NPPA says no to unilateral price hike

The National Pharmaceutical Pricing Authority has ruled out a unilateral increase in the prices of medicines to address the pricing concerns of the domestic drug industry. The response comes after the drug industry sought a blanket hike in the retail prices of hundreds of medicines which the authority had cut recently.

The drug industry has argued that the reasons that warranted a price cut -- steady appreciation of the rupee against the dollar and cheaper raw material costs -- were no longer applicable as the rupee is falling and cost of imported raw material is shooting up. Industry wants the NPPA to reverse the price reduction.

"NPPA has informed us that the authority cannot take any suo motu decision to increase the price of medicines. The authority also said it cannot give a general relief to the drug industry but can consider individual price revision applications from pharma companies," said Daara Patel, secretary general, Indian Drug Manufacturers Association.

According to Patel, the association will ask all its members to provide documental proof to support their demand for charging higher prices.

"The rupee has weakened against the dollar recently. Similarly, the cost of imported raw material has also shot up. NPPA has assured us to consider each price revision case and provide relief to all eligible applicants," he added.

The drug industry started feeling the pricing pinch after NPPA began close scrutiny of the price movements of both imported and domestically produced drug raw materials.

Since raw material contributes to over 70 per cent of the total production cost of the medicines, the drug panel had made sure that the effect of any reduction in raw material prices should immediately be passed on to the consumer.

The authority has also embarked on a mission to understand the pricing pattern of medicines in the retail and the bulk sale segments. It will analyse the pricing trends of all raw materials based on three parameters -- the notified or approved prices of these bulk drugs, the landed cost of the imported ones, and the prices quoted in trade journals for such raw materials.

This approach to fix the prices of medicines through a consumer interface instead of the normal practice of industry interface was the major reason for turning drug industry vulnerable to the price fluctuations.