50% PRICE HIKE ON ESSENTIAL INDIAN DRUGS: THE REASON BEHIND NPPA’S DECISION

India’s National Pharmaceutical Pricing Authority (NPPA) recently approved a significant 50% price increase for certain essential drugs. This development has raised concern among healthcare professionals, patients, and public health experts due to the potential implications for both healthcare costs and patient outcomes. The affected drugs are primarily low-cost medications that are vital for treating various life-threatening and chronic conditions such as asthma, glaucoma, thalassemia, tuberculosis, and mental health disorders. These medicines have long been considered essential in India’s healthcare system, serving as first-line treatments for millions of people.

The Decision to Increase Drug Prices

The NPPA invoked Paragraph 19 of the Drugs (Prices Control) Order (DPCO), 2013, to revise the ceiling prices of 11 scheduled formulations from eight essential drugs on October 8, 2023. This clause allows the NPPA to make exceptional price adjustments in the public interest. A ceiling price is the maximum price that a manufacturer or retailer is permitted to charge for a product. The NPPA justified the 50% price hike as necessary “to ensure the continued availability of these drugs” in light of increased production costs and rising prices of key ingredients.

Pharmaceutical companies have long been requesting this price adjustment. They cited a combination of factors, including rising costs of raw materials, increased production expenses, and adverse currency exchange rates, all of which have made it increasingly difficult to manufacture and sell these essential drugs at the existing regulated prices. Some companies even expressed their intention to stop manufacturing certain medicines due to unsustainable financial losses, exacerbating fears of drug shortages in critical areas of healthcare.

Which Drugs Are Affected?

The 50% price increase applies to a selection of drugs that play a crucial role in treating common yet serious medical conditions. These include:

1. Benzyl Penicillin 10 lakh IU injection: A widely used antibiotic for treating bacterial infections, including syphilis, endocarditis, and bacterial meningitis.

2. Atropine injection 0.6 mg/ml: Used to treat bradycardia (slow heart rate) and to reduce salivation and secretions during surgery.

3. Streptomycin powder for injection (750 mg and 1000 mg): An antibiotic essential for the treatment of tuberculosis (TB) and other bacterial infections.

4. Salbutamol (tablets 2 mg and 4 mg, and respirator solution 5 mg/ml): A bronchodilator for asthma and other respiratory diseases.

5. Pilocarpine 2% drops: A medication used to treat glaucoma by reducing intraocular pressure.

6. Cefadroxil tablet 500 mg: An antibiotic used to treat bacterial infections like urinary tract infections, skin infections, and respiratory tract infections.

7. Desferrioxamine 500 mg injection: Used for treating thalassemia and anemia by removing excess iron from the body.

8. Lithium tablets 300 mg: A critical drug in managing mood disorders, particularly bipolar disorder and depression.

Why Are Drug Prices Increasing?

The pharmaceutical industry has been facing increasing challenges in maintaining the supply of essential drugs at low prices due to various economic pressures. According to industry sources, several factors have contributed to the need for a price revision:

1. Rising Production Costs: The cost of raw materials, often sourced from international suppliers, has increased significantly. Active pharmaceutical ingredients (APIs) and excipients (inactive substances used in drug formulations) have seen a steady rise in prices due to global supply chain disruptions and inflationary pressures. The pharmaceutical sector, which relies heavily on imported APIs from countries like China, has been hit hard by the volatility in global markets.

2. Increased Costs of Compliance and Regulation: Pharmaceutical companies are required to adhere to stringent regulatory guidelines, ensuring that drug manufacturing processes meet international standards. These regulations have led to higher compliance costs for the industry, further squeezing profit margins on essential, low-cost drugs.

3. Currency Exchange Rate Fluctuations: The weakening of the Indian rupee against major global currencies has added to the financial burden of pharmaceutical manufacturers, especially when importing raw materials from countries where the cost of procurement is tied to stronger currencies like the U.S. dollar or the Euro.

4. Profitability Concerns: Due to these rising costs, some pharmaceutical companies have found it economically unviable to continue producing certain drugs. They have either stopped production or scaled back their operations. The NPPA’s intervention to raise prices aims to prevent shortages by making it more financially feasible for manufacturers to continue production.

Potential Impact on Patients

The 50% price increase has sparked concerns among healthcare providers and patients alike, particularly those from lower- and middle-income backgrounds who depend on affordable medication for chronic conditions. Doctors warn that the price hike could negatively impact treatment adherence, particularly for long-term treatments such as tuberculosis (TB) and asthma.

Impact on Tuberculosis Treatment

India has one of the highest burdens of tuberculosis globally, and treating TB requires a lengthy regimen of antibiotics, sometimes lasting between six and 18 months. Streptomycin, one of the drugs affected by the price hike, is used in combination with other antibiotics to treat severe cases of TB, such as bone and cerebral tuberculosis. Doctors fear that the higher costs might lead to reduced treatment adherence among patients who cannot afford the increase. This could result in incomplete treatment, risking the emergence of drug-resistant TB strains, which are much harder to treat and more expensive for the healthcare system.

Impact on Asthma and Respiratory Diseases

Asthma, another prevalent chronic condition in India, requires continuous medication for effective management. Salbutamol, a commonly prescribed bronchodilator, is essential for controlling asthma symptoms. However, the price increase might force patients, especially those from economically disadvantaged families, to ration their medication or skip doses, worsening their symptoms and potentially leading to more frequent and severe asthma attacks. Incomplete treatment could also heighten the risk of developing drug-resistant strains of respiratory diseases, complicating future treatments.

Broader Public Health Implications

The NPPA’s decision to raise prices, while aimed at ensuring the continued availability of essential drugs, carries significant public health risks. Experts are concerned that the price increase might lead to a spike in healthcare costs as more patients turn to government hospitals when they can no longer afford private care. This would put additional strain on the already overburdened public healthcare system, which is grappling with limited resources and capacity.

Furthermore, the increased cost of essential medicines might lead some patients to seek out cheaper, substandard alternatives, which may not be as effective or safe. This could increase the risk of “breakthrough diseases,” where a patient’s condition worsens after treatment, causing more severe health issues. In the long term, the failure to address these risks could exacerbate the financial strain on India’s healthcare infrastructure.

Looking Ahead: Balancing Public Health and Economic Viability

The NPPA’s mandate is to regulate the prices of essential medicines to ensure affordability while preventing drug shortages that could arise from unprofitable production. The decision to invoke Paragraph 19 of the DPCO and allow a price hike reflects the authority’s balancing act between protecting public health and maintaining economic viability for drug manufacturers. This marks the third instance in recent years where the NPPA has used its extraordinary powers to raise prices, following similar actions in 2019 and 2021 when price increases were approved for 21 and 9 drug formulations, respectively.

While the NPPA’s move aims to address the immediate threat of drug shortages, it highlights the broader challenge of ensuring affordable healthcare in an environment of rising costs. As India continues to strive toward its public health goals, such as the eradication of TB, careful monitoring and additional measures may be required to mitigate the unintended consequences of this price hike on patient outcomes and the healthcare system as a whole.