Rising prices of Medicines: 6 in 10 consumers say medicine prices have already increased 20% in last 12 months and another 12% increase from April 1 will hurt badly

April 1, 2023, New Delhi: As has been the norm, the government is all set to allow drug manufacturers to increase the ceiling prices of around 900 scheduled drugs (medicines) on April 1, in line with the change in the annual Wholesale Price Index (WPI). The annual change in WPI in 2022, as notified by the government, is 12.12%, the National Pharmaceutical Pricing Authority (NPPA), the drug prices regulator, said on March 27. Prices of 384 molecules, which correspond to around 900 formulations across 27 therapies, are thus expected to go up by over 12%. This is the second year in a row when the increase is more than that allowed for non-scheduled drugs.

Scheduled drugs including painkillers, anti-infectives, cardiac drugs and antibiotics are part of the national list of essential medicines. Their prices are regulated by the NPPA. The rest - non-scheduled drugs which are outside price control - are allowed an annual increase of 10% every year. For the year 2021, the subsequent hike in drugs was over 10% in line with change in WPI.

Global events including the pandemic and Russia-Ukraine war has led to disruption in supplies of raw material or active pharmaceutical ingredients (API) for essential drugs and also a steep rise in their prices. Even while the supply chain and logistics situation has improved, the increasing price of raw materials remains a concern for the pharma sector while consumers are having to pay a much higher cost for their dose of medicines.

With tens of thousands of consumers across India expressing the pinch of rising prices of medicines on LocalCircles since the 2nd COVID wave, the platform decided to conduct a national survey to quantify the magnitude of the price increase. The survey received over 34,000 responses from consumers located in 323 districts of India. 66% respondents were men while 34% respondents were women. 46% respondents were from tier 1, 30% from tier 2 and 24% respondents were from tier 3 & 4 districts.

58% of respondents indicated that prices of medicines have changed in the last 12 months; 31% stated that they have risen over 20%

The first question in the survey asked respondents, “For the medicines that you have regularly been purchasing, how have the prices changed in the last 12 months?” This query received 8,478 responses with 58% of respondents indicating that prices of medicines have changed in the last 12 months, and 31% stating that it has risen over 20%. Breakdown of the data shows that while 26% of the respondents feel that “prices are more or less the same”; 12% indicated that “prices for most are higher by over 50%”; 19% shared that prices of most medicines they buy are “higher by 20-50%; 27% shared that the prices of most medicines are 0-20% higher. On the other hand, 1% of those surveyed felt the prices have in fact dipped by over 20%, another 1% claimed the prices of most medicines they buy are lower by 0-20%; another 4% claimed they are not sure as “I have changed my source (wholesale, online, etc.) and 10% opted for "can't say” as they personally don’t purchase the medicines consumed.

Majority of those surveyed indicated that prices of specialized medicines for diabetes, BP, arthritis, cancer, etc., have risen the most

The second question in the survey asked respondents “What are the categories in which your household has experienced significant rise in prices of medicine in the last 12 months?” which received 8,451 responses with the majority indicating that prices of specialized medicines for diabetes, BP, arthritis, cancer, etc., have risen most. Data shows that 5% of respondents had to pay more for general medicines (1) like for fever, cough, headache, eye drops, vitamins, etc.; 35% indicated specialized medicines (2); it is not just allopathic medicines which became costlier as 2% of respondents pointed to Ayurveda and Homeopathic medicines (3); 30% indicated both 1&2 categories; 30% to categories 1&3; 6% of respondents pointed to categories 2&3; and 18% to all the three categories of medicines. On an aggregate basis, 89% said that they experienced significant price increase in the specialized medicines category i.e. diabetes, blood pressure, arthritis and cancer while 57% said they experienced a significant price increase in general medicine category as well i.e. medicines for fever, cough, headache, eye drops, vitamins etc. It must be noted that since 2020, the general category of medicines have experienced a huge surge in demand due to COVID.

56% of respondents indicated that MRP on medicines regularly taken by them or their family members has risen; 31% stated that the rise has been above 20%

The next survey question asked respondents “On the medicines that you have regularly been purchasing, how much has the maximum retail price (MRP) displayed on those medicines changed in the last 12 months?” This query received 7,350 responses with 56% indicating that they believe the MRP on medicines regularly taken by them or their family members has risen and 31% stating that the rise has been above 20%. The data shows that 25% of the respondents felt the MRPs are more or less the same; but 8% of those surveyed felt the “MRPs for most products are higher by over 50%”; 23% indicated that the MRPs for most medicines are higher by 20-50% and 25% indicated that the MRPs for medicines regularly purchased have risen by 0-20%. Only 2% of the respondents stated the MRPs are lower by 0-20%; while 3% indicated they couldn’t comment as they have change the source (wholesale, online, etc.,) and 14% of respondents stated they can’t say anything on the issues are they don’t personally purchase the medicines require and had not paid any attention to the previous MRPs. On an aggregate basis, 31% believe that the MRPs have risen by 20% or more. The big question in the mind of some consumers is that for essential medicines through the price increase was only approved up to 10%, how is it that MRPs have risen north of 20%. The regulator must do more investigation on the subject to ensure that no norms are being violated and that the consumer is not being disadvantaged.

76% want the Government to cap the trade margin on medicines between 50-100%

A large majority of Indian households are currently feeling the pinch of high inflation, rising cost of living and limited or no growth in household earnings. With medicine prices already pinching in past 12 months and another price increase of 12% scheduled to go in effect on 900 formulations from April 1, 2023, the next question focused on way forward for the consumer to provide some relief. With many consumers pointing to the huge gap that typically exists between medicine selling price and MRP it asked them, “How should the government cap the trade margin percentage on medicines?” Of the nearly 10,000 consumers who responded to this query 76% want the government to cap the trade margin on medicines. Data shows 21% of those surveyed want the trade margin to be capped at 100% of the ex-factory price; 55% want the trade margin to be capped at 50%. However, 5% of the respondents are not in favour of capping the trade margin and 19% gave no clear response.

In summary, the survey finds that 6 in 10 consumers have experienced on the ground a price increase of 20% in medicines in the last 12 months with 89% experiencing a significant increase in prices of specialised medicines and 57% of them confirming a significant price increase in prices of general medicines. 56% of those surveyed also confirmed an increase in MRP of medicines with 31% of them confirming that MRPs have risen over 20%. These are significant increases. With many already feeling the pinch of rising prices in last 12 months and another increase of approximately 12% going into effect on 900 formulations from April 1, 2023, there is a high level of concern amongst the household consumers. Add to this the current economic scenario of high inflation and cost of living and household earnings flat or having limited growth, the pain is real. One of the solutions people are keen that the Government consider is that of capping of trade margin. When asked about the trade margin cap in the survey, 55% respondents said that a cap of 50% trade margin must be implemented while 21% of them were in favour of a 100% cap. People feel that atleast with a cap on trade margin the MRPs will become more realistic and many consumers who currently may be subject to overcharging may end up paying a more reasonable price for the medicines.

LocalCircles will escalate the findings of this survey with the key stakeholders like NPPA, Department of Pharmaceuticals and Department of Consumer Affairs for their interventions.