Pharma department moves to wrestle NPPA’s special powers to cap drug prices

In a significant development, the department of pharmaceuticals is understood to have moved a proposal to effectively wrestle the powers of the National Pharmaceutical Pricing Authority - India’s drug pricing authority – vested under Paragraph 19 of the Drug Price Control Order, 2013. A submission has been made recently by the department to Ananth Kumar, Minister of Chemicals and Fertilizers, seeking to effectively shift the operational powers of the clause to itself.

In simple terms, Paragraph 19 of the DPCO allows the pricing authority to fix or revise the ceiling price or retail price of any drug which it deems necessary for the interest of the public in case of any extraordinary circumstances. Interestingly, the NPPA’s decisions to cut prices of the widely used coronary stents by as much as 85 percent earlier in February this year and more recently the prices of knee implants were partly effected using powers under Para 19.

Controversy first erupted over NPPA’s use of Para 19 in 2014 after the authority fixed the prices of as many as 108 non-scheduled cardiovascular and anti-diabetes medicines or drugs not under the National List of Essential Medicines after noting huge “inter-brand price differences” that in its assessment led to a “market failure". The decision was criticised by Indian and multinational industry groups as “discretionary” and challenged separately in courts. The Bombay High Court backed the NPPA decision and its powers to decide on price caps in extraordinary circumstances in public interest.

According to Malini Aisola, representing the All India Drug Action Network, “stripping NPPA of the powers to use para 19 to further the public interest and respond to public health needs will be a disaster. The powers under para 19 have been reaffirmed by the courts. It is absolutely essential that these powers remain intact (with the NPPA) and continue to be used such as for checking the prices of medical devices.”

The timing of the move of the department of pharmaceutical is crucial. Later during the week, a case moved earlier by AIDAN is scheduled for hearing at the Supreme Court. AIDAN has challenged the government on the amendments to the DPCO and questioned the effectiveness of market-based pricing regulations versus the previous model of pricing of drugs based on the cost of manufacturing and marketing expenses.

"If Para 19 goes from the NPPA's jurisdiction, it may become less potent or ineffective," said another source, requesting not to be identified.
In its latest draft policy report that came up for discussions with stakeholders and industry representatives a few weeks ago, the department of pharmaceuticals had said with reference to regulation of price controls on patented medicines that “they can be regulated through compulsory licensing under the Patents Act or by use of emergency powers under paragraph 19 of DPCO 2013, that too, only when expressly directed by the government in the Department of Pharmaceuticals to do so.”

While the industry had expressed strong reservations on the NPPA’s decisions to cap prices of medical devices over the last few months based on Para 19, it was openly supported by the Prime Minister and the chemicals and fertilizers minister Ananth Kumar, who had via tweets commended the decisions that made the products affordable to the masses.