The Telegraph
Since 1st March, 1999
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Tonic for common drugs

New Delhi, Sept. 23: Prices of commonly-used drugs like Cetrazine, Omiprazole and Nimusulide are expected to come down substantially with pharma companies agreeing to a government proposal to limit retail margins.

“Industry has agreed to the government proposal of fixing margins on drugs which are promoted by the trade route from October 2,” Union chemicals and fertiliser minister Ram Vilas Paswan told jouranlists here today.

Different industrial bodies have said they would fix margins at 35 per cent on retail and 15 per cent on wholesale for those drugs which the companies give responsibility to distributors for promotion without fixing any margins.

“As a result of this agreement, we expect a substantial fall in the prices of these commonly used drugs,” Paswan said.

According to estimates, the prices of these drugs can fall between 0.2 per cent and 70.3 per cent, the minister said.

Commenting on the prices of anti-AIDS drugs, Paswan said a reduction was expected as two state-owned pharmaceutical units — Rajasthan Drugs and Pharmaceuticals (RDPL) and Hindustan Antibiotics (HAL) are set to launch their anti-retrovirals.

While RDPL will launch six drugs, HAL will be producing three, the prices of which are expected to be lesser by 10 per cent to 20 per cent compared with those manufactured by the private players, he added.

The country’s drug policy, which was slated to come up before cabinet earlier this month, has now been pushed back and new changes are being worked in.

The government has managed to get pharma firms to agree to a move to fix generic drug prices in a manner such that wholesale margins are limited to 15 per cent and retail profits to 35 per cent.

The Centre wanted to bring 33 per cent of all drugs under price controls against the current 25 per cent. But Paswan continued parleys with pharma companies to narrow down the list in exchange for commitments on a self regulation formula for new drugs.

The government believes by keeping prices low, pharma companies will be able to create a large mass market for generic drugs here.

This in turn would help them lower costs and compete better in global markets. To need to be even more cost competitive comes as India believes China and East Europe will soon emerge on the global scene as major competitors to its pharma majors.

The benefits of scale of operations would help keep Indian drug prices low. A recent KPMG study suggests India's potential in the global generics market as well as an offshore location for contract manufacturing, could garner some $ 48 billion in business by 2007.

Though the minister has in the past told cabinet colleagues and newspersons that his plans to place 354 essential drugs under price control were in consonance with Supreme court rulings, he now seems amenable to be more flexible.

Top officials said the finance ministry along with the pharma industry body have made known strong objections to the new policy, which is why Paswan is now agreeable to make changes.

But chemicals ministyry officials said the new policy was pro-poor and among other things which the industry did not like but which were pro-consumer was Other salient features of Paswan's cabinet note, a draft of which has already been circulated to various ministries 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.

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