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Why Drug Prices Won't Increase This Year

April 05, 2024 08:59 IST

The government has been stringent with pricing changes.
Prices of 651 essential medicines came down from April 1, 2023 by 6.73 per cent with the government capping ceiling prices of these drugs.

IMAGE: Kindly note the image has been posted only for representational purposes. Photograph: Kind courtesy Polina Tankilevitch/Pexels.com
 

Consumers are in for a relief as prices of drugs in the National List of Essential Medicines (NLEM) will remain flat in line with the change in the wholesale price index (WPI) this year.

In a notification issued last week, the National Pharmaceutical Pricing Authority (NPPA) said the annual change in WPI worked out to be 0.005 per cent during the calendar year 2023 over the corresponding period in 2022.

According to Para 16(2) of the Drug Price Control Order (DPCO) 2013, the manufacturers may increase the maximum retail price (MRP) of scheduled drugs on the basis of this WPI, the notification said.

Therefore, effectively, in 2024 the prices of NLEM drugs or scheduled drugs will remain flat. The price hikes allowed (in line with change in WPI) were 12.12 per cent in 2023 and 10.7 per cent in 2022, respectively.

The prices of drugs in the NLEM are capped by the NPPA, and the annual price change allowed in this category is determined by the change in WPI over the last year. For non-NLEM drugs, companies are allowed to take a 10 per cent raise.

Rajiv Singhal, general secretary of the All India Organisation of Chemists and Druggists, an umbrella body of chemists in the country, said prices would remain unchanged, and pharma companies do not need to re-label stock in circulation in the market.

The market usually has 90 days of stock and this year the prices of scheduled drugs will remain unchanged, he added.

This year, since the change is very small (+0.00551 per cent), most companies will not increase the MRP of their scheduled formulations, said Viranchi Shah, national president, Indian Drug Manufacturers Association.

Sudarshan Jain, secretary general, Indian Pharmaceutical Alliance, said the focus of the industry and the government was now on ensuring quality standards for medicines.

Price rise of drugs in the recent past has not beaten inflation, as there is intense competition in the Indian market. Therefore, companies take lesser price hikes on an average than what is allowed, Jain said.

The government has been stringent with pricing changes. Prices of 651 essential medicines in the NLEM came down from April 1, 2023 by 6.73 per cent with the government capping ceiling prices of these drugs.

The NPPA noted that with the capping of ceiling prices, the cost of 651 essential drugs on average had already come down by 16.62 per cent.

'Due to this, the price of 651 essential drugs, which were to go up by 12.12 per cent, has actually come down by 6.73 per cent from April 1,' NPPA said last year.

The NLEM was revised in 2022 and now covers 384 drugs covering around 870 formulations. NLEM 2015 covered 376 drugs covering 800 formulations.

Analysts pointed out that price growth had been a major growth driver for the IPM.

"If we analyse the growth drivers for the IPM over a period of time, we can see that price growth has been a major growth driver," said Sheetal Sapale, vice-president, commercial, Pharmarack, a market research firm.

"In September 2022, price growth was 6.3 per cent while volume growth was 5.2 per cent," Sapale pointed out. "In March 2023, price growth was 5.7 per cent while volume growth was 3.3 per cent.

"Now in December 2023, volume growth was 0.8 per cent while price growth was 4.9 per cent," Sapale added/

One reason behind the volume decrease could be that purchases of chronic medications have moved to online channels, which is not captured by PharmaTrac.

Feature Presentation: Ashish Narsale/Rediff.com

Sohini Das
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