CHENNAI: The RBI may take the applause for keeping headline inflation under check, but not so for Wholesale Price Index (WPI).
Rising WPI, which the National Pharmaceutical Pricing Authority (NPPA) uses as the base to revise prices of essential drugs and devices, jacked up prices of 873 Schedule-1 drugs, IV fluids and coronary stents.
Starting this month, prices have been revised upwards by 4 per cent for medicines under the National List of Essential Medicines (NLEM); though with regards to coronary stents, the increase appears out-of-turn at 8 per cent, while WPI inched up 4.3 per cent in 2018 over 2017. For context, the consumer price index has been undershooting the central bank’s estimates and is hovering around 2.5 per cent for the past few months.
Curiously, the increase, particularly for devices like stents, comes a month after the government constituted the seven-member committee under the NITI Aayog to identify drugs and recommend price caps of essential and non-essential drugs. The panel’s appointment was feared to be diluting NPPA’s role, which fixes and monitors prices of essential drugs.
Price caps on stents rattled foreign companies, whose share is now reduced to about 20 per cent from about 80 per cent a couple of years ago. It may be noted that in February 2017, the drugs price controller lowered stent prices by as much as 85 per cent, and subsequently capped prices at Rs 7,660 for bare-metal stents and Rs 27,890 for drug-eluting stents last year, attracting the ire of the industry that cried foul about profit erosion. Besides, NPPA also capped the trade margin at 8 per cent to ensure that profitability of Indian and foreign stent-makers remains the same.
Pharma lobbies accused the NPPA of misusing its special powers to expand price control beyond the NLEM. It was even accused of getting influenced by healthcare activists and for showing a cold shoulder to the industry, reasoning that a little profit-making by drug makers was justifiable.
While appointing the high-level committee under NITI Aayog, the Centre reasoned that it will balance corporate and public interests, but it remains to be seen if it will sway pricing decisions in favour of the industry and roll back prices on medicines under NLEM should WPI continue on its upward trajectory.
At a glance