The Telegraph
Since 1st March, 1999
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Paswan pill runs risk of bad side effect

July 18: The government plans to bring 33 per cent of all medicines produced in the country under price control 'and a decision on this contentious proposal could be taken by the cabinet within the next 15 days.

Even as the draft proposal makes the rounds of the various departments of the government, industry has started to band together to thwart a measure that threatens to seriously undermine the fortunes of a major foreign exchange earning segment of the economy.

Chemicals and fertiliser minister Ram Vilas Paswan today indicated that he planned to bring up the new policy bringing more drug formulations under price checks before the Union cabinet later this month.

But even as he spoke, industry shoguns were meeting in Mumbai to ventilate their deep disappointment over the proposal and discuss ways to lobby sympathetic sections within the UPA government against such a step.

Paswan said he had three rounds of discussions with pharmaceutical firms before formulating his policy. Among other things, the drug policy would place all 354 essential drugs under price control.

The minister told newspersons in New Delhi today that his plans were in consonance with Supreme Court rulings on this issue and the list of 354 essential drugs were framed by the health ministry.

Top officials said the finance ministry and the pharmaceutical industry has strong objections to the new policy which Paswan is trying to push through. But officials in the chemicals ministry said the new policy was pro-poor and pro-consumer and it would seek to fix generic drug prices in a manner that wholesale margins were limited to 15 per cent and retail profits to 35 per cent.

Other salient features of Paswan’s cabinet note include a bid to rationalise excise duty from 16 per cent to 8 per cent and a serious move to bring down prices of anti-cancer and anti-HIV drugs.

The honchos of pharmaceutical companies said the regulatory shock through increased price controls would badly roil the industry.

At present, price controls are limited to 74 bulk drugs that account for 25 per cent of the industry in value terms. Paswan said the 354 formulation drugs that were proposed to be brought under price control account for only 8 per cent in value terms.

Ajay Piramal, who heads Nicholas Piramal (India) and is chairman of the CII national committee on drugs and pharmaceuticals, said, “The current price control regime has worked well. Prices are not increasing, there is adequate competition, affordable high-quality drugs are easily available and there is adequate incentive for R&D investments.”

Piramal said instead of stunting growth by placing fetters on industry through over regulation, the government should allow the market forces to determine prices.

Pfizer India managing director Kewal Handa said industry growth would be badly crimped if it was forced to slash prices.

“Bringing down the price of the drugs further will affect three things in the pharmaceutical industry ' exports, expansion and employment,” said Swati Piramal, director, strategic alliance and communications, Nicholas Piramal.

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