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Governance

Niti Aayog-led Committee to Monitor Pricing of Drugs

  • 22 Jan 2019
  • 2 min read

The Union government has formed Standing Committee on Affordable Medicines and Health Products (SCAMHP) under NITI Aayog.

  • The objective of the committee is to recommend medicines for price control. Thus, diluting the central role of the National Pharmaceuticals Pricing Authority (NPPA) in setting drug prices.
  • SCAMHP will be a recommending body to NPPA regarding prices of drugs and health products.
  • At present, the health ministry prepares the list of drugs eligible for price regulation. The department of pharmaceuticals (DoP) then incorporates National List of Essential Medicines (NLEM) into Schedule 1 of the Drugs (Prices Control) Order (DPCO). Following this, NPPA fixes the prices of drugs in this schedule.
  • The committee may take a matter related to pricing for examination, suo motu or on the recommendations of Department of Pharmaceuticals (DoP), NPPA or the department of health and family welfare.
  • The new committee can also exercise powers under Para 19 of Drugs (Prices Control) Order (DPCO):
    • NPPA exercises Para 19 powers in public interest.
    • In 2013, the government had delegated these powers to NPPA, which it can exercise for setting the price cap of scheduled and non-scheduled drugs.
    • NPPA used para 19 powers in 2017 to cap prices of cardiac drugs, stents, and knee implants.

Concerns

  • The direct implication is that the new committee has broad discretionary powers to intervene in any aspect including related to the functions of the NPPA which could be used to dilute the pricing regime.
  • Earlier NPPA was taking strict action against those companies found to be overcharging. This will weaken the functions of NPPA as an enforcement body.
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