Para 19 of DPCO: IDMA urges Govt to allow Pharma industry to hike Drugs Prices

What does Para 19 of DPCO say?

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NPPA Price of drugs

Last Updated on November 10, 2021 by The Health Master

DMA urges Govt to allow Pharma industry to hike Drugs Prices

The Indian Drug Manufacturers’ Association (IDMA) has urged Mansukh Mandaviya, Union minister of health and family welfare and chemicals and fertilizers, to permit the drug makers to increase the prices of all non-scheduled formulations by 20 per cent under paragraph 19 of the Drugs (Prices Control) Order (DPCO), 2013 and enhance the prices of all scheduled formulations by 10 per cent as per the prevailing wholesale price index (WPI), with immediate effect to provide succor to the industry battling rising input costs.

What does Para 19 say?

Para19: Fixation of the ceiling price of a drug under certain circumstances.- Notwithstanding anything contained in this order, the Government may, in case of extraordinary circumstances, if it deems necessary so to do in the public interest, fix the ceiling price or retail price of any drug for such period, as it may deem fit and where the ceiling price or retail price of the drug is already fixed and notified, the Government may allow an increase or decrease in the ceiling price or retail price, as the case may be, irrespective of the annual wholesale price index for that year.

The increase in input prices has affected all the cost heads like key starting materials, raw materials, packing materials and transportation costs. There has been a tremendous escalation in input costs within the last one month.

The prices of active pharmaceutical ingredients (API) increased from 11 % to 51 % and the prices of excipients spiked from 11 % to 61 %.

For instance:

  • Price of diabetes drug metformin HCL has zoomed up by 51 per cent to Rs. 375 per kg in October, 2021.
  • It was priced at Rs. 248 per kg in September.
  • The prices of paracetamol have gone up by 50 per cent to Rs. 900 a kg in October as against Rs. 599 a kg in September.
  • The prices of phenylephrine HCL have increased by 20 per cent to Rs. 7,800 a kg in October as compared to Rs. 6,500 a kg in September.
  • Similarly, the prices of excipients– citric acid, sodium citrate, methylene chloride, methylparaben, magnesium stearate etc have gone up by 60 per cent, 54 per cent, 47 per cent, 16 per cent, 14 per cent respectively in October. 

The situation becomes more alarming when we compare the spurt in input prices for the past one-year period between October 2020 and October 2021.

Over the past one year, there has been an exceptional rise in input costs in each and every cost head, which has significantly affected the Indian pharmaceutical industry. The prices of key APIs have increased between 15% to 130% with the price of paracetamol increasing by 130%.

The prices of excipients have risen by between 18% to 262%. Glycerin and propylene glycol are solvents used in every liquid preparation, including syrups, oral drops and sterile preparations.

The prices of glycerin and propylene glycol have sky-rocketed by 263% and 83% respectively, while the price of a key chemical like trimethyl chloro silane has clocked a 214% price increase, and the price of methylene chloride has increased by 135%. The price of a pH regulator like citric acid has doubled.

The prices of intermediates have registered an increase between 11% to 175% with penicillin G registering a 175% rise in prices. The prices of plastic based material like PVC, PVDC and poly foil have risen between 33 to 62%.

The price of aluminium foil is up by 27%. The prices of paper based packing material like cartons and corrugated boxes have increased by 11 to 12%.

The outward freight costs have risen by 14%. The cost of inward freight of imports has increased by 50%.

Hence the industry body requested a one time immediate relief to overcome the sudden spurt in prices of inputs by invoking Para 19 of DPCO 2013 due to the prevailing extraordinary circumstances.

It appealed to the minister to permit the Indian pharmaceutical industry to increase the prices of all non-scheduled formulations by an additional 10 per cent over the 10 per cent allowed for non-scheduled formulations.

The ministry may revert to the specified 10 per cent increase in the prices of non-scheduled formulations once the surge abates, it said.

Since the prevailing WPI for the period April to September 2021 is over 10 per cent, it is evident that there has been a tremendous increase in input costs, but the increase would be effective from April 2022.

Hence the industry body requested Mandaviya to allow the prices of all scheduled formulations to be increased by 10 per cent as per the prevailing WPI, with immediate effect.

Besides this, IDMA also appealed to him to allow scheduled formulations whose retail prices are below the ceiling price, to be raised up to the new proposed ceiling price which includes the 10 per cent WPI increase.

Many manufacturers of scheduled formulations are suffering on this count and para 13(2) of DPCO 2013 needs to be relaxed under the current circumstances, it said.

It cited the case of the dichotomy in paracetamol where the API price grew by 300 per cent while the ceiling price was allowed an increase of only 3 %.

Under Para 18(i) of DPCO 2013, re-fixation of ceiling prices for common formulations between NLEM 2015 and NLEM 2021 would be soon undertaken. As a result of Para 18(i) the current ceiling price is much lower than the first ceiling price fixed under DPCO 2013 for many scheduled formulations.

The industry body fears if the re-fixation of ceiling prices exercise is undertaken this year, it may lead to a further reduction in ceiling prices to the tune of 15 per cent to 20 per cent. In light of the current situation, it requested that Para 18(i) of DPCO 2013 should be deleted or amended.

“We fear that the severe pressure on operating margins could lead to stock outs and shortages even for essential formulations in trade, hospitals and for government institutional supplies.

As the input price situation is worsening day by day, we request your urgent intervention and immediate acceptance of our recommendations, to provide partial relief to the Indian pharmaceutical industry.

If immediate respite is not provided, the Indian pharmaceutical industry would find it very difficult to sustain its manufacturing superiority and that would seriously imperil its position as the pharmacy of the world, ” said Mahesh Doshi, national president, IDMA in a representation to Mandaviya.

Besides Mandaviya, IDMA has also made representations to Dr. Vinod K Paul, member, NITI Aayog, S Aparna, secretary, department of pharmaceuticals, Kamlesh Kumar Pant, chairperson, NPPA in this regard.

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