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NPPA stripped of powers to cap non-essential drug prices

Move comes days before the Prime Minister’s visit to the US.

By: ENS Economic Bureau | New Delhi |
September 24, 2014 2:30:29 am

The government has withdrawn the power of the National Pharmaceutical Pricing Authority (NPPA) to cap prices of non-essential drugs after the agency’s recent order drew the industry’s ire.

The Department of Pharmaceuticals, under the ministry of chemicals and fertilisers, on Friday, ordered the NPPA to withdraw a guideline under the Drug (Prices Control) Order of 2013 that gave the agency power to cap prices of non-essential drugs. NPPA complied with the order on Monday.

The decision comes after the NPPA ordered capping prices of 108 non-essential drugs between August and September 2014, in line with the powers provided in paragraph 19 of the Drug (Prices Control) Order of 2013 which relates to ‘fixation of ceiling price of a drug under certain circumstances’. The capping of these drugs had been greeted with protests and challenged in courts. The government order, however, did not mention the fate of these 108 drugs.

“In compliance with the directions received from the government … the aforesaid internal guidelines issued by the NPPA on May 29, 2014, … are hereby withdrawn with immediate effect,” the drug pricing authority said in a statement on Monday.

On May 29, NPPA issued an internal guideline where it said that the drug pricing authority will monitor inter-brand price differences of non-scheduled formulations on the basis of monthly MRP (maximum retail price) data and will begin the exercise with monitoring of inter-brand price difference of single ingredient medicines used for treatment of cancer, HIV, TB, diabetics and cardiovascular diseases, among others. “The plain reading of the order is that a guideline under DPCO 2013 has been withdrawn with immediate effect i.e. from September 22,” an NPPA official was quoted by the PTI as saying.

The government’s decision comes days before Prime Minister Narendra Modi’s visit to the US to attend a United Nations General Assembly session among other engagements. Ties between India and the United States have been strained in recent years because of trade policies and patent disputes, mainly in the pharmaceutical sector.

Reacting to the development, Indian Pharmaceutical Alliance (IPA) secretary general DG Shah said: “It confirms the industry position that Para 19 is not the correct instrument for modification of DPCO 2013.”

Several industry bodies, including Indian Pharma Alliance (IPA), had criticised the NPPA’s move to cap prices of medicines not under the National List of Essential Medicines (NLEM). Under the Drug (Prices Control) Order of 2013, the government already controls prices of 348 drugs in the NLEM.

Following the announcement, shares of several pharma companies rose up to 4 per cent in the early trading hours on Tuesday.

The share prices, however, dipped in line with the 431-points fall in the benchmark Sensex. Among the stocks in the BSE healthcare index, only shares of GlaxoSmithKline Pharmaceuticals and Piramal Enterprises closed in the green, gaining 1.7 per cent and 0.4 per cent, respectively. With PTI inputs

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