On July 23, 2019, the Union Minister for the Chemicals & Fertilizers, Mr. D .V. Sadananda Gowda, in a written reply to Lok Sabha informed that 22 drug formulations were introduced in the market without prior approval of the National Pharmaceutical Pricing Authority (NPPA). Consequently, the NPPA issued demand notices for an amount of INR 101 crore against defaulting companies. Out of this, an amount of INR 5.56 crore has been recovered and demand notices amounting to INR 89.31 crore are under litigation1.
The NPPA ('Authority') is an independent agency under the Department of Pharmaceuticals (DoP), Ministry of Chemicals & Fertilizers to regulate the availability of medicines in the country at affordable prices. The Authority functioning as per provisions of the Drugs (Prices Control) Order, 2013 (DPCO) of Essential Commodities Act, 1955, regularly monitors the market activities for DPCO compliances and takes action against violators.
The DPCO, 20132 has precisely mentioned the applicability of prior price approval for different drugs:
- that when an existing manufacturer launches a new drug other than the listed drug (drug + dosages + strengths) in National List of Essential Medicines, shall need to apply for prior price approval of such new drug from the Government (NPPA) in Form-I of Schedule-II of this Order. Non-compliance of this provision requires existing manufacturer to deposit the overcharged amount along with the interest calculated from the launching period, in addition to penalty as per Para15(5) of this order3.
In certain cases the approval of pricing authority is not required, namely:
- No prior approval is required in case the manufacturers increase the maximum retail price (MRP) of scheduled formulations once in a year (April), on the basis of the wholesale price index.
- As per para 12(1) a manufacturer, launching a scheduled formulation, shall be free to fix the price of the scheduled formulation equal to Price list; to or below the ceiling price fixed for that schedule formulation by the Government. (2) Where an existing brand is re-launched by another manufacturer the provisions of paragraph 13 shall be applicable.
However, the provisions of this order are not applicable in certain cases, where:
- y a new drug patented and produced in India, if developed through indigenous research and development, are exempted for price regulation under this Order for a period of five years from the date of commencement of its commercial production in the country.
- y a new drug is produced by a new patented process in India, if developed through indigenous research and development, are exempted for price regulation under this Order for a period of five years from the date of the commencement of its commercial production in the country.
- y a new drug involving a new delivery system developed through indigenous research and development, are exempted for price regulation under this Order for a period of five years from the date of its market approval in India, if proof of approval of such new drugs from Drugs Controller General (India) is produced before the Government.
Note – NPPA regularly analyzes market-based information to monitor the status of new drug launches and drug overcharging. Apart from this, a consumer may lodge a complaint directly to NPPA, if he observes pricing of medicine over and above the printed MRP of a medicine.
3 Para 15(5) Where existing manufacturer of scheduled formulation fails to apply for prior approval of the price of the new drug in Form-I, such manufacturer shall be liable to deposit the overcharged amount over and above such price fixed and notified by the Government, if any, along with interest thereon from the date of launch of the new drug, in addition to the penalty.
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