Govt To Allow Prices Of Essential Drugs To Go Up Over 10% From Apr

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Mumbai : Already reeling from the rise in prices, consumers will now also have to factor into their household budgets higher medicine prices. Essential medicines — including painkillers, anti-infectives, cardiac and antibiotics — will become dearer from April with the government set to allow drug companies an increase in line with the change in the annual wholesale price index (WPI). The annual change in WPI, as notified by the government, works out to 10.8% during the year 2021, drug prices regulator National Pharmaceutical Pricing Authority (NPPA) said on Friday.

Prices of over 850 formulations across major therapies are expected to go up by at least 10%, a first-ever instance when the increase is more than that allowed for non-scheduled drugs (which are outside price control). Non-scheduled drugs are allowed an annual increase of 10%.

Historically, the increase in prices due to the annual change in WPI have been marginal — in the 1-2% range — over the last few years. For 2019, the NPPA had allowed drug companies a price hike of around 2%, while in 2020 prices were increased by 0.5% in line with the change in annual WPI. The NPPA will notify the ceiling prices of the scheduled formulations over the next few days.

The development is welcome news for the industry, which has been battling a surge in manufacturing costs on account of multiple factors. During the pandemic, the industry was impacted by a rise in prices of raw materials (active pharmaceutical ingredients, or APIs), freight and plastics & packaging material, among others.

“Industry will be relieved once the new prices are notified. It has been facing huge cost-escalation due to imported raw materials and excipients, in some drugs as steep as 60-70%. There have also been massive increases in freight rates, transportation and packaging costs,” a company executive said. “We had sought a 20% increase last year.”

Most pharma ingredients and intermediates for manufacturing cardio-vascular, diabetes, antibiotics, anti-infectives and vitamins are imported from China, while for certain raw materials (APIs), dependence on China is 80-90%. Once the pandemic surged in China in 2020, there were wide-scale supply disruptions and shortages leading to higher costs for domestic companies.

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