New Delhi: Responding to a query raised in the Lok Sabha, Ministry of Chemical and Fertilizers informed about the steps taken by the government to check High Drug Prices and control the unreasonable competition between drug companies and ensure that drugs are available in the markets at affordable prices.
The Minister in response to the query raised during the session informed that Competition Commission of India (CCI) had organized a Technical Workshop on ‘Competition Issues in the Healthcare and Pharmaceutical Sector in India’ and the issues that emerged and recommendations suggested by the stakeholders have been documented in a Policy note titled ‘Making Markets Work for Affordable Healthcare’ in October 2018.
In the note, CCI observed that the pharmaceutical sector is characterized by information asymmetry and supplier-induced demand that significantly circumscribes consumer choice, a condition necessary for well-functioning markets.
As per the note, ‘one major factor that contributes to high drug prices in India is the unreasonably high trade margins.’ ‘The high margins are a form of incentive and an indirect marketing tool employed by drug companies.
Further, self-regulation by trade associations also contributes towards high margins as these trade associations control the entire drug distribution system in a manner that mutes competition.
The Government has established the Drug Price Regulator i.e. National Pharmaceutical Pricing Authority (NPPA). The NPPA lays down a ceiling price for essential drugs. So far it has notified ceiling prices for 856 drugs till 30.11.2018.