Having succeeded in checking rising retail prices, the drug price regulator National Pharmaceutical Pricing Authority plans to turn its attention to raw material (bulk drug) prices.
Bulk drugs account typically for over 70 per cent of the cost of a formulation.
NPPA will begin analysing pricing trends of 74 bulk drugs that come under the government-notified price-controlled list every quarter.
The authority's comparison will be based on three major parameters -- the notified or approved prices of these bulk drugs, the landed cost of the imported bulk drugs and the prices quoted in the trade journals.
NPPA will notify a revised bulk drug price if aberrations are found among these different price points.
The authority also plans to intensify its surveillance by tracking the cost audit report that drug companies submit to the department of company affairs.
Bulk drug prices are currently notified for three years. Interim revisions take place only if the authority detects substantial fluctuations in retail prices.
In other words, it is not the raw material that is tracked for price movements, but the final product.
NPPA's price intervention, based on market surveillance, is known to have been very effective between 2005 and 2007. According to an official analysis, instances of drug companies raising prices of price-controlled medicines have come down considerably during this period.
In November 2005, there were 1,353 instances of annual price increases in medicine packs. In November 2007, the number had dropped to three.
Of the 1,353 packs, prices of 296 packs had increased above 20 per cent. Another 456 pack prices increased in the range of 10 per cent to 20 per cent and 256 packs saw price rise of between 5 per cent and 10 per cent.
In comparison, all three medicines that saw price rises in November 2007 were in the range of 0 per cent to 5 per cent.
