India’s National Pharmaceutical Pricing Authority (NPPA) has asked the government to tighten legislation to stop pharmaceutical manufacturers from abusing safeguards which are aimed at preventing drug prices from increasing to unacceptable levels.

At present, manufacturers are free to set the launch prices of medicines which are not under official price control. However, these are monitored by the NPPA, and if a new product’s price then rises more than 10% in a year the agency is empowered to bring it under official control. The NPPA has told the government it believes that some companies are setting the initial launch price at over-inflated levels in order to avoid such action by the NPPA later on.

The issue is expected to be discussed at the Cabinet’s second meeting on the new pharmaceutical policy, due to be held early in September. The meeting is also likely to examine a plan being developed by the Ministry of Chemicals and Fertilisers aimed at preventing innovative new medicines from being launched in India at over-inflated prices. The Ministry is suggesting that the government should propose the Indian price, based on its cheapest level internationally, and then negotiate with the manufacturer.

The NPPA is also investigating procurement contracts agreed between drugmakers and large-volume purchasers such as state governments, military institutions and the railways, after a number of state governments informed it of the significant differences, of as much as 59%, which they have found between the procurement and retail prices charged by some manufacturers for the same brands. In addition, it is examining further reports from the state governments that they have found, in certain cases, huge differences in the prices of different brands of the same medicine.

New pharma/biotech zone planned

Meantime, Indian pharmaceutical firm Ajanta Pharma has announced plans to establish a 'special economic zone' for the pharmaceutical and biotechnology industries. A 250-acre site at Aurangabad in the state of Maharashtra has been acquired by the Mumbai-based company from the state’s industrial development corporation, and it is now in investment negotiations with international generic drugmakers. Ajanta expects the project to take about a year to set up. By Lynne Taylor