Last Updated on December 31, 2023 by The Health Master
Low-Cost Formulations from Price Control
The Indian Drug Manufacturers’ Association (IDMA) has recently appealed to the National Pharmaceutical Pricing Authority (NPPA) to reconsider the pricing control of formulations with a maximum retail price (MRP) below Rs. 5.
This request is prompted by the escalating manufacturing costs faced by pharmaceutical companies.
The IDMA highlights the unprecedented rise in input costs, such as active pharmaceutical ingredients (APIs), solvents, excipients, packaging materials, and transportation expenses.
Additionally, stringent quality upgrades and regulatory requirements have led to a steep increase in manufacturing costs.
To address these challenges, the IDMA suggests exempting all formulations priced at Rs. 5 per unit dose from the ceiling price.
Rising Costs and Operating Margin Pressure:
The surging input costs and transportation expenses have placed significant strain on the operating margins of pharmaceutical companies.
Notably, there has been a substantial price increase in key APIs, ranging from 11% to 51%, and excipients, with hikes reaching 11% to 61% in 2021.
To monitor prices, production, and sales of scheduled and non-scheduled formulations, as well as APIs, the NPPA has introduced the Integrated Pharmaceutical Database Management System (IPDMS 2.0).
This system aims to streamline operations by providing a centralized platform for various form submissions as mandated under the Drug Prices Control Order (DPCO) of 2013.
Industry Appeals for Price Revision:
In the past, pharmaceutical industry associations had appealed to the Department of Pharmaceuticals (DoP) for urgent intervention to address price hikes.
They recommended allowing price revisions based on the consumer price index (CPI), rather than the wholesale price index (WPI), for scheduled formulations.
Moreover, the NPPA announced a substantial annual increase of 10.76% in the WPI for the calendar year 2021.
This led to a price hike of 10.7% for over 800 drugs categorized as Scheduled drugs.
WPI Trends in Pharmaceuticals:
The WPI increase for pharmaceuticals in 2021 stood at 0.53%, compared to 1.88% in 2020, 4.26% in 2019, and 3.43% in 2018.
Over the past five years, there has been no general decrease in prices due to WPI fluctuations, except for a decrease observed in 2016 compared to prices in 2015.
Conclusion:
The IDMA’s plea to the NPPA to exempt low-cost formulations from price control seeks to address the mounting manufacturing costs faced by pharmaceutical companies in India.
With input costs and transportation expenses rising significantly, industry associations aim to find solutions to maintain sustainable operating margins.
As the discussions continue, stakeholders will evaluate the feasibility of revising pricing mechanisms and addressing the challenges faced by the pharmaceutical sector in the country.
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