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September, 2006 Pragati Maidan, New Delhi, India |
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Plan panel resists move to expand drug price control
To examine if price negotiation for patented drugs is consistent with WTO
The Planning Commission has decided to voice its dissent over the chemicals and fertilisers ministry’s proposal to broaden the ambit of price control in the pharmaceutical sector. “We have reservations about expanding the span of price control on medicines. Price controls are bound to be a disincentive for investment as it curtails profitability and constrains research and development (R&D) expenditure,” a member of the commission said.
He, however, added that there might be a need for regulating the prices of patented drugs. “There is a prima facie case (for price regulation on patented drugs. However, it has to be examined whether it (such a regulation) is consistent with the WTO,” he said, adding that the practices being adopted by foreign countries in this connection would have to be studied, before taking a final view. The Commission would be formally making its comments on the draft Cabinet note on pharmaceutical policy in a week, he added.
It may be noted that the ministry had not incorporated the proposal made by a task force headed by the Planning Commission principal adviser Pronab Sen for fixing the average price of the top three brands (by value) as the ceiling price for medicines in a given therapeutic category. Sen told a leading financial daily that implementation of the proposal would have led to “some moderation” of prices in the long-term. “Generally, the cap would have been somewhat lower than the price of high volume brands,” Sen noted.
However, instead of accepting this proposal, the policy draft proposed cost-based price control. Sources said the ministry’s rationale for the move is that only cost-based control would bring a reduction in prices, while the cap based on average of prices of top three brands would not.
Date: 11-Jul-2006
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