Govt may give itself full power over drug pricing

In a move likely to give sleepless nights to pharma makers, the government is proposing to vest itself with overriding powers to enforce price controls on any category of drugs - imported as well as domestic - for any length of time.

The proposal is part of the draft Drugs (Price Regulation and Control) Bill, 2006, mooted by the Ministry of Chemicals and Petrochemicals. Chemicals Minister Ram Vilas Paswan has advocated the populist move to improve the affordability of drugs.

If the proposed Bill were to receive legislative sanction, the entire Rs 33,000 crore (Rs 330 billion) Indian pharma industry will come under its purview.

As per industry estimates, India's pharma imports roughly amount to Rs 4,500 crore (RS 45 billion). Other measures suggested in the draft Bill include empowering the government with the right to seek and mandatorily obtain any relevant information from all drug manufacturers, marketers, distributors and retailers.

When contacted for comment on the proposed measures, Dilip Shanghvi, chairman, Indian Pharmaceutical Alliance said: "The industry will wish to understand the conditions under which these provisions will apply. Such an Act will vest significant authority in the government which may hamper the long-term planning of the industry."

However, allaying industry fears, a senior ministry official said: "These are just umbrella enabling provisions to deal with price control issues in the future too. It will not be draconian as it will replace the Essential Commodities Act (which subjects a violator to criminal prosecution)."

The proposed Bill has a system of graded fines, monetary penalties, and withdrawal of marketing approval.

The issues are multiple. While misbranding - whereby the composition is slightly tampered with while retaining the brand name - has been a menace and will be contained through such provisions, they will create a gamut of other controls, which will circumscribe the functioning of the industry.