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Panel suggestions to soften prices of essential medicines


New Delhi:

A ministerial panel headed by Agriculture Minister Sharad Pawar today finalised the drug pricing formula based on simple average of drugs with over 1 per cent market share, sources told NDTV.

It means that the price will be the weighted average price of all drugs which have over 1 per cent market share. Weighted average means that the price of a particular drug will have a weight equal to its market share when the average price or median price is calculated.

In effect, this means that if the suggestions are accepted by the Cabinet, which is likely to get the report on Thursday, the prices of medicines will soften marginally.

The Group of Ministers (GoM) had earlier decided on weighted average price of drugs with over 1 per cent. It may be noted that Finance Minister P Chidmabaram had reservations over weighted average price-based pricing formula.

However, sources told NDTV that the minister is not happy with the price mechanism as suggested by the GoM.

Also, at today's meet it was decided that any change in formulations of 348 drugs will come under price net and an increase in prices beyond 10 per cent will have to be cleared by drug price regulator National Pharmaceutical Pricing Authority (NPAA), with NPAA being allowed to revise prices any time.   
NPPA can revise prices at any point
The Finance Minister was a special invitee at the meet today as there were concerns raised on following the weighted average price (WAP) method of pricing, with Mr Chidambaram suggesting that the cost plus method should be adopted.

Following approval by the Cabinet, 348 essential drugs will come under price control of the government.

At present, the government, through the National Pharmaceutical Pricing Authority (NPPA), controls prices of 74 bulk drugs and their formulations.

Apart from Pawar, Sharma and Jena, other members of the group include Health Minister Ghulam Nabi Azad, Minister for HRD, Communications and IT Kapil Sibal, Law Minister Salman Khurshid and Planning Commission Deputy Chairman Montek Singh Ahluwalia.

Story first published on: November 21, 2012 19:01 (IST)

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