Companies currently selling essential medicines at less than the government-mandated price caps will have to freeze their rates at the existing levels and will not be given the option of matching the higher ceiling price,according to the upcoming drug pricing policy.This will constitute a setback to companies that sell essential drugs at rates below the government notified price and will put them at a disadvantage against new entrants who will be able to sell products at the ceiling price.

But this move will address a major concern of health activists and the World Health Organisation who had expressed the fear that a market-based ceiling price would encourage drug makers selling medicines below this level to raise their prices.This would have defied the basic purpose of regulating the prices of essential drugs.We have therefore decided to change the concept of ceiling price.Rates of medicines that are sold at more than the ceiling price have to be slashed.But rates of medicines sold below ceiling price will not be increased, an official said.

The prices prevailing in May 2012,six months before the drug pricing policy was notified,will be taken as the reference point.Drug-makers will be permitted an annual increase in maximum retail price that will be in sync with the rise of the wholesale price index.The government is in the process of expanding the number of drugs whose prices are regulated.At present,dosage forms made from 74 bulk drugs or active pharmaceutical ingredients that total 150 fall under price control.

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