NPPA evokes special powers to fix prices of 14 formulations
New Delhi: India’s drug pricing regulator has invoked its special powers to fix the prices of 14 formulations including glucose injections, morphine tablets, potassium permanganate, clot busters and emergency injections.
After bringing down prices of cardiac stents and knee implants last year, National Pharmaceutical Pricing Authority (NPPA) decided to invoke para 19 of the Drug Prices Control Order (DPCO) to fix state institutional (procurement) price as the ceiling price without adding any further trade margin for these so-called large volume parenterals. Pharma industry lobby groups say that the order is likely to have serious ramifications on the availability of these formulations and fear that it will discourage new investments in these areas.
In this case, NPPA has fixed the price based on the state institutional price which is usually lower than the market/retail prices because institutional supplies come with a guaranteed volume and there are no marketing expenses involved. That is a departure from the usual practice of fixing prices outlined in the DPCO.
For these 14 formulations, NPPA has used the state institutional price because of unavailability of market data and to make the formulations affordable.
“The authority examined the draft ceiling price fixation which was worked out by adding 16% trade margin on the procurement price of various government agencies. After detailed discussions and keeping in mind the extraordinary situation of non-availability of market data and the essentiality of these drugs to be made affordable in public interest, the authority decided to fix state institutional procurement price as ceiling price without adding any further trade margin as institutional procurement is inclusive of all margins by invoking the government jurisdiction under para 19 of DPCO 2013,” read the minutes of the meeting. Mint has reviewed the minutes of the meeting held on 22 November.
D.G. Shah, secretary general of the Indian Pharmaceutical Alliance (IPA), which represents 20 of the country’s biggest drug makers, said that due to a significant low price, these products may disappear from the retail segment. “It is unfortunate that the NPPA is focused only on price and not bothered about access or availability. Both these are equally important for the public. The above 14 products may disappear from the retail segment,” Shah warned.
The NPPA’s decision brings down the prices of these 14 formulations. For example, clot buster Alteplase (powder for injection 50mg) which was sold at around Rs39,375 will now cost Rs35,985. A company official at a drug maker said that they will approach the NPPA with their representation. The official declined to be named.
Malini Aisola, health researcher at non-profit All India Drugs Action Network, said that the latest order “exposes the flaws of the irrational market-driven pricing policy that is completely dependent on market data. There are problems in fixing prices when the data is not available from proprietory sources or the government’s own database. AIDAN has advocated cost-based pricing where the government may set prices in relation to the cost of production and also provide a reasonable profit to the manufacturer.”