Prices of medicines, including those for treatment of diseases such as tuberculosis, HIV, diabetes and cancer are expected to fall further, as the government looks to reconsider the formula used to fix their rates.
But there’s a catch. Low prices could also force manufacturers to stop production, which may lead to some of these medicines going off the shelves.
In the wake of a recent Supreme Court order in July asking the government to revisit the formula to fix medicine prices, the Centre is mulling going back to the older method.
“We may go back to the older drug pricing formula. The health ministry is working on the proposal where it will invite suggestions from stakeholders,” Hansraj Gangaram Ahir, minister of state, chemicals and fertilisers, told HT. “We are discussing the proposal with industry associations, non-governmental organisations (NGOs) and several consumer activists. No deadline has been fixed, we will take a decision after considering the viewpoint of each stakeholder,” he added.
The current pricing formula is market-based, which takes a simple average of prices of all medicine brands (therapeutic category), which have at least 1% market share to fix the maximum retail price. In the earlier cost-linked system based formula, the government collected data from companies and other sources on the manufacturing cost of different drugs, and fixed their prices through a cost-plus-margin method. In 2013, the market-price linked formula replaced the tedious cost-based method.
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