An investigation carried out by the Indian edition of the leading medical bulletin, the Monthly Index of Medical Specialties, has found that several drug companies, including leading pharmaceutical manufacturers like Dr Reddy's, Novartis and Torrent, have utilised a recent government directive to revise the maximum retail prices of their popular brands beyond the desired level.
The resultant price increase was the cause of a surprise upward variation in the "drug and medicines" segment of the weekly wholesale price index of the ministry of commerce and Industry last week, it is learnt.
The government had, in an attempt to unify the MRP of medicines across the country, asked for a change in the way prices are printed on medicine packs. The government wanted MRP to be "inclusive of all taxes" instead of being "MRP + local taxes extra" from October 2, 2006.
MIMS investigation shows that the companies added much more than the tax component to their revised MRP, thereby causing price hike. It found that many drug manufacturers have hiked the retail prices of their popular brands over and above the sum payable as local taxes.
MIMS sights the example of Nise (nimesulide) brand of Dr Reddy's Labs where the MRP shot up from Rs 27 to Rs 32 - an increase of 18.5 per cent. At the same time, the price of less popular Relant (cetirizine + ambroxol) has been increased by less than 9 per cent -- from Rs 35.73 to Rs 38.85, an indication that local taxes (which will not be different between brands) were not the only component that decided the revised MRP.
MIMS survey also revealed that the price of Betacard (atenolol) of Torrent has been increased from Rs 32 to Rs 38 i.e. by 18 per cent in the revised packs. A 16 per cent increase in the MRP of Voveran SR (diclofenac) 100mg by Novartis and a 20 per cent increase in the price of Covance-50 (losartan) from Rs 50 to Rs 60.45 by Ranbaxy are other instances highlighted by MIMS.
"Ranbaxy has increased the price of Storvas (simvastatin) from Rs. 80 to Rs. 84.84 i.e. by 6 per cent but had no hesitation in hiking the price of Covance by more than 20 per cent. Surely such hikes cannot be attributed to inclusion of local taxes only" Dr C M Gulhati of MIMS says.
Interestingly, the 'drugs and medicine price' section in the WPI had seen the highest variation (5.8 per cent ) during the week ended February 24 and had contributed most to the annual rate of inflation for that week.