Imported insulin to cost more

Department of Pharmaceuticals asks NPPA to review Eli Lilly product prices

The department of pharmaceuticals has asked the National Pharmaceutical Pricing Authority (NPPA) to review Eli Lilly’s imported insulin prices, kept in check in recent months. The move could result in prices of imported insulin rising, against the regulator’s attempt to pull these down.

The department, in a recent order, asked NPPA to revisit prices fixed for Eli Lilly’s five imported insulin products and bring these at par with other imported products. It also asked the regulator to reconsider the relevant information and applicable norms while fixing prices.

The order points out that NPPA must regulate prices within the scope of the Drugs Prices Control Order (DPCO), unless it is amended. This comes in the wake of fresh guidelines issued by NPPA, lowering the margin of pharma companies on imported drugs. While the DPCO provides for maximum allowable post manufacturing expenses (MAPE) to “not exceed 50 per cent”, NPPA, through guidelines issued in 2011, changed the margin “to 35 per cent” . Therefore, these norms formed the basis for price fixation of imported products by Eli Lilly and other such companies.

“This is amendment of the substantive provision of DPCO, (19)95 by changing a variable to fixed percentage based on the availability of the local substitute, which could be one of the factors and not the only factor. NPPA has limited the scope of the DPCO, which is beyond the powers of NPPA,” the department said in its order to NPPA.

It added, DPCO provides that landed cost shall form the basis for fixing prices of imported medicines ,with a margin to cover selling and distribution expenses, including interest and importers’ profit, which “shall not exceed 50 per cent” of the landed cost.

Following such arguments, the NPPA is also directed to issue guidelines with the prior approval of the department.

This is the second such review order passed by the department in the recent past. It had passed a similar review order for Torrent Pharma’s insulin products in January. Following the review order, the company expressed its intention to raise its insulin prices. The regulator had reiterated its stand to all insulin makers asking them to follow the price fixed by it until any further price revision is notified.

“It may be noted that the notified price should be compulsorily followed while filing review application,” the regulator said in the letter to Torrent, Eli Lilly and Lupin in February.

The regulator has been particularly strict with insulin prices in India, mainly because of the huge gap existing between prices of indigenously manufactured insulin and imported ones. To maintain prices of insulin at a lower level, NPPA has also imposed two separate price caps, each for domestic and imported ones, irrespective of their brands.

However, the government is of the opinion that the domestic industry is unable to cater to the rising demand for insulin and, therefore, import is essential.

The current insulin market in India is pegged at Rs 1,140 crore. Major players including Novo Nordisk, Eli Lilly and Sanofi hold almost 86 per cent of the total market. Among the domestic firms, Biocon commands around 10 per cent, while Wockhardt and other players share four per cent.