Essential Commodities Act could be invoked to regulate pricing and hoarding of drugs

The Centre is considering invoking the Essential Commodities Act to prevent hoarding of APIs and stabilise medicine prices after disruptions in supply routes such as the Strait of Hormuz triggered a sharp rise in raw material costs for pharmaceutical manufacturers.

Hyderabad: To prevent cost of medicines from escalating and discourage individuals and even wholesalers from hoarding life-saving drugs during the ongoing crisis in West Asia, the Centre might invoke Essential Commodities Act (ECA).

Since March, due to the closure of sea routes like the Strait of Hormuz, there has been a disruption in the supply of Active Pharmaceutical Ingredients (APIs) and chemical solvents, which are critical for drug manufacturing.

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As a result, multiple reports have indicated that the prices of essential raw materials have surged by 30 percent to even 100 percent in just two to three weeks. The API prices of Paracetamol have jumped nearly 25 percent while the cost of solvents like glycerine has spiked by over 60 percent.

Pharma experts who are familiar with the development have said that the reason for the surge in prices is because transport ships are charging a premium. The Small and Medium Enterprises (MSMEs), which are heavily involved in manufacturing molecules and smaller compounds for drug companies, have become vulnerable due to these developments.

By involving Essential Commodities Act (ECA), the authorities are hoping to prevent wholesalers and traders from hoarding APIs to create artificial shortages. Senior pharmacists here have said that involving ECA will also stabilize cost of medicines, as it will ensure that the cost of over 900 medicines, which are in the National List of Essential Medicines (NLEM), remain affordable.

A few days ago, the drug pricing regulatory authority National Pharmaceutical Pricing Authority (NPPA) had allowed a marginal 0.65 percent price hike on medicines.

However, pharma companies have argued that such a rise is insufficient to cover the current 200–300 percent surge in some input costs.