IDMA warns of shortages unless drug prices are increased

By Gareth Macdonald

- Last updated on GMT

Related tags: Pharmacology, Pharmaceutical industry

The Indian Drug Manufacturer's Association (IDMA) believes that
local firms may be forced to stop production of some medications in
as little as two months unless national price restrictions are
relaxed.

In a letter to the National Pharmaceutical Pricing Authority (NPPA), the IDMA asked that its members be allowed to increase the price of some products, arguing that low government mandated prices and the rising cost of importing bulk drug intermediates, due to the strength of the rupee against the US dollar, means that company margins are being squeezed to breaking point. The IDMA also reported that the current record oil price, which recently hit $135 a barrel, has impacted all aspects of the pharmaceutical manufacturing industry, ranging from electricity costs to labour and transportation expenditure. On March 21, the NPPA slashed the sale price of 33 bulk drugs following certain changes in the annual budget, including a reduction of countervailing duty (CVD) which is imposed on imported goods to offset subsidies provided to producers or exporters by the government of the exporting country. At the time an Indian government spokesman explained that the prices had been revised downwards in the wake of the change in CVD, and not because of the foreign exchange fluctuation. "No possibility of closures due to price controls"​ In response to the IDMA's letter, chemicals, fertilizer and industry minister Ram Vilas Paswan was quoted by The Hindu​ as saying: "in a situation where the profit margins are as high as 200 per cent, there is no possibility of any company closing its manufacturing business due to the price control mechanism of the government."​ Paswan made the comments while announcing the government's plan to set up a specific pharmaceutical department to oversee the country's booming drug industry. Recent research revealed that both the domestic and export pharmaceutical markets grew 14 and 33 per cent in 2007, reaching $6.2bn and $7bn respectively. PPMA follows suit ​The Pakistan Pharmaceutical Manufacturing Association (PPMA) has also called for a hike in drug prices. According to reports in the Pakistan media, the PPMA says that increases of between 15 and 20 per cent are required. PPMA chairman Kashif Sheikh commented that "the country will face a shortage of medicines if the government do not increase the price of [some] drugs​." "The pharmaceutical industry, which is unfortunately [viewed] by the government and general population as a very high profit making industry, is undergoing a severe crisis that in the long run could result in the acute shortage of drugs​," Sheikh continued.

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