New drug pricing policy likely by March

The government is expected to bring out the new Drug Price Control Order (DPCO) by March, which will determine the retail price of over 640 packs of essential medicines. The new DPCO, which will replace the existing one, will define the mechanism and other rules for price fixation of medicines, in line with the new drug pricing policy, recently notified by the government.

Meanwhile, the drug price regulator National Pharmaceutical Pricing Authority has turned down requests from many companies, such as Eli Lilly, Allergan and Alcon Lab, for a price rise. “Many companies have applied for a price increase in consideration of the new policy, but we have not allowed any price rise in those cases, as the new DPCO is yet to come, and we will be able to notify new prices only as prescribed under the new pricing order,” an NPPA official told Business Standard. However, the Authority, in public interest, has reduced prices of some medicines, including those used in the treatment of diabetes.

According to the new pricing policy, prices of 348 essential drug formulations (or over 640 packs of medicines containing these drugs in various strengths and dosages) will be fixed at the arithmetic average of prices of all the drugs in that segment with a minimum of one per cent market share. Though the new policy has been notified by the Department of Pharmaceuticals on December 7, the NPPA was unable to implement the same because the detailed formula, rules and provisions of the policy will be laid out in the revised DPCO. The NPPA currently works under the provisions of DPCO, 1995. According to the existing DPCO, the pricing regulator so far used to fix prices of 74 bulk drugs, and all medicines containing one or more of these bulk drugs, based on a cost-plus formula. For all medicines, companies were allowed to increase prices by up to 10 per cent annually, and for anything beyond that they were required to seek permission from the regulator.

According to the official, the new pricing policy provides for price fixation of essential medicines based on data that is six months prior to the date of notification of the policy. “This would mean the new ceiling prices will be based on the data of June,” the official said. Various drug makers have, therefore, sought a price revision based on the new policy. A recent notification by NPPA shows it has not allowed a price increase in various packs of monocomponent insulin from Eli Lilly. Besides, prices of Allergan India’s Ozurdex/Retina injection and Alcon Lab’s 5-ml vial of prednisolone acetate also remain unchanged.