(a) whether the multinational companies are selling the medicines and
medical devices at exorbitant rates despite availing of hefty tax
concessions;
(b) if so, the details thereof and the reasons therefor;
(c) whether the Government proposes to withdraw the tax concessions given
to them;
(d) if so, the details thereof; and
(e) the steps being taken by the Government to bring down the prices of medicines?
THE MINISTER OF CHEMICALS AND FERTILIZERS AND MINISTER OF STEEL(SHRI RAM VILAS PASWAN)
(a) to (d) Under the provisions of the Drugs (Price Control) Order, 1995 only the prices of 74
bulk drugs and the formulation containing any of these scheduled drugs are controlled. NPPA/Govt.
fixes or revises prices of scheduled drugs/formulations as per the provisions of the DPCO.1995. No
one can sell any scheduled drug/formulation at a price higher than the price fixed by NPPA/Govt.
In respect of drugs not covered under the Drugs (Prices Control) Order, 1995 i.e. non-scheduled
drugs, manufacturers are free to fix the prices by themselves without seeking approval of
Government/NPPA.Such prices are normally fixed depending on various factors like the cost of bulk
drugs used in the formulation, cost of excipients, cost of R&D, cost of utilities/packing material,
sales promotion costs, trade margins, quality assurance cost, landed cost of imports etc. However,
NPPA regularly examines the movement in prices of non-scheduled formulations. The monthly reports
of ORG IMS and the information furnished by individual manufacturers are utilized for the purpose
of monitoring prices of non-scheduled formulations. Wherever any abnormal prices increase is
noticed, necessary action is taken. The manufacturer is impressed upon in such cases to bring down
the price voluntarily failing which, if justified, action is initiated under paragraph 10(b) of
the DPCO, 1995. This is an ongoing process.
No specific information relating to selling of medicines by the multinational companies at
exorbitant rates despite the heavy tax concession has been brought to the notice of the NPPA.
(e) In order to bring down the prices of medicines, Government has revised the allowable price
increase limit in case of non scheduled formulations from earlier 20% increase per annum to 10%
increase per annum w.e.f. 1.4.2007. In addition The Govt. has delegated its power under paragraph
10 of DPCO, 1995 to National Pharmaceuticals Pricing Authority (NPPA) on 15.01.07 in pursuance of
paragraph 26 of DPCO, 1995. Accordingly, the NPPA can cause enquiry, call for information and fix
retails price of a non-scheduled formulation if it considers necessary so to do in public
interest. As a result NPPA has fixed price in case of 27 non-scheduled formulation packs under
para 10(b) and companies have reduced price voluntarily in case of 60 formulation packs. Thus, in
all, prices of 87 packs of control free drugs have got reduced as the result of the intervention
of NPPA. The NPPA has also stepped up enforcement activities and a separate enforcement division
has been started which purchases medicines from the market to check that prices fixed by NPPA are
implemented.