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Oct 21, 2017 05:15 PM IST | Source: Moneycontrol.com

Govt says no changes to ceiling price methodology of scheduled drugs

“The Government has been examining the Drugs (Prices Control) Order, 2013 (DPCO) with a view to enhancing the accessibility and affordability of essential medicines at reasonable prices to the poor and needy while providing sufficient opportunity for innovation and competition to support the growth of the Pharmaceutical Industry,” said the Department of Pharmaceuticals (DoP) in a statement on Friday.

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In a bid to allay fears of pharmaceutical industry, the Union government said that any changes in the methodology of calculating ceiling prices of scheduled medicines are presently not under consideration.

“Scheduled drugs” are medicines that fall under price control as per DPCO.

“The Government has been examining the Drugs (Prices Control) Order, 2013 (DPCO) with a view to enhancing the accessibility and affordability of essential medicines at reasonable prices to the poor and needy while providing sufficient opportunity for innovation and competition to support the growth of the Pharmaceutical Industry,” said the Department of Pharmaceuticals (DoP) in a statement on Friday.

The government said it has been actively interacting with the industry and other stakeholders on these issues.

“Any impression regarding tightening of price control is both misleading and misplaced,” the DoP press statement said.

The Indian drug industry was unnerved by media reports about a proposed amendment by a committee under DoP joint secretary to scrap the current method of fixing the ceiling price of drugs based on simple average of brands having market share of over 1 percent.

Public health activists for long argued against taking simple average of over 1 percent market share brands, calling it industry-friendly policy.

According to people with knowledge of the proceedings - a committee under DoP joint secretary Sudhanshu Pant had been asked in April to submit a report on amendments to DPCO 2013.

The government wanted the committee's recommendations vetted by DoP and the National Pharmaceutical Pricing Authority (NPPA).

The government also tried to play down the extent of price controls.

“Under the provisions of DPCO, the prices of only those medicines are fixed which are in the National List of Essential Medicines (NLEM), numbering about 850 against more than 6,000 medicines available in the market of various strengths and dosages,”

“This constitutes approximately 17% of the total pharmaceuticals market, in value terms. There is an Expert Committee which continuously evaluates the list of Essential Medicines,” the press statement added.

The government said the important issues under its consideration include treating the drugs which have become non-scheduled as non-scheduled drugs without any freezing of their prices for a further year; revision of the list of scheduled medicines on the basis of revision of NLEM by incorporating only additions and deletions to the list so that the prices of only ‘’new medicines” which are added to the NLEM will be fixed by NPPA; limiting the determination of overcharged amount of a medicine found to be sold at higher than the ceiling price to the stock available with the defaulter; and in case of negative Wholesale Price Index (WPI), mandating the NPPA to change the ceiling price of scheduled drugs and not require the individual drugs to also reduce their MRPs if they are already lower than such revised ceiling price; etc.

Considers changes to "new drugs" pricing method

As regards “new drugs” as defined in DPCO 2013, the Government said it is considering a change in the method of approving their prices.

The government didn't provide specific details about its plan but said it is in consultation with the industry to explore doing away with the present practice of deciding a new price for each applicant of “new drug”, which is causing considerable time delay in launch of the new drugs in the market by the manufacturers.

A “new drug” as per DPCO, 2013 means a formulation launched by an

existing manufacturer of a drug of specified dosages and strengths as listed in the NLEM by combining the drug with another drug either listed or not listed in the NELM.

Industry body Indian Pharmaceutical Alliance (IPA) that represents large Indian drug makers welcomed the clarifications issued by the DoP on the Proposed Amendments to the DPCO.

"They allay industry’s misgivings about the shape of things to come," said DG Shah, Secretary General of IPA.

Shah also said sought government to provide more clarity on its proposal to change in the method of approving their prices.

"The IPA expects that the DoP also confirms that this proposal is not under consideration, as such a move will expand the span of price control, discourage competition and jeopardise growth of the industry. "New Drugs” is the main driver of growth of the industry," Shah added.
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