Pharma Industry Seeks Price Control Exemption

Pharma Industry insiders highlight that this increase was the highest seen since the implementation of DPCO 2013

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DPCO Drug Price Control Order
DPCO

Pharma Industry

In a significant move, India’s pharma industry is currently lobbying for a one-time exemption from the stringent price control measures that would otherwise compel them to reduce their rates, aligning with the drop in the Wholesale Price Index (WPI), which has been on a declining trend.

DPCO 2013 and its Impact

The Drug Price Control Order (DPCO) 2013 plays a pivotal role in regulating drug prices in India. Under this order, the prices of scheduled drugs are revised based on the Wholesale Price Index (WPI) of the previous calendar year.

This implies that drug manufacturers are obligated to lower their prices in the face of a decline in the annual WPI.

In contrast, manufacturers not under the price control order are allowed to increase the maximum retail price of medicines by 10% annually.

Impact on Manufacturers and Consumers

Pharma Industry executives express concerns that this regulatory step results in only marginal price reductions, having negligible effects on consumers.

One executive remarks, “If it’s done, the cost of medicines will go down by a few paisa only.”

Another senior executive emphasizes that practically, there will be hardly any noticeable price reduction due to the declining WPI.

Rising Input Costs and Pharma Industry’s Plea

The pharma industry argues that the government should grant a one-time exemption this time around, citing the escalating input costs.

Several pharma lobby groups are gearing up to make a representation to India’s drug pricing authority, advocating for this exception.

Executives caution that implementing such measures would create an administrative burden, involving substantial costs in printing new prices, with minimal impact on consumers.

Previous Year’s Surge in Medicine Prices

In the preceding year, essential medicines, including painkillers, antibiotics, and anti-infectives, experienced a significant surge in prices, marking the highest annual increase on record.

The National Pharmaceutical Pricing Authority (NPPA) permitted a price increase of 12.1218% from April 1 for scheduled drugs under price control, covering more than 800 drugs on the National List of Essential Medicines.

This surge was in line with the change in the WPI, which rose by 12.12% for the calendar year 2022.

Challenges

Pharma Industry insiders highlight that this increase was the highest seen since the implementation of DPCO 2013.

Moreover, it marked the second consecutive year that the WPI surpassed the annual permitted price hike for non-scheduled formulations (10%), raising concerns among industry executives about the sustainability of such pricing models.

FAQs

  1. Why is the pharmaceutical industry seeking a one-time exemption?
    • The industry cites rising input costs as a primary reason for seeking a one-time exemption.
  2. How does the Drug Price Control Order (DPCO) 2013 affect drug prices?
    • DPCO 2013 regulates drug prices based on the Wholesale Price Index (WPI) of the previous calendar year.
  3. What was the impact of last year’s price increase on essential medicines?
    • Essential medicines, including painkillers and antibiotics, became costlier by more than 12%, marking the highest annual increase on record.
  4. Why are executives skeptical about the effectiveness of the price control measures?
    • Executives believe that the minimal reduction in prices due to the declining WPI will have negligible effects on consumers.
  5. How does the 10% annual price increase for non-controlled drugs contribute to the debate?
    • Non-controlled drugs are allowed a 10% annual price increase, raising concerns about the sustainability of such pricing models.

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