Last Updated on November 22, 2023 by The Health Master

Drug Price Regulation

The recent order on Drug Price Regulation by the division bench of the Delhi High Court has sent ripples through the pharmaceutical industry.

In a landmark decision, the court clarified the government’s authority to monitor the pricing of non-scheduled formulations.

This order, issued on November 8, 2023, has far-reaching implications for the future decisions of the drug price regulator, particularly concerning the interpretation of Paragraph 20 of the Drugs (Prices Control) Order, 2013.

Understanding Paragraph 20

1. Background of the Order

The order, delivered by Chief Justice Satish Chandra Sharma and Justice Subramonium Prasad, provides a detailed analysis of various scenarios using hypothetical illustrations.

These scenarios shed light on how Paragraph 20 may be interpreted in different instances.

2. Uniformity in Illustrations

For the sake of uniformity, the order establishes that the Maximum Retail Price (MRP) of a non-scheduled formulation, manufactured by a specific company, is considered Rs. 100 as of February 1, 2014.

3. Permissible Increase in MRP

The order clarifies that a manufacturer can increase the MRP by 10 percent annually, as per Para 20 of the 2013 Drugs (Prices Control) Order.

Scenarios and Implications

4. Scenario 1: Annual Increase

In one scenario, the manufacturer follows a 10% annual increase in MRP. The court rules that penal consequences do not apply as long as the increase remains within the stipulated percentage.

5. Scenario 2: Continuous Annual Increase

Another scenario explores continuous annual increases in MRP. The court emphasizes the manufacturer’s right to round off figures, ensuring no penal consequences even with rounding.

6. Rollback Obligation

The order specifies situations where a manufacturer must roll back the MRP, illustrating the importance of adhering to the prescribed percentage increase.

7. Immediate Reduction Obligation

If a manufacturer fails to adhere to the prescribed increase and increases the MRP immediately, the court mandates an immediate reduction to the permissible limit.

8. Flexibility in MRP

The court acknowledges flexibility in MRP adjustments, as long as the increase stays within the permissible limit and is implemented within the stipulated time frame.

9. Periodic Increase

The order outlines scenarios where a periodic increase in MRP is permissible, emphasizing the need for adherence to the specified percentages.

10. Non-Conforming MRP

In instances where the MRP does not conform to Para 20, the manufacturer is bound by the MRP of the previous twelve months.

11. Deposit Obligations

Manufacturers failing to comply with MRP regulations are obligated to deposit the overcharged amount, highlighting the financial consequences of non-compliance.

12. Reduction and Deposit

The court underscores the manufacturer’s obligation to reduce MRP immediately and deposit the overcharged amount along with interest in specific scenarios.

13. Consequences of Non-Compliance

Non-compliance with MRP regulations can lead to financial liabilities, illustrating the court’s commitment to strict enforcement.

14. Specific Cases

The order delves into specific cases, emphasizing the importance of adhering to Para 20 and the repercussions for non-compliance.

15. Manufacturer’s Entitlement

The court concludes by reiterating that a manufacturer is entitled to increase the MRP based on the permissible limit of the previous twelve months.

Conclusion

The division bench’s order provides a comprehensive interpretation of Paragraph 20 of the Drugs (Prices Control) Order, 2013. Manufacturers are now presented with a clearer understanding of their obligations, ensuring regulatory compliance in drug pricing.

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FAQs:

1. Is it mandatory for manufacturers to increase the MRP by 10 percent every year?
   • No, manufacturers have flexibility, but any increase must adhere to the stipulated percentage.
2. What are the consequences of immediate MRP increases beyond the permissible limit?
   • Manufacturers are obligated to immediately reduce the MRP and deposit the overcharged amount with interest.
3. How does the court address non-compliance with MRP regulations?
   • Non-compliance may lead to financial liabilities, including the deposit of overcharged amounts.
4. Are manufacturers allowed to round off figures in MRP calculations?
   • Yes, the order allows manufacturers to round off figures, ensuring practicality in compliance.
5. What is the significance of the court’s emphasis on the previous twelve months’ MRP?
   • The previous twelve months’ MRP serves as the basis for permissible increases, emphasizing continuity and adherence.

Disclaimer: This article contains information derived from the source mentioned below. Our team utilized an AI language model to rewrite and present the news or article in a unique format.

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