Chandigarh, July 15
Manohar Lal of Panchkula needs frequent protein plasma transfusions. His family used to buy plasma (Human Albumin), manufactured by Synergy Diagnostics, from the pharmacy of a private hospital for Rs 5,000 per 100 ml dose (MRP of Rs 6,030). One day, they found that the same product was available for Rs 2,050 at a chemist shop in Chandigarh.

Sushila Rani was undergoing treatment for food poisoning at a Ludhiana hospital. A canula and an IV set were used to administer her medicines intravenously, including Tazect injection. The hospital pharmacy charged Rs 72 for canula and Rs 70 for IV set (both manufactured by Romsons), while Tazect injection cost Rs 650 (all on MRP). Later, the family came to know that the three things were available for Rs 30, Rs 30 and Rs 350, respectively, in the market.

These are not the isolated cases where patients were forced to shell out more to buy drugs.

With over 300 per cent difference between the production cost and the MRP fixed by drug manufacturers, most of the medicines have gone out of reach of the common man.

With the manufacturers including their huge marketing costs (involving sales promotion, margins allowed to chemists and offers made to doctors for prescribing these medicines) while fixing the MRPs of medicines, the cost of medicines has escalated like never before.

All this is happening because of the MRP-based tax regime that was introduced a few years ago. With most manufacturers having shifted base to the tax-exempt hill states, and thus free from paying any excise on the MRP, they fix MRP higher than the MRP of the same drug manufactured in non-tax-exempt states. By fixing higher prices, these manufacturers can have a higher margin for marketing their drugs, taking care of the huge commission being paid to doctors and chemists.

With most medicines flooding the Indian market as non-scheduled drugs, there is no government control on their pricing. This means that most medicines meant for patients suffering from life-threatening diseases, have gone beyond the reach of vast majority of patients.

Once the manufacturer has fixed the MRP, it is purely up to the hospital pharmacy/retail chemist to sell it at whatever price he deems fit. In most private hospitals, the policy is to sell drugs at the MRP, which allows hospitals to pocket huge commissions. Since purchase by these private hospitals is made in bulk, the manufacturers offer them a huge discount on the MRP, which is generally not passed on to the patients. Retail chemists, on the other hand, tend to pass on some percentage of the commission to the patients, in an effort to maximise their sales.

Officials in the National Pharmaceutical Pricing Authority (NPPA), the national body set up by the government to control prices of medicines, informed The Tribune that though they do not control the prices of non-scheduled medicines, they do monitor these prices.

“In case of non-scheduled bulk drugs, we monitor the price hike effected by a manufacturer on annual basis. The manufacturers are not allowed to hike prices by more than 10 per cent per annum. In case of indigenously made scheduled bulk drugs, the prices are fixed and we have allowed the manufacturer to keep 100 per cent profit margin on the factory cost of production, while fixing the MRP,” said a top official of NPPA.

In simple terms, the government has a control on the prices of just 74 salts that have been included in the list of scheduled medicines. Because the prices of these 74 salts are fixed and the profit margins meagre, the doctors recommending and the chemists selling these drugs do not get any commission. As a result, these medicines are neither recommended by doctors, nor sold by chemists.

The drug manufacturers, the salts manufactured by whom come under the Drug Price Control Order, have found a novel way to escape this and continue selling drugs at higher prices. After doxycyclin salt was included in the price-control order, its price was fixed at Rs 9.90 for 10 tablets. However, a drug manufacturer simply added Lactic Acid Bacillus to the doxycyclin salt, modified the brand name by adding a suffix, and continues to sell it at Rs 57.50 for 10 tablets.

Similarly, after Amoxycyclin and Cloxacillin salt combination was included in the DPCO, and its price fixed at Rs 19.80 for nine tablets, the manufacturer made a slight change in the combination by using Amoxycyclin and Dicloxacillin and started retailing it at Rs 53.50 for nine tablets.

Officials in the NPPA, when contacted, said they were aware of this “malpractice” by the manufacturers. “We keep a look on such malpractices. Manufacturers are not allowed to change the combination of scheduled formulations without getting approval from the NPPA. The errant manufacturers are fined regularly,” they said.

(To be concluded. Tomorrow: Why are manufacturers raising MRP of drugs)