The National Pharmaceutical Pricing Authority’s (NPPA) recently withdrew the internal guidelines of May 29, 2014. The guidelines pertained to the fixation/ revision of prices of scheduled and non-scheduled formulations regarding Paragraph 19 of the Drug Price Control Order (DPCO) 2013. These relate to guidelines that gave NPPA the power to fix drug prices in certain circumstances in public interest.
Though no reason has been given for the withdrawal, the fact is that it came a few days before the Prime Minister’s visit to the US. Industry has reacted positively to the news, with an official statement from Ranjana Smetacek, Director General, The Organisation of Pharmaceutical Producers of India saying, “We appreciate Government’s decision to withdraw the guidelines on fixation/revision of prices of scheduled and non-scheduled formulations under Para 19 of the DPCO 2013. This welcome move tells us we are being heard and we look forward to working with the Government toward a common goal. We are still trying to understand the precise impact of this order on our member companies.”
Daara B Patel, Secretary-General, IDMA too reacted positively, “The Government’s decision to withdraw the guideline to the fixation/revision of prices of scheduled and non-scheduled formulations regarding Paragraph 19 of the DPCO 2013 is a right step and will be beneficial to both the industry as well as to the patient. Now companies will not be reluctant from manufacturing those medicines which were put under DPCO regime and patients can avail them without any hurdles.”
According to an Angel Broking analysis, the drugs impacted include Gliclazide, Glimepiride, Sitagliptin, Voglibose, Amlodipine, Telmisartan and Rosuvastatin, Heparin and Ramipril, covering an estimated market of around Rs 5,500 crores. These drugs had witnessed a price reduction from 10-15 per cent to as high as 35 per cent, with the average reduction around 12 per cent. The biggest positive impact will be felt for companies like Sanofi (~Rs 139 crore gain), Zydus Cadila (~Rs 40 crore gain), Ranbaxy (~Rs 38 crore gain), Cipla (~Rs 19 crore gain), Lupin (~Rs 32 crore gain) , DRL (~Rs 14 crore gain in sales) and Sun Pharma (~Rs 25 crore gain in sales), on the basis of AIOCD AWACS.
Thus, amongst domestic and MNC players, the latter would be impacted the most positively, as they mostly price their products much higher than the competition and then derive their 100 per cent of the sales from domestic markets. The domestic companies not having very huge exposure to the domestic market, will be insulated to a large extent, as pricing is not the key growth driver for their growth. Their products are therefore competitively priced.
“Invoking Para 19 of DPCO, NPPA had extended price control to drugs outside of National List of Essential Medicines (NLEM). Pharmaceuticals lobbies had contested NPPA order in Bombay High Court,” commented Sarabjit Kour Nangra, Vice President Research – Pharma, Angel Broking.
Commenting on the NPPA’s role, Patel continues “It is a good step taken by the Government and we are happy and looking forward positively. However, I feel that NPPA should only be considered about the fact of overcharging activities practiced by pharma companies and should not increase (the number of ) products under the National List of Essential Medicines (NLEM). I hope the new NPPA chairman will strike a balance between industry, government and patient.”
EP News Bureau – Mumbai
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