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Despite the fact that pharma industry was apprehensive about substantial hike in drug prices under the new goods and services tax (GST) regime, it is unlikely to be the case for the pharmaceutical industry. While around 80 per cent drugs were put in the 12 per cent GST bracket (up from the current 9 per cent slab), implying a sharp rise in prices, the National Pharmaceutical Pricing Authority (NPPA) has worked out provisional ceiling prices of 761 formulations towards a smooth GST implementation on July 1 for the pharmaceutical industry.
The pharma pricing regulator has notified the revised ceiling prices of 761 drugs which are part of the Schedule 1 of the Drug Price Control Order (DPCO) 2013. According to the revised list issued by the NPPA, prices of most drugs have come down.
Somes of the scheduled drugs are 5 - aminosalicylic acid, 5-fluorouracil, abacavir, abacavir (A) + lamivudine (B), acetazolamide, acetylsalicylic acid, acyclovir, adenosine, adrenaline, albendazole, allopurinol, alprostadil, amiodarone, amitriptyline, amlodipine, amoxicillin, amoxicillin (A) + clavulanic acid (B), amphotericin B –conventional, amphotericin B – lipid/liposomal, ampicillin, anti - rabies immunoglobulin, artemether (A) + lumefantrine (B), artesunate, artesunate (A) + sulphadoxine - pyrimethamine (B), ascorbic acid (vitamin C), atazanavir (A) + ritonavir (B), atenolol, atorvastatin, atracurium, atropine, azathioprine, azithromycin, baclofen, benzathine benzylpenicillin, benzoyl peroxide, betamethasone, bisacodyl, bleomycin, bortezomib etc.
With this regulatory move, the price increase after the GST roll-out would be marginal as the base price has been lowered.
While most of the drugs will fall under the 12 per cent GST bracket, certain life-saving drugs are in the 5 per cent tax slab under the new regime. Under the GST regime, the prices of stents have not been increased. The NPPA has kept the prices of drug eluting stents at Rs. 30,800 and bare metal stents at Rs. 7,400. Just like stents, prices of immunosuppressants like cyclosporine and drugs to treat leukaemia remain unchanged. Prices of erythropoietin, filgrastim and hepatitis B vaccine also remain the same.
The NPPA notification would mean reduction in prices of drugs to treat HIV, cancer, Crohn’s disease, pneumonia and skin-related ailments among others. Prices of some of these drugs have come down by a few hundred rupees. For instance, the price of anti-cancer drug bortezomib has been brought down to Rs. 11,160 from Rs. 11,637 for a packet of injection powder. Apart from drugs to treat chronic diseases, regular medicines like paracetamol have also seen price cuts.
The NPPA notification of prices has not included the GST element. The list has deducted the excise duty element and VAT from the existing ceiling price of the drugs. In the case of scheduled drugs where companies have been exempted from paying the excise duty, the NPPA has not revised the ceiling price. Companies believe that while the ceiling price has come down for these drugs, adding the GST element to the new ceiling price will make medicines slightly more expensive than their current rates. Analysts have maintained that the impact of GST will not be drastic on such drugs. But the industry is worried about input credit which is only 40 per cent for those without receipts.
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