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Pharma industry challenges new drug pricing policy

Move expected to delay introduction of low priced medicines in the market

Nivedita Mookerji  |  New Delhi 

Taking cue from and Alembic, many in the pharmaceutical industry have challenged the new drug price fixation orders, which were to be implemented from July 29. The move is expected to delay introduction of low priced medicines in the market.

According to official sources, Sun Pharma and two major industry bodies - Indian Drug Manufacturers Association (IDMA) and Confederation of Indian Pharmaceutical Industry (CIPI) - have approached Delhi High Court recently challenging the 45 days time period given to companies for replacing existing stocks. Besides, some other firms such as IPCA Labs and multinational drug maker Abbott have filed a review petition with Department of Pharmaceuticals challenging other aspects of the new price regulation, sources said.

Meanwhile, the drug price regulator National Pharmaceutical Pricing Authority (NPPA) started notifying prices of essential medicines as per the new policy from mid-June. As per the notifications, companies are required to replace existing stocks in the market with newly priced batches within 45 days of notification. While the first notification came on June 17 for 151 drugs, companies selling those drugs were required to implement the new pricing from July 29. However, with several companies challenging the norm, it is likely that medicines will continue to be available at their earlier prices in the market. Some trade sources confirmed that companies are yet to replace stocks.

However, the price regulator has started its vigilance process. “We are writing to state drug controllers to keep a strict watch on the market and report to us immediately if any violation is noted,” a senior official said. NPPA is also planning to collect random samples from the market very soon to check whether its orders are being followed or not, the official added.

According to the official, if companies are found selling drugs at a price more than the ceiling price notified, then they will be face action from NPPA for overcharging.

Meanwhile, the finance ministry has also issued a notification exempting excise duty on re-printing, re-labeling, re-packing or stickering of such essential drugs within 45 days of NPPA’s price notification. The move is significant as it is expected to save companies from payment of excise duty twice while relabeling the existing stocks.

“The scheduled formulations, in respect of which the manufacturer is liable to ensure that the Maximum Retail Price (MRP) of such formulation does not exceed the ceiling price within forty-five days of the date of notification of the ceiling price by National Pharmaceuticals Pricing Authority (NPPA), have been removed from the place of removal on payment of appropriate duty,” the notification by Department of Revenue said.

While the industry has welcomed the move, it continues to argue that recalling the existing stocks from the retail level is practically not possible and therefore the government should allow companies to sell the existing stocks at the previous price.

However, the regulator says the move is important keeping in mind the public interest because without a deadline companies are likely to misuse the provision and dodge price control.

First Published: Wed, July 31 2013. 19:35 IST