Pharma Pricing: NPPA’s October 2023 Formulation Ceilings

In November 2022, the NPPA disclosed its pricing revision methodology under the revised Schedule I.

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NPPA National Pharmaceutical Pricing Authority
Picture: Pixabay

NPPA

In a significant move, the National Pharmaceutical Pricing Authority (NPPA) has embarked on a transformative journey, leveraging the price database from October 2023 for the fixation of ceiling prices.

This pivotal decision encompasses around 225 formulations falling under the revised Schedule I of the Drugs (Prices Control) Order (DPCO), 2013.

Let’s delve into the intricacies of this groundbreaking development and understand how it shapes the pharma pricing landscape.

The Foundation: Historical Ceiling Price Revisions

NPPA’s Past Strategies

The NPPA, in its recent meeting, reflected on its past strategies, noting that from November 23, 2022, to January 24, 2024, ceiling prices for 700 formulations under the National List of Essential Medicines (NLEM), 2022 were fixed using the July 2022 database.

However, the remaining 225 formulations await their ceiling prices.

A Comparative Analysis

Drawing parallels with the past, the Authority observed a shift from the methodology applied during the ceiling price revision exercise based on NLEM, 2015.

Notably, the NLEM, 2015, considered the database of August 2015, while after the introduction of Para 9(7) in January 2019, prices were determined using multiple months.

The October 2023 Database: Catalyst for Change

Rationale Behind Database Selection

The October 2023 database takes center stage, capturing Price To Retailer (PTR) revised based on the Wholesale Price Index (WPI) for 2023, as provided by pharmaceutical companies.

This strategic decision aims to ensure a comprehensive reflection of market dynamics.

Para 9(7) of DPCO, 2013: Empowering the Decision

The introduction of Para 9(7) in January 2019 allows the government to consider market-based data for any month deemed fit when fixing or revising the ceiling price for formulations.

This regulatory flexibility aligns with the dynamic nature of the pharmaceutical industry.

Transition to Revised Schedule I: NLEM, 2022

Evolution of DPCO and Schedule I

The NPPA, aligning with the Department of Pharmaceuticals (DoP), replaced NLEM, 2015, with NLEM, 2022, in the revised Schedule I of the DPCO.

This transition, effective November 11, 2022, set the stage for a recalibration of pricing strategies.

Methodology Unveiled in November 2022

In November 2022, the NPPA disclosed its pricing revision methodology under the revised Schedule I.

The decision to consider data from July 2022 and Pharmatrac database for fixing ceiling prices marked a shift in approach.

Change in Database Decision: A January 2024 Turn

Meeting of December 15, 2023

In its meeting on December 15, the Authority contemplated fixing ceiling prices for remaining formulations based on the market database for October 2023.

The proposal was tabled for further examination in the subsequent Authority meeting.

Confirmation on January 24, 2024

The final decision to adopt the October 2023 database for price fixation materialized in a meeting on January 24, 2024.

This definitive stance reinforces the NPPA’s commitment to staying abreast of market dynamics.

Market Dynamics Impacting Price Revision

Correction Following WPI Implementation

Scheduled formulations with pre-fixed ceiling prices experienced corrections post the implementation of price revisions based on the Wholesale Price Index (WPI) of 12.1218 from April 1, 2023.

Pharmatrac’s Crucial Role

In November 2022, the NPPA announced the revision exercise would impact around 954 formulations, leveraging Pharmatrac’s market research database for July 2022.

The shift from the traditional practice underscored the responsiveness to industry representations.

Industry Associations’ Voice

Industry associations played a pivotal role, urging the NPPA to disregard April 2022 data due to its potential inability to accurately reflect the current Price to Retailer (PTR)/Maximum Retail Price (MRP).

The industry also advocated for considering the latest market data, specifically from October or September 2022.

Looking Ahead: The Impact on Formulations

Total Formulations and Potential Expansion

While initially, around 819 unique formulations were slated for ceiling price fixation, the dynamic nature of the pharmaceutical landscape, coupled with the revised Schedule 1 expansions, could see this number surge beyond 954 to approximately 1000 formulations.

The Authority stands poised to navigate this evolving terrain.

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.

FAQs

  1. What prompted the NPPA to shift to the October 2023 database for ceiling price fixation?
    • The NPPA aimed to capture the revised Price To Retailer (PTR) based on the Wholesale Price Index (WPI) for 2023, ensuring a more accurate representation of market dynamics.
  2. How does Para 9(7) of DPCO, 2013, empower the government in fixing or revising ceiling prices?
    • Para 9(7) grants the government the authority to consider market-based data for any month deemed fit, providing regulatory flexibility in pricing decisions.
  3. What role did industry associations play in the pricing revision exercise?
    • Industry associations advocated for disregarding outdated data, specifically from April 2022, and emphasized the importance of considering the latest market data, particularly from October or September 2022.
  4. How does the NPPA’s decision impact scheduled formulations with pre-fixed ceiling prices?
    • Scheduled formulations underwent corrections following the implementation of price revisions based on the Wholesale Price Index (WPI) from April 1, 2023.
  5. What is the anticipated impact on the total number of formulations slated for ceiling price fixation?
    • Initially around 819 formulations were targeted, but considering the revised Schedule 1 expansions, this number could potentially exceed 954, impacting over 1000 formulations.

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