Pharma firms go to HC against use of special power for price cuts

According to a source, the matter is expected to come for hearing at the court on July 30

Leading drug makers have approached the high court in Mumbai, raising concerns against the latest price cuts ordered by the National Pharmaceutical Pricing Authority (NPPA) by using provisions provided for “extraordinary circumstances”.

Indian Pharmaceutical Alliance (IPA), an industry association representing leading domestic companies, including Sun Pharma, Cadila Healthcare, Lupin and Ranbaxy, have filed a petition at the high court in Mumbai. They’ve challenged the recent price reduction of diabetes and cardiovascular medicines, it is learnt.

According to a source, the matter is expected to come for a hearing on Wednesday. When asked, IPA secretary general DG Shah said, “We are exploring all possible actions. At this point in time, we cannot give further information.”

HYPERTENSION

• Domestic drug companies are petitioning against the use of provisions meant for ‘extraordinary circumstances’ to order price cuts
• They are also arguing that the regulator has arbitrarily expanded the ambit of existing price control policy, from 13 per cent to 20 per cent of the market

NPPA Chairman Injeti Srinivas confirmed the move. “We are aware of the development. They are within their right to approach the court. We will file our response in the court,” he said.

The companies have also written to the department of pharmaceuticals’ secretary, Aradhana Johri, raising concerns on the latest move by NPPA and seeking the government’s intervention. “We do not find that such extraordinary circumstances have risen since the promulgation of the DPCO 2013 to warrant their use,” IPA had said in its letter.

Top representatives from other pharma industry organisations, such as Organisation of Pharmaceutical Producers of India, which represents multinational drug makers in the country, have also met senior officials in the department. The industry is also considering a representation to the Prime Minister’s Office.

Earlier this month, the Authority ordered cuts in the prices of around 50 formulations in the two segments of cardiovascular and anti-diabetes medicines by up to 35 per cent, under Paragraph 19 of the Drugs Price Control Order, 2013. The provision allows NPPA to reduce prices of medicines in an “extraordinary” situation, in the public interest. Similar price cuts are expected in other therapeutic categories, in anti-cancer drugs, anti-retrovirals, vaccines and medicines used in treatment of asthma, tuberculosis and malaria.

According to an industry source, IPA has objected that the current circumstances do not qualify as “extraordinary”. Beside, the regulator has acted out of the policy purview, to bring more drugs under price control. Under the National Pharmaceutical Pricing Policy, 348 essential medicines come under direct price control, where the government has the right to cap their prices based on the average price of all medicines in a particular therapeutic segment with a minimum of one per cent market share.

However, NPPA has identified eight categories where it feels there is a huge “inter-brand” price difference. Apart from anti-diabetic and cardiac drugs, NPPA’s list has medicines used in treatment of asthma, tuberculosis, malaria, oncology, anti-retrovirals and vaccines. It has decided that as consumers cannot make an informed choice and have to compulsorily go by a doctor’s prescription, it is imperative to bring down the inter-brand price difference, so that companies cannot charge patients unduly to promote their products with doctors.

The regulator, therefore, decided to fix the price of any medicine in these categories if it exceeded 25 per cent of the simple average price in that category. This has increased the span of price control from around 13 per cent to 20 per cent of the Rs 76,000-crore domestic pharma market, creating pressure on the revenue of leading drug makers, India-based and multinational.

 

Companies have also written to the Department of Pharmaceutical (DoP) secretary Aradhana Johri raising concerns on the latest move by NPPA and seeking government's intervention to safeguard industry's interest.

 

"We do not find that such extraordinary circumstances have risen since the promulgation of the DPCO 2013 to warrant their use," IPA had said in its letter addressed to Johri earlier in July.

 

Top representatives from other pharma industry organisations such as Organisation of Pharmaceutical Producers of India, which represents multinational drug makers in the country, have also met senior officials in the department.

 

The industry is also considering to make a representation to the Prime Minister's Office on the matter.