When price caps on pharma drugs fail

Akanksha· Host0:00

[upbeat music] In today's episode of The Daily Brief, we will be breaking down two important stories. The first is about when should the prices of medicines go up, and the second one is how Indian hotels are performing financially. Welcome to The Daily Brief, where we cut through the noise and give you the real insights into the world of finance and business. I'm your host, Akanksha, and today is Monday, 15th of June. So let's start with the first story. So when should one increase the price of medicine? The thing is, the government just did something that at first glance would seem inhumane. It agreed to let the prices of two cancer drugs rise by as much as 50%. The drugs are cisplatin and carboplatin. Both are made from platinum-based raw material. They are first-line chemotherapy drugs used to treat ovarian, cervical, lung, breast, head and neck, and testicular cancer. These drugs are also cheap. A 10-milligram vial of carboplatin is capped at 61.1 rupees. In the last few months, though, they started disappearing from hospitals, including AIIMS Delhi and Tata Memorial Center. This is why the government invoked an emergency clause to let its manufacturers charge more. It was better to let a drug cost slightly more than to have none of it in pharmacy shelves. This tells you why a price cap can be a trade-off. On one hand, the cap did exactly what it was designed to do. It held the price flat.