The Indian Pharmaceutical Alliance (IPA) has a few
issues relating to the ‘span of control' in the draft National
Pharmaceutical Policy (NPP) 2011.
IPA Secretary
General D. G. Shah said the draft policy stated that the ‘span of
control' was likely to go up to 60 per cent. The prices of almost half
the ‘essential medicines' will be reduced by 5-80 per cent and the other
half by 5 per cent.
The IPA estimates that domestic
price reductions alone will result in about Rs 3,000 crore loss in
sales to the domestic industry where the players have contributed 95 per
cent of increase in gross fixed assets and 77 per cent of R&D
expenditure in the industry in the last 15 years.
However,
IMS Health data show that the ‘span of control' can effectively be as
high as 75 per cent — more than four times the current ‘span of control'
and more than twice the ‘span of control' as per the National List of
Essential Medicines (NLEM), 2011.
It will, in
effect, bring an additional 1,154 drugs and 6,441 formulations under
price control as against the Drug Price Control Order (DPCO), 1995, of
38 drugs and 800 formulations with an 18 per cent ‘span of control'.
“The proposed additions will enlarge the scope of price regulation by
over eight times the current volume to about 68,000 packs, making the
task unwieldy and ineffective. ,'' said Mr. Shah.
With
an enlarged ‘span of control', the domestic manufacturers can shift
investment outside India as they have facilities all over the globe.
“Importantly,'' according to Mr. Shah, “large domestic companies, which
contribute around 81 per cent of total pharma exports, earn an average
50 per cent of their revenues from exports. The price reductions in the
country will have an impact on export price realisation also as all
importing countries check domestic prices.''
The IPA
has suggested that to ensure a sustainable supply of essential
medicines, the policy should stay with the NLEM 2011 list, which covers
348 drugs and 654 formulations with a ‘span of control' of 30 per cent.
In
a bid to balance consumer interest and the pharmaceutical industry's
growth, the government is considering plans to increase its procurement
of essential medicines by 7-8 times from the domestic industry for
supply to the weaker sections of the society.
The
IPA Secretary General felt the success of such a programme would hinge
on the industry being able to produce huge volumes and also its ability
to absorb the costs of supplying the enhanced volumes at heavily
discounted rates.
Source: The Hindu
