project India as the most preferred API source, and take over China’s role. But this will take some time.

For the time being, the Indian consumer is insulated from rising drug prices as manufacturers cannot increase prices of drugs falling under the NPPA. But if drug makers simply decide to cut their loses and discontinue making a particular product, then there will be a shortage at the retail level and the patient will be left with no choice but to buy the more expensive brands surviving in the market. Thus the NPPA’s stated objective of serving the patient by keeping drug prices down will itself be defeated. Can we afford this?

Viveka Roychowdhury
viveka.r@expressindia.com