Drug companies fleecing consumers: Study

Drug companies fleecing consumers: Study

Kalyan Ray, New Delhi, June 15, 2012, DHNS:
A government study has blamed leading pharmaceutical companies like GlaxoSmithkline, Pfizer and Ranbaxy for selling their products at an “exorbitantly high” profit margin.

Currently, there are about 900 medicines in the Indian drug market. Out of these medicines, prices of 74 life-saving drugs are controlled by the National Pharmaceutical Pricing Authority (NPPA). 
The study carried out by the Union Ministry of Corporate Affairs shows how the common man pays through the nose to buy medicines.

It also accuses the pharmac­eu­tical companies of violating rules. As per government rules, drugs under price control can be sold in the market after adding 100 per cent maximum allowable post-marketing expense (MAPE) to the production cost. But the study blames the drug companies for adding a MAPE between 203 per cent and 1,123 per cent in violation of rules, raising questions about the role played by the NPPA.

A worried Corporate Affairs Minister M Veerappa Moily rece­ntly wrote to Minister of Chemicals and Fertilisers M K Alagiri and Minister of Health and Family Welfare Ghulam Nabi Azad seeking action to cu­rb this practice by the drug companies.

Some of the common drugs sold at high prices include Calpol by GlaxoSmithkline, Corex cough syrup by Pfizer, Revital by Ranbaxy Global, Omez by Dr Reddy’s Labs and Azithral by Alembic. 
Profit margins are “exorbitantly high” in cases of brands like Amlodopine, Metformin, Ciprofloxacin and Azithro­m­ycin. Also, production costs dif­fer significantly. There was significant variance in retail price between different brands of same molecules, the study points out.

“This practice of fixing maximum retail prices (MRP) at exorbitant high levels gives a chance to the whole chain of distributors, wholesale dealers and retailers to dupe consumers. This is highly detrimental to the interests of the consumers, forcing them to pay the MRP even 10 times the cost of medicine they are procuring,” it said.

In 21 high value brands, the­re are very high company profit margins. The profit margins, as percentage of net sales realisation, range from 29 per cent to 68 per cent. 

In 11 cases, the margins were more than 50 per cent. The study comes at a time when a group of ministers (GoM) under the chairmanship of Union Agriculture Minister Sharad Pawar is reviewing the new pharmaceutical pricing policy to increase the number of price-regulated drugs to 348 from the existing list of 74.

A section of Parliamentarians as well as public health specialists and activists are in favour of price control for all the 900-odd drugs .

Congress MP Jyothi Mirdha told the GoM last month that Indians spend 82.7 per cent of medical expense from their pocket, which is the fourth highest in the world. The maximum expense—40 to 70 per cent of any treatment—is spent on drugs. 

In its report tabled in Parliament last month, the standing committee on health said when it asked pharmaceutical secretary about the government’s pl­ans to expand the list of regula­ted drugs, he did not give a “categorical reply.”