AIOCD to support market-based pricing formula based on all-brands

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The All India Organisation of Chemists and Druggists (AIOCD) has welcomed the government’s draft proposal to move away from cost-based pricing to market-based drug pricing policy saying that it will best address patient needs and balance industry growth. It, however, said the proposal can be further strengthened if the weighted average of the prices (WAP) of all brands formula is taken rather than taking WAP of top three selling brands as mentioned in the proposal.

J S Shinde, President, AIOCD said, “At a time when the Indian pharmaceutical industry is facing challenges on multiple fronts, the WAP of all brands formula will result in greater impact on the industry in comparison to the WAP of top three brands formula proposed in the draft NPPP 2011 to best meet access, affordability, innovation and quality needs of patients.”

It may be noted that the Department of Pharmaceuticals has made a strong effort to address the severe drawbacks of cost-based pricing by introducing a market-based pricing mechanism in the National Pharma Pricing Policy 2011. Overall the industry also felt that the market-based formula is the simplest, most transparent and balanced formula.

Shinde said, “WAP of all brands formula takes in to account almost 90 per cent of the cumulative market share under price control (formulations as listed in the NLEM) by value in comparison to around 60 per cent taken in to account by WAP of top three brands. WAP of all brands formula will result in more patient savings on NLEM formulations than the WAP of top three brands formula.”

Over the last two decades, patients in India have suffered on account of the non-transparent and complicated cost-based pricing regime (DPCO, 1995), which has hampered patient access to essential medicines.

The association is of the opinion that market-based pricing would balance patient as well as industry interests, and prevent formulations going off the market on account of an unviable manufacturing environment as happened during cost-based pricing regime. It would also facilitate an environment that would attract more players to the market, further intensify competition and provide more options to patients.

According to Shinde, “Many therapeutically efficacious and cost-effective medicines such as Methyldopa and Doxycycline used in the treatment of hypertension and urinary tract/other infections respectively have become unavailable due to cost-based price control.”

The association also suggested that non- essential strengths, dosages and combinations not specifically listed in the NLEM 2011 be not included in the scope of the policy as such a move would burden the industry and stifle growth and adversely impact availability of essential medicines.

EP News Bureau – Mumbai

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