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LATEST NEWS UPDATES | Pricing of imported drugs under regulatory scanner-Khomba Singh

Pricing of imported drugs under regulatory scanner-Khomba Singh

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published Published on Sep 6, 2012   modified Modified on Sep 6, 2012
-The Economic Times
Medicines
India's drug price regulator has initiated a process to end the 16-year freedom enjoyed by foreign drug makers to fix the retail price of their imported medicines in the country.

The National Pharmaceutical Pricing Authority (NPPA) has written to the department of pharmaceuticals to amend the Drugs (Prices Control) Order of 1995, its chairman CP Singh told ET.

The amendment will allow NPPA to seek details of the methodology adopted by importers to arrive at the landed price of drugs on the basis of which the maximum retail prices of imported drugs are fixed. The DPCO does not allow NPPA to seek such details. The regulator has to go by the landed cost declared by the importer, limiting its pricing authority to merely fixing the profit margin.

"There is an impression among some quarters that some companies are launching their drugs in India by declaring a much higher price (than cost of the drug)," Singh said. "We want to have some control over this in public interest. Today, we are completely blind how they have arrived at the landed price."

Singh said verification will help the regulator understand if the MRP in India is near the actual price (cost) of the drug.

Last year, NPPA tried to seek such details from some foreign drug makers. But its request was shot down by the Delhi High Court after the law ministry conceded that NPPA had no such powers under DPCO.

Local companies also say this rule is unfair to them as their MRP is fixed after strict scrutiny of the cost of production by NPPA, while no such rule is applicable to imported brands. "We want a level playing field based on a common ceiling price for a product to encourage domestic manufacturers by ensuring that imported products do not get an unfair advantage," said Rakesh Bamzai, president (marketing), at Biocon.

The market for imported medicines has trebled to Rs 11,113 crore in the past eight financial years, according to CMIE data. The share of drugs under price control, however, will be small as NPPA regulates prices of medicines made using 74 ingredients alone, which accounts for 20% of the market.

But the Organisation of Pharmaceutical Producers of India, a representative body of MNC drug firms, said NPPA's move contradicts the department of pharmaceuticals' policy.

"The recommendation of the NPPA is tantamount to facilitating back-door entry of 'cost-based pricing' for imported products, when the department of pharmaceuticals, on the contrary, recommends 'market-based pricing' in its draft National Pharmaceutical Pricing Policy 2011," Tapan Ray, director-general of the organisation, said.

"It will signal utter confusion in the pharmaceutical policy making process of the government," he said, adding that such recommendations from NPPA will signal a high degree of unpredictability in the pharmaceuticals business environment.

A group of ministers, led by agriculture minister Sharad Pawar, is in the process of finalising a drug pricing policy, which seeks to fix prices of 348 drugs. The department of pharmaceuticals has proposed a market-based pricing mechanism, although it is opposed by the health ministry, NGOs and some members of Parliament. The debate on the issue began last year after NPPA refused to hike prices of imported brands of US-based Eli Lilly. It also rejected to revise prices of insulin brands of all drug makers citing public interest. Companies have alleged that their margins were squeezed to as low as 5% and it was becoming difficult for them to do business under such strict regulation.


The Economic Times, 6 September, 2012, http://economictimes.indiatimes.com/news/news-by-industry/healthcare/biotech/pharmaceuticals/pricing-of-imported-drugs-under-regulatory-scanner/articleshow/16274


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