Cipla, Alembic move court on new drug pricing

Govt direction to replace existing stock with cheaper ones contested

Pharmaceutical companies are gearing up to challenge the Centre’s populist move to slash prices of essential medicines through the new drug pricing policy. According to sources, drug makers Cipla and Alembic have approached the Delhi High Court and Gujarat High Court, respectively, challenging the provisions of the new Drug Price Control Order (DPCO), 2013, notified by the government in May.

Cipla has raised concerns over the government’s direction to replace stocks in the market with those carrying reduced MRPs (maximum retail price) within 45 days of the new price notification by the National Pharmaceutical Pricing Authority (NPPA). Alembic, too, has challenged NPPA’s mechanism for computation of one per cent market share while determining the price cap.

“We moved the Delhi HC last Friday. Our basic contention is about the provision in DPCO that requires companies to pull out existing stocks within 45 days,” said Prathiba M Singh, Cipla’s counsel and managing partner of Singh & Singh, a law firm.

She added the company had appealed the existing stocks that have been manufactured and are supplied in the market should be allowed to continue sales, while new lots supplied by companies can follow the new price caps.

Separate emails sent to Cipla and Alembic did not elicit any response.

According to a source, Alembic has argued NPPA had violated the provision of the pharmaceutical pricing policy as cleared by the government initially. The new policy prescribes price cap of 348 medicines based on arithmetic average of all medicines with a minimum of one per cent market share. While NPPA has taken into consideration all brands of a formulation made by a company to calculate one per cent, Alembic has contested the mechanism saying multiple brands of a particular company should be assessed independently and only the brands with a share of more than one per cent be considered while determining ceiling prices.

However, NPPA, in the process of filing a response to the courts, says it has followed the norms prescribed in the DPCO. “Our calculation is as per the norms of the DPCO and the provisions of the policy. What we have done is provided for in the policy,” said a senior official. He added the 45-day time period is reasonable and companies should be able to replace stocks within that time frame.