NEW DELHI, January 18: The Minister for chemicals and pharmaceuticals M Arunachalam has stayed the notification slashing the price of ranitidine, the country's largest selling anti-ulcer bulk drug, from Rs 1714 to Rs 1203 per kg on a review petition filed by Glaxo. The formulation price of the drug should not be disturbed, he ordered.The minister's order, which was passed on November 20, 1997, was flouted by the department of pharmaceuticals. The latter had sought a review of the stay on the price cut. An irate Arunachalam has on Thursday slapped a show cause notice on his department for not obeying orders. "My directions have not been followed and I would like to know why ?", the minister wrote on the file.Subsequent to last week's diktat, the department has decided to fall in line and roll back the order effecting a price cut in ranitidine. Formulation prices will continue to be valued a the earlier bulk price of Rs 1714 per kg.
Arunachalam found fault in the parameters and assumptions which were takeninto account by the Bureau of Industrial Costs and Prices (BICP) and the National Pharmaceutical pricing Authority (NPPA) while deciding on the price cut. The stay was ordered because Arunachalam felt that the price data on the drug was not exhaustively compiled by the authorities. Of the three main manufacturers of the bulk drug -- Glaxo, Shasun and Cheminor -- the last did not provide information on cost of production for the year 1996-97. He said that the price cut should be put off until a government team is sent on a plant visit to Cheminor to assess the correct cost of production."I see merit in Glaxo's argument (in the review petition) that the weighted average cost of production should be taken of all manufacturers and not of a selected sample. The law ministry's view point can be sought on the issue," Aurnachalam noted on the file. He also saw "considerable merit" in Glaxo's argument that export production should be exempted while arrving at the correct cost of production of the drug.The department
of pharmaceuticals had sent back a protest note to the minister's November order staying the price cut in ranitidine. "The methodology followed by BICP in recommending the fair price is the same in all cases by the BICP. The fair price arrived at has been arranged in ascending order, and at the two-third cut-off level, the revised price comes to Rs 1203 per kg," the department observed in its counter note.
On the minister's observation that the export quantity should be excluded from the weighted average calculations, the department said that "this practice is never followed and an exception cannot be made for one drug as the principle has to be applied across the board". The note went on to add, "the minister's directive would need to be reconsidered and it would be unfair and incorrect to let the formulation price continue at the erstwhile bulk drug price of Rs 1714 per kg when the new bulk drug price has already been notified".
The department, however, admitted to the minister's point that Cheminor hadnot cooperated in sharing the cost data for 1996-97 and the information had to be extrapolated from audit statistics.
While the department was trying to pass the ball back to the minister, Glaxo filed a writ petition in the Bombay High Court challenging the notification that sought to cut the price of ranitidine.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
