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NEW DELHI: Government ’s price capping of essential medicines has failed to make drugs affordable and instead led to a hike in prices of such products as compared to ‘unregulated’ ones, says the Economic Survey while advocating “non-distortionary” mechanisms to keep prices under check.

The survey suggests that government—as a huge buyer of drugs through its various schemes and mechanisms such as CGHS, defence, railways, etc—combine its purchases and use its bargaining power effectively to provide affordable drugs.

“The increase in prices is greater for more expensive formulations than for cheaper ones and for those sold in hospitals rather than retail shops. These findings reinforce that the outcome is opposite to what DPCO (Drug Price Control Order) aims to do—making drugs affordable,” it said.

Officials, requesting anonymity, said the Survey rightly points out anomalies. “Price control has not benefited the consumer as much as it has hurt the industry. Take the example of stents. While stents have become cheaper and reduced margins of medical device manufacturers, procedure costs have not changed as hospitals have raised other cost components to equalise their margin,” said an official at NITI Aayog . Another said market forces should determine prices as competition keeps them in check.

The survey, which analysed data for 1,751 formulations and 49,893 brands, shows prices of drugs under DPCO 2013 increased on average by Rs 71 per mg of the active ingredient (raw material), whereas for drugs not covered under regulation, prices increased by Rs 13 per mg of active ingredient. Similarly, prices of medicines, under control, sold in hospitals increased as much as Rs 99 per mg, whereas it was Rs 25 per mg for those which were not under price control and sold in hospitals. The survey also shows that access to services improved through Ayushman Bharat and Mission Indradhanush.

