Essential medicine likely to get dearer as price revision looms

NPPA seeks data from firms to revalidate existing prices

Soon, consumers might have to shell out more for essential medicines. The National Pharmaceutical Pricing Authority (NPPA) is seeking medicine cost details from individual companies, based on which current rates could be revised, according to an official.   

The move comes in the wake of complaints from leading pharmaceutical companies pointing out that the basis of price fixation by NPPA is not accurate. The companies had alleged while NPPA used IMS Health data, it does not represent the real prices. Following the complaints, department of pharmaceuticals (DoP) ordered NPPA to revalidate the data used for capping prices of essential medicines under the new policy.

“In compliance with the review orders of DoP, NPPA has been directed to revalidate the data under para nine of the DPCO (Drug Price Control Order), 2013, through a broad-based survey,” the price regulator said in a notice.

According to an industry official, the move is likely to lead to an increase in prices of medicines, as that was the main contention behind the appeal filed by pharma companies with the DoP. “The industry feels the price caps notified by NPPA under the new order were not in line with market prices. The IMS Health data does not capture all brands. There are also instances where companies sell their products directly through stockists, which does not get reflected properly in the IMS data,” the official said.

Companies such as GlaxoSmithKline Pharma, Cipla, Ranbaxy, Dr Reddy’s Laboratories and Abbott have a huge pipeline of essential medicines in India.

DPCO 2013, which replaced the previous one of 1995, prescribes that prices of 348 essential medicines be capped at the average of all drugs in a particular segment with more than one per cent market share. For this, the regulator relied on the data generated by IMS Health, a leading healthcare data management company.

While the new pharmaceutical pricing policy was cleared by the cabinet in November 2012, it took NPPA around seven to eight months to cap prices of the first tranche of essential medicines, last June. However, with DoP’s new directive in place, NPPA might now have to do its calculations all over again after receiving pricing details from individual companies.