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The Department of Pharmaceuticals (DoP), under the supervision of the Prime Minister’s Office (PMO), has clarified on certain issues related to price-capping powers of National Pharmaceutical Pricing Authority (NPPA).
On April 20, the DoP issued five office memoranda related to this matter — two memoranda mentioned that the decisions were taken in the meeting, which was chaired by Nripendra Mishra, principal secretary to PM, on “review of pharma issues”. This meeting was held in PMO on March 28, where the NPPA was also present.
Bhupendra Singh, chairman, NPPA, told The Indian Express: “There is no issue regarding NLEM and Schedule I. NPPA fixes the prices of the drugs under Schedule I and it does not refer to NLEM. Though Schedule I is based on NLEM. It is only in exceptional circumstances that NPPA can fix the ceiling prices of any ‘drug’ irrespective of Schedule I under Para 19 of DPCO, 2013. Government has delegated these powers to NPPA.”
According to DoP, it was brought to its notice that the NPPA has sought additional information — such as detailed agreement or contract between the manufacturer and marketer — from the applicant seeking price approval for new drugs under form-1 of DPCO, 2013. The pharmaceutical industry told the central government that such agreement “comprises of commercial information not directly relevant to decision of price fixation of a new drug”.
Therefore, at the PMO meeting, it was decided that “copy of the detailed agreement or contract entered into between the manufacturer and marketer shall not be required to be submitted to NPPA for fixing the ceiling price of new drug formulation”.
The DoP also noticed that while fixing the prices of scheduled formulations, “the NPPA has adopted a practice that even when some brands of a medicine of a company have less than one per cent market share, the market share of all such versions of that medicine of the company is clubbed for the purpose of determining the company’s market share (in place of given brand’s market share) is equal to or more than one per cent”.
Therefore, in one office memorandum, the DoP clarified that while fixing the ceiling price of scheduled medicines, moving annual turnover (MAT) value and price to retailer (PTR) value of only those brands — which are having one per cent or more market share — shall be considered by the NPPA.
“NPPA exercises the delegated powers of the Government (DoP) under DPCO, 2013 and all orders of NPPA are government orders. Under Para 31, of DPCO, 2013, DoP can review the orders of NPPA and in such case the government orders prevail. The OMs (office memoradums) referred by you are review orders by the government (DoP) under Para 31 of DPCO, 2013 and not be treated as setting limits to powers of NPPA,” Singh told The Indian Express.
“Some provisions of DPCO, 2013 have been interpreted by NPPA in a manner which DoP has given a different interpretation. In a recent discussion between DoP and NPPA, the issue has been resolved and NPPA will comply with and go by the spirit of the review order of the government,” Singh added.
In one office memorandum, the DoP clarified that price revision due to change in WPI, which has been effective from April 1, 2016, will not be applicable to scheduled medicines that have been shifted to non-scheduled category in the DPCO through an amendment done on March 10, 2016.
Moreover, in another office memorandum, the DoP stated: “Individual companies/ brands/medicines which are already having a (maximum retail price) MRP below or equal to such WPI adjusted ceiling price shall henceforth not to be required to reduce MRPs vis-a vis the WPI.” The ceiling price of schedule-I medicines is revised by the NPPA each year in accordance with the revision of Wholesale Price Index.
“Government has accepted the request of the NPPA and set up a committee to review the entire DPCO, 2013 as requested by NPPA. The committee has already started stakeholders” consultations,” Singh told The Indian Express.
