No Method in the Madness

The decision to impose a customs duty of 22% on a list of 76 life-saving medicines is symptomatic of several things wrong with the pharma pricing scenario in India. One arm of the government, the Department of Pharmaceuticals, is in charge of implementing the Drugs (Prices Control) Order (DPCO) 2013. Another arm, the Ministry of Health, is nowhere as they are seen as probably not relevant to the issue.

The DPCO-2013 has put 348 medicines of the NLEM-2011 (National List of Essential Medicines) in specific formulations and specific strengths, and only those, under a price ceiling. The calculation of the ceiling price itself is flawed based on a naïve simple average market-based price mechanism. This legitimises the already high drug formulation prices. The flawed DPCO-2013 nevertheless succeeds in putting a brake on prices of some essential medicines, even if it covers only a maximum of 15% of the domestic pharma market of around Rs 90,000 crore. The list of 76 drugs, on which customs duties are now to be imposed, has those in common with the 348 drugs of the DPCO-2013 and the recent NLEM-2015. So why does the government giveth to the patient with one hand and taketh with the other? Because the many arms of the government are not in conversation with each other.