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In a first, regulator hikes prices of essential medicines

This is the first time the National Pharmaceutical Pricing Authority (NPPA) — which is known to slash prices of essential and life-saving medicines — is increasing prices in public interest.

Written by Prabha Raghavan | New Delhi | Updated: December 14, 2019 9:03:46 am
Most of these drugs are used as first line of treatment and are integral to public health programmes.

To ensure supply of crucial medicines, India’s drug pricing regulator has allowed an increase in the maximum retail prices of 21 drugs currently under price control by as much as 50 per cent. This is the first time the National Pharmaceutical Pricing Authority (NPPA) — which is known to slash prices of essential and life-saving medicines — is increasing prices in public interest to prevent patients opting for costlier alternatives in the face of shortage of these drugs.

Most of these drugs are used as first line of treatment and are integral to public health programmes.

The decision by the NPPA, taken at a meeting on December 9, will apply to formulations like the BCG vaccine for tuberculosis, vitamin C, antibiotics like metronidazole and benzylpenicillin, anti-malarial drug chloroquine and leprosy medication dapsone.

The Indian Express had, in July, reported that the Authority was mulling a proposal to increase prices of certain medicines under price control to offset potential shortages due to increasing prices of key ingredients used to make them.

Explained

Building capabilities need of day

Manufacturers have been citing difficulties in supplying these drugs as the cost of making them has gone up, and inaction by NPPA could have led to a shortage. Experts say to avoid such a situation, India has to build capabilities to manufacture the key ingredients for these medicines.

“The Authority noted that the twenty one scheduled formulations being considered for upward price revision under para 19 of DPCO (Drug Price Control Order) 2013 are low priced drugs and have been under repeated price control. Most of these drugs are used as first line of treatment and are crucial to the public health program of the country. Many companies have applied for discontinuation of the product on account of unviability,” the minutes of a meeting of the authority held on December 9 said.

Noting that the mandate of NPPA is to ensure availability of drugs at affordable prices, the minutes said “while ensuring affordability, access cannot be jeopardised and the life saving essential drugs must remain available to the general public at all times. Therefore, the Authority is of the considered view that unviability of these formulations should not lead to a situation, where these drugs become unavailable in the market and the public is forced to switch to costly alternatives”.

NPPA said it has been receiving applications for upward price revision under para 19 of DPCO, 2013, since last two years citing reasons like “increase in API (key ingredient) cost, increase in cost of production, exchange rates etc. resulting in unviability in sustainable production and marketing of the drugs”. The Indian Express has viewed a copy of these minutes.

The Authority further noted that in its 62nd meeting, it had deliberated upon 49 such applications consisting of 72 formulations, received from manufacturers/ marketers seeking upward revision of ceiling price under paragraph 19 of DPCO, 2013 and shortlisted 19 formulations for “further examination”.

The NPPA had constituted a committee comprising Adviser (Cost), Adviser DGHS (Directorate General of Health Services) and Deputy Drug Controller, DCGI (Drugs Controller General of India) under the convenorship of Director (Pricing), NPPA for “further examination” of these 19 formulations based on “parameters of essentiality, market share of the applicant company and available alternatives etc”.

“This Committee in its second meeting…recommended that these 19 formulations could be considered for a upward price revision under para 19 of DPCO, 2013 to ensure availability of these medicines and these recommendations were presented to the Authority in its 68th meeting of 25th June, 2019,” it stated.

The authority in June had deliberated on the matter “at length” and took a view that revision of ceiling prices under para 19 of DPCO 2013, which are extraordinary powers granted to the regulator to revise prices, should be undertaken “only in exceptional circumstances as there is neither a precedent nor any formula prescribed for upward revision of ceiling prices under para 19 of DPCO, 2013”.

NPPA had said during its June meeting that it was cognizant that “any upward revision of ceiling price under para 19 of DPCO 2013 may be used as precedent for more applications of a similar nature for upward revision of ceiling prices in future” and therefore, based on its analysis, further shortlisted “only 12 formulations” and referred the issue to Niti Aayog’s Standing Committee on Affordable Medicines and Health Products (SCAMHP) for “guidance” on the modalities and methodology to be followed for such cases. The standing committee in November recommended that there was a need to revisit the prices of these 12 drugs by allowing a “one-time” 50 per cent increase from the present ceiling price.

With India still dependent on China for over 60 per cent of its API (active pharmaceutical ingredient) requirement, higher API costs for price-controlled medicines eat into profits and sometimes make production of these drugs unviable here, an executive of a large drug maker told The Indian Express. For instance, costs of ingredients to make vitamin C went up as much as 250 per cent, leading to a 25-30 per cent shortage of this drug in India last year, the executive added.

“Suppliers of key ingredients do not want to negotiate the prices they charge companies, because they are not affected by price control,” the executive had said, adding that, in such an environment, firms would begin to exit the market over time.

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