Industry sources say the ministry is working on three key proposals: the scrapping of the NPPA chairman's post; transfer of around 14 NPPA officials to the ministry under a joint secretary; and a surrender of the premises occupied by the apex body. These recommendations, sources say, may be put forth to the cabinet for its approval.

Senior ministry officials, however, said they were not aware of any such development and could not comment on it. Top NPPA officials said they could comment on the matter as they were not aware of the move.

Sources say that if the ministry's proposals eventually go through, it could have far-reaching implications for the pharmaceutical industry. For one, it may signal the demise of the apex pricing body. "These proposals indicate the diminishingvalue of the role of the NPPA, which in turn could mean that a major dilution of the Drug Price Control Order (DPCO) is on the cards," sources said.

The NPPA was made responsible for monitoring the prices of bulk drugs and formulations (besides bulk drug production) following a resolution notified by the government on August 29 last year. The NPPA became functional on September 1 last year.

Experts, however, say that the DPCO has become redundant and "only inhibits further productive investments, while wasting public funds on regulatory organisations and bureaucratic procedures".

Currently, around 74 drugs are covered by the DPCO even as the pharmaceutical industry has been seeking a total replacement of the price control system. The industry has been stressing the need for a phased deregulation of drugs which may be backed by strict monitoring of their prices.

It has suggested a decontrol of 17 bulk drugs as a first step, followed by the removal of 19 from the shackles of the DPCO every six months.The pharmaceutical industry has, on its part, assured the government that no immediate price increases will be effected.

Sources also point to a recent statement of finance secretary, Vijay Kelkar, suggesting the need to restrict the scope of the DPCO to a handful of essential drugs. Besides, recent reports also indicate that the government is examining the option of scrapping the DPCO and incorporating a mass health insurance scheme to cover the cost of essential drugs.

The centre has, however, been wary of a total decontrol of drug prices on three major counts: the creation of monopolistic conditions, multifold increase in drug prices and an abnormal rise in the profits of drug companies. The industry has, however, countered these charges time and again and even substantiated its claims with ORG studies on the issue.

Insight

NPPA's role crucial

Considering that even the largest proponents of free trade like the US have mechanisms to prevent the rise of monopoly powers, the existenceof a body such as the NPPA cannot be said to be unjustified. In the absence of wide-scale health insurance, ensuring that essential drugs are available at affordable prices attains great importance. However, while the NPPA did succeed in achieving these objectives to a certain extent, it has had its share of criticism, too. Bureaucratic hurdles to the smooth functioning of the industry is one such criticism.

The number of drugs under the DPCO has already come down considerably. Besides, several pharma companies found innovative ways to avoid coming under the purview of the DPCO. But what this means is that the working of the body needs to be improved, not that it should be abolished altogether.