The recent announcement of Draft National Pharmaceutical Pricing Policy 2011 (NPPP 2011) evokes mixed response. While on the one hand, it is heartening to see an arousal of sorts from the policy paralysis that has been holding the Indian pharma ecosystem for so long, on the other, it raises several questions about its rationale as well as extent of its efficacy in annulling age-old malaises of healthcare in the country.

Before diving deeper into its pros and cons with the 'essentiality' criteria for price control, let’s consider some of the salient features of Draft NPPP 2011. On a first look, the content of this draft policy suggests a shift from an archaic ‘Cost-based pricing’ method to a more transparent ‘Market-based pricing’ method. Further, the number of price controlled drugs would rise from 74 at present to 348, thereby accounting for almost three-fifth of the domestic pharma market.

Added to this is the consideration that this draft policy proposes ceiling prices only for end-use formulations, based on a weighted average price of top three brands, where the capped prices would be inflation indexed for manufactured goods. Given this, one wonders if this goes against encouraging R&D in pharma space and creating a pragmatic incentive framework for process-improvement, and hence, reduction in costs. Indeed, it would be prudent to have an advanced mechanism to increase price efficiency of pharma products on a sustained basis. This still falls short of the larger challenge in finding ways and means to make adequately available inexpensive non-branded generic drugs in place of expensive branded formulations that are mostly prescribed by doctors. 

In the current socio-economic and healthcare scenario, although India is among the several emerging economies in the world where ‘Drug Price’ remains one of the key factors to ensure accessibility to medicines, such a single-pronged strategy would not do enough to significantly improve access of modern medicines to the common man.

With the country’s more than one-third population still living below the poverty line and more than three-quarter of healthcare expenses being ‘out of pocket’, universal healthcare for all would still remain a distant dream. The need of the hour remains a more holistic and comprehensive approach of better access to doctors, diagnostics and hospitals, appropriate financial cover for health along with an effective price regulatory mechanism for medicines.

Manas R Bastia
Senior Editor, Modern Pharmaceuticals