Govt is considering revising the DPCO to encourage drug innovation

Pant assured the industry of making efforts to evolve provisions of DPCO to address the need of industry taking risk for innovative products.


Last Updated on November 29, 2021 by The Health Master

The Department of Pharmaceuticals (DoP) is mulling over revising the Drug (Prices Control) Order (DPCO) 2013 to facilitate drug innovation.

Speaking at the Global Innovation Summit 2021 held by the Indian Pharmaceutical Alliance recently, Kamlesh Kumar Pant, chairman of the National Pharmaceutical Pricing Authority (NPPA), said, “Over a period of time, the philosophy of DPCO has evolved from cost-based pricing to market-based pricing.

There are differentiated pricing provisions for generic drugs, patented drugs, and drugs having incremental innovation in DPCO. NPPA is guided by DPCO. One of our responsibilities is to render advice to the DoP on changes/revisions in the drug policy.

Our effort is to constantly improve the provisions of DPCO and suggest those provisions to DoP. The department actively considers our suggestions. Currently, it is working on upgrading DPCO to address the needs of the industry involved in the development of innovative products. ”

A predictable, reasonable, and supportive pricing regime is crucial to supporting innovation. We constantly try to evolve the provisions of the DPCO so that the requirements of innovation are taken care of. This will be a continuous process. There will be continuous dialogue between the industry and the government in this regard,” said the NPPA chairman.

Pant assured the industry of making efforts to evolve provisions of DPCO to address the need of industry taking risk for innovative products.

Kiran Majumdar-Shaw, founder and chairman of Biocon Ltd said, “Price control has always been considered counterproductive to innovation. Companies say that they need to get a return on their R&D investments.

NPPA needs to apply differentiated price control based on R&D investment. Certain products are much more complex to make than others. Here we paint everything with one brush.

For instance, a generic molecule is a fraction of the cost of developing biosimilar drugs, novel vaccines, or novel drugs, and yet the same formula applies to all the products when it comes to price control.

Serious attention needs to be given to have differentiated pricing for new drugs to encourage innovation. Companies need to be allowed to get healthy returns on innovation so that they keep investing in innovation.”

Product pricing under DPCO will have to be decided by factoring in the cost of inputs for products. We need to find ways to incentivise innovation. For certain years, new drugs need to be exempted from price control.

We understand the need for affordable drugs in the country, but innovation of new drugs is a risky and costly affair. Outcome is not predictable. Many drugs are in the pipeline but only few of them get succeeded but it adds to the R&D costs.

Research linked incentives or exemption of innovative drugs from price control needs to be considered to incentivise innovation, she said.

Replying to her, Pant said Paragraph 32 of the DPCO creates a provision for the exemption of patented drugs from price control for five years.

Echoing Shaw’s concerns, Dilip Sanghvi, managing director of Sun Pharma, said, “There are several products in the pipeline. One gets successful, but others are not.”

Innovators need to be allowed to charge a price of successful drugs to recover the cost of unsuccessful drugs.

Regulators acknowledge the challenges faced by the industry while developing innovative products. We are hopeful of a positive outcome in this regard.”

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