ISSN (Print) - 0012-9976 | ISSN (Online) - 2349-8846

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From 50 Years Ago: Partial Solution

Vol V, No 22 may 30, 1970

Partial Solution

With the fixing of the ‘norms’ for calculation of conversion and packaging charges, the price control on drugs has at last become operative. On paper, prices of medicines have been subject to control since as far back as 1968, but in fact the so-called price ‘freeze’ imposed in the wake of the hostilities with China was totally ineffective and, indeed, mischievous insofar as it created the impression of Government intervention to reduce prices when, in fact, nothing of the sort was being attempted or achieved. How high were the levels at which prices were ‘frozen’ was demonstrated by the study by R K Hazari published in this journal…The study revealed that in 1964 the then wholly foreign-owned companies earned a cash profit which would fetch their investment back in just two years; the rate of profit of the foreign-majority companies was such as to recoup their investment in a little over four years. The data yielded by the Tariff Commission’s inquiry, completed in mid-1968, confirmed that, despite the industry’s well-orchestrated complaints of rising costs, the margins between costs and market prices of drugs remained unconsionably high. The Commission worked out fair retail prices for 49 formulations on a cost-plus-reasonable-profit basis; the actual retail prices charged by different companies for their own brands of these drugs were in most cases way above the Commission’s estimate of fair prices…

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