Last Updated on December 31, 2023 by The Health Master
Introduction: Para 18(1) and Para 13(2) of DPCO 2013
The Indian Drug Manufacturers’ Association (IDMA) has recently called for a reevaluation of certain sections of the Drug Prices Control Order (DPCO-2013) to establish a level playing field and ensure fair pricing in the pharmaceutical industry.
IDMA from pharma industry made this representation during a workshop organized by the Department of Pharmaceuticals (DoP) and the National Pharmaceutical Pricing Authority (NPPA) in New Delhi, focusing on potential amendments to the DPCO-2013 and the National Pharmaceutical Pricing Policy 2012.
Revisiting Para 18(1):
Preventing Price Re-Averaging One of the key concerns raised by IDMA relates to Para 18(1) of the DPCO-2013, which mandates the re-averaging of prices for scheduled formulations every five years.
IDMA proposes either eliminating this re-averaging requirement or allowing companies with a maximum retail price (MRP) lower than the notified ceiling price to raise their MRP to the ceiling price.
These changes aim to prevent significant erosion of ceiling prices every five years, which negatively impacts manufacturers despite yearly price revisions.
Challenges with Para 18(1) and Para 13(2):
The implications of Para 18(1) are closely linked to Para 13(2) of the DPCO-2013. Para 13(2) states that if the MRP of a scheduled formulation is lower than the notified price, the formulation must maintain the lower MRP and cannot be raised to the ceiling price.
IDMA highlights that this provision restricts existing manufacturers from selling their products at the notified ceiling price, while their competitors are allowed to do so.
As a result, many companies are compelled to sell below the ceiling price, leading to economic unviability and potential discontinuation of essential drug production.
18(1) reproduced as under:
Revision of ceiling price on the basis of moving annual turnover (MAT).– The revision of ceiling prices on the basis of moving annual turnover value shall be carried out,
(i) as and when the National List of Essential Medicines is revised by the Ministry of Health and Family Welfare or five years from the date of fixing the ceiling price under this Order whichever is earlier;
13(2) reproduced as under:
Price of scheduled formulations for the existing manufacturers
(2) All the existing manufactures of scheduled formulations, selling the branded or generic or both the versions of scheduled formulations at a price lower than the ceiling price (plus local taxe as applicable) so fixed and notified by the Government shall maintain their existing maximum retail price.
IDMA’s Recommendations:
Considering the above challenges, IDMA has put forth the following recommendations to address the issues within the DPCO-2013:
- Revisit Para 18(1): IDMA proposes the elimination or suitable amendment of Para 18(1) to prevent re-averaging of prices every five years, ensuring stability for manufacturers and reducing erosion of ceiling prices.
- Delete Para 13(2): IDMA urges the NPPA to remove Para 13(2) as it restricts existing manufacturers from selling at the notified ceiling price, causing disparities within the market and potential economic unviability for companies.
Ensuring Availability of Essential Drugs:
The repercussions of Para 18(1) and Para 13(2) extend beyond the pricing concerns.
If manufacturers are compelled to sell below the notified ceiling price, it may result in economic challenges and even the discontinuation of essential drug production.
This could lead to a shortage of crucial medicines in the market.
Conclusion:
The IDMA’s representation to the DoP and NPPA emphasizes the need for a fair pharmaceutical pricing framework by revisiting and amending certain sections of the DPCO-2013.
Addressing concerns related to price re-averaging and the restrictive nature of Para 13(2) is essential to ensure a level playing field and promote the availability of essential drugs in the market.
By implementing these changes, the industry can achieve a balanced pricing structure that considers the economic viability of manufacturers while fulfilling the healthcare needs of the population.
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