Even if companies increase the cost of medicines by 12.12% — equivalent to the increase in the wholesale price index — prices will likely go down by 6.73% from the previous year, Union Health Minister Mansukh Mandaviya said Monday, responding to the Congress chief Mallikarjun Kharge’s swipe at the PM that he had taken “supari” to pick the pockets of people.
Kharge Sunday tweeted that with the increase in the wholesale price index, the prices of essential medicines will go up by 11% from April. The PM earlier at an event in Bhopal had said that some people have given ‘supari’ to dent his image.
Mandaviya, in a series of tweets, countered Kharge’s claim. First, he pointed out that the prices of essential medicines go up automatically with the annual Wholesale Price Index (WPI) – changes in the wholesale prices of a representative basket of things – as mandated by the Drug Prices Control Order 2013, which was brought in by the UPA government.
This would allow pharma companies to increase the drug prices by a maximum of 12.12% this year, which is the change recorded in the WPI. This April onwards, however, the once-in-five year price fixation by the National Pharmaceutical Pricing Authority (NPPA) was also to kick in. On average, there was a 16% reduction in prices of essential medicines as per this price fixing exercise.
Explaining this, Mandaviya in his tweets said that after the 16% reduction in prices, if the pharmaceutical companies decide to increase prices up to the allowed ceiling the drugs would still be 6.73% cheaper than previous year.
This is the second year in a row that the wholesale price index has increased in double digits, going above the 10% annual increment in prices allowed for non-essential medicines.
So, how did the medicines become cheaper despite an increase in the wholesale price index? The NPPA price fixing exercise that happens once every five years calculates the average price of each of the essential medicines based on the prices set by companies manufacturing the drug with over 1% of market share. Once the price is set, no company manufacturing the same drug can go over the ceiling price.
Last year the government revised the National List of Essential Medicines, adding 34 medicines and deleting 26, totalling up to 384 medicines available in 870 formulations. The NPPA then set about fixing the ceiling prices based on the new list, which were to kick in April onwards.
“The price fixing exercise has been completed for 651 of the total 870 formulations in the new list. On average, the price across these formulations went down by 16%. This is because of the excessive competitiveness in the market,” said an official from the pharmaceutical department that heads NPPA. The official added that the prices of the rest of the formulations would also be fixed soon.
Emphasising this point, Mandaviya in his series of tweets said, “Under the leadership of PM Narendra Modi, Jan Aushadhi mission has been a big supply side intervention, which has created a great competition. Because of this, pharma companies do not increase the prices up to the allowed ceiling based on annual Wholesale Price Index.”
Source: Indian Express