Drug price

this presentation deals with drug price control in India. it has also updated information on drug price regulation. any suggestion regarding this topic is most welcomed.

1. DRUG PRICE CONTROL IN INDIA PRESENTED BY- Dr. AAKANKSHA PRIYA JR- 1 DEPARTMENT OF PHARMACOLOGY AIIMS, PATNA.

2. OVERVIEW Introduction. Factors Influencing Drug Price. National Pharmaceutical Pricing Authority. Procedure for Price fixation of Bulk drugs. Procedure for Price fixation of formularies. Recent Advances. Conclusion.

3. INTRODUCTION The World Health Organization(WHO) reported that one third of the world’s population lacks reliable access to required medicines and the situation is even more worse in developing countries, which is finding it increasingly difficult to finance medicine as expenditure on medicine has been growing steadily .

4. DEFINITION The Drug Price Control Order(DPCO)- “ The Drug Price Control Order (DPCO) is an order issued by the government under the Essential Commodities Act which enables it to fix the prices of some essential bulk drugs and their formulations ” Bulk Drug means any pharmaceutical, chemical, biological or plant product including its salts, esters, isomers, analogues and derivatives, conforming to standards specified in the Drugs and Cosmetics Act, 1940 (23 of 1940) and which is used as such or as an ingredient in any formulation.

5. DEFINITION BULK DRUGS- “Bulk Drug means any pharmaceutical, chemical, biological or plant product including its salts, esters, isomers, analogues and derivatives, conforming to standards specified in the Drugs and Cosmetics Act, 1940 (23 of 1940) and which is used as such or as an ingredient in any formulation”.

6. HISTORY OF REGULATION OF DRUG PRICE The first time, the Drug Price Control Order was put in place after the Indo-china war of 1962 because pharmaceutical companies started to profit immensely and it became necessary in public interest to cap drug prices.

7. CONT…

8. TABLE OF REGULATIONS FOR DRUG PRICE CONTROL IN INDIA DRUG REGULATIONS ISSUING YEAR SAILENT FEATURES Drug(display of prices) order 1962 For the first time drug prices came under control of Government of India. Drug (control of prices) Order 1963

9. Drug Regulations Issuing Year Salient Features Drug Prices( Control ) Order 1966 It was mandatory for the manufacturers to obtain prior approval from the government before increasing price of any formulations. Drug (Price Control ) Order 1970 Order was passed Under section 3 of Essential Commodities Act. Authorizing it to fix and regulate the prices of essential bulk drugs and their formulations.

10. DRUG REGULATION ISSUING YEAR SALIENT FEATURES The Hathi Committee 1974 Abundant availability of essential medicines at a reasonable price. Drug ( Price Control) Order 1979 370 drugs came under price control. These drugs were divided into 4 categories: I- Life Saving(40%), II- Essential, III- Less Essential, IV- Non essential. These categories have different Maximum Allowable Post Manufacturing Expenses(MAPE).

11. DRUG REGULATION ISSUING YEAR SALIENT FEATURES The Kelkar Committee 1984 Exclusion of a no. of drugs for price control. Drug Price control order 1987 No. of Bulk drug under price control was reduced from 370 to 142. The Drug Policy 1994 Allowed foreign investment up to 51%. Drug Price control order 1995 No. of Bulk drug under price control was reduced from 142 to 76. Drug prices was based on manufacturing costs.

12. TIMELINE OF EVENTS

13. NATIONAL PHARMACEUTICAL PRICING POLICY, 2012 [NPPP] The dept. of Pharmaceuticals drafted National Pharmaceutical Pricing Policy, 2011 based on NLEM,2011 and was placed before Ministry of Health and Family Welfare Based on the recommendation by Ministry National Pricing Policy, 2012 was formed and was put before Cabinet The cabinet approved NPPA 2012 in its meeting held on 22.11.2012.

14. KEY PRINCIPLES OF NPPP, 2012

15. DPCO, 2013 This new order bring 652 drugs( scheduled drugs) under price control. It will enable the National Pharmaceutical Pricing Policy 2012 to regulate price of 348 drugs which are covered under National List of Essential Medicine 2011.

16. CONT… In this current order, ceiling prices would be calculated by taking simple average of all the drug brands having market share more than 1% + Local Taxes + a 16% retailer’s profit margin ( so there is a shift from cost based price calculation to market based methods).

17. DPCO 2019 Paragraph 9. Reference data and source of market based data.– (1) Initially, the source of market based data shall be the data available with the pharmaceuticals market data specializing company as decided by government [IMS Health (IMS)] and if the Government deems necessary, it may validate such data by appropriate survey or evaluation.

18. CONT… Paragraph 32 ( i ) a manufacturer producing a new drug patented under the Indian Patent Act, 1970 (39 of 1970) (product patent) and not produced elsewhere, if developed through indigenous Research and Development, for a period of five years from the date of commencement of its commercial production in the country. ( not applicable in DPCO 2013).

19. CONT…. Paragraph 32 Sub Paragraph iv is included Drugs for treating orphan diseases as decided by Ministry of Health and Family Welfare, Government of India.

20. FACTORS INFLUCENING DRUG PRICE

21. NATIONAL PHARMACEUTICAL PRICING AUTHORITY(NPPA) The NPPA is an organization of government of India established to fix/revise prices of controlled bulk drugs and formulations. It came into existence on 29 th August 1997 as an independent body of experts as per decision taken by Ministry of Chemical and Fertilizers.

22. FUNCTIONS OF NPPA Implement and enforce the provisions of the DPCO. Deal with all legal matters arising out of decision of the authority. To Monitor the availability of drugs . Maintain data on production, exports and imports, market share and profitability of individual companies for bulk drugs. Undertake and/or sponsor relevant studies .

23. CONT…. 6) Render advice to the central government on changes/ revisions on drug policy. 7) Render assistance to the central government in the parliamentary matters relation to the drug pricing.

24. PROCEDURE FOR PRICE FIXATION OF BULK DRUGS As per paragraph 3 of DPCO, 1995 prices of scheduled bulk drugs are fixed by the NPPA to make them available at a fair price from different manufacturers. These prices are fixed from time to time by notification in official gazette .

25. STEPS INVOLVED IN PRICE FIXATION/REVISION OF BULK DRUGS Step 7: Notification to the official Gazette

26. PROCEDURE FOR PRICE FIXATION OF FORMULARIES As per paragraph 8(2) of DPCO 1995, a manufacturer using scheduled bulk drug in his formulation is required to apply for fixation of price of formulation within 30 days of fixation of price of such bulk drugs. Price of formulation is fixed in two ways- Based on application from the manufacturer. Suo- motu basis.

27. PROCEDURE STEP 1. Examination of Technical Parameters STEP 2 . Examinations of prices of bulk drugs STEP 3. Examinations of Excipient Claims STEP 4. Examination of PL, CC, PC and PM cost STEP 5. Application of MAPE STEP 6. Working out the Retail Price.

28. Retail price calculation R.P = [ M.C. + C.C. + P.M. + P.C ] * [ 1 + MAPE/100 ] + E.D M.C = Material cost C.C = Conversion Cost P.M = Cost of Packing Materials including process loss P.C = Packing Charge { procedure of costing).

29. SUO-MOTU BASIS If the manufacturer or companies do not apply for revision of formulation prices as required under paragraph 8(2) DPCO 1995 within a period of 30 days of price reduction of bulk drug, thus steps are taken on suo -motu basis.

30. PHARMA JAN SAMADHAN The Pharma Jan Samadhan provides the consumer with an effective and time bound grievance redressal system to effectively deal with complaints related to pricing, shortage and non-availability of medicines .

31. PHARMA SAHI DAAM

32. Recent steps taken by the government to control Drug Prices in India

33. 1. Reduction of prices of medicines In September 2016, drug price regulator (NPPA) reduced the prices of around 33 essential medicines, which brought down their retail prices by 30-50%. The medicines include antibiotics and drugs used to treat ulcerative colitis, anti- allergics used for common cold and cough, arthritis, gastro- esophageal reflux disease (Gerd), psoriasis, and tuberculosis.

34. 2. REDUCTION IN THE PRICES OF CORONARY STENTS In July 2016, the Ministry of Health and Family Welfare entailed coronary stents in the National List of Essential Medicines, 2015 (NLEM, 2015). On 13 February 2017, the National Pharmaceutical Pricing Authority (NPPA) issued an order which capped the price of coronary stents up to 40 per cent lower than their existing market prices.

35. CONCLUSION From the historical analysis, it is cleared that the Indian Government has successfully controlled the drug prices steadily. Previously, the regulations on drug prices were not very strict but by time to time changes in the drug price control order made the precise guidelines for pharmaceutical industries.

36. NATIONAL PHARMACEUTICAL PRICING POLICY, 2012 [NPPP] The Department of Pharmaceuticals had prepared a draft National Pharmaceutical Pricing Policy, 2011 (NPPP-2011) based on the criteria of essentiality as per the medicines as under National List of Essential Medicines-2011 (348 drugs with specified dosage and strengths), as stipulated by the Ministry of Health and Family Welfare which was placed before the Group of Ministers ( GoM ). Based on the recommendations of the GoM , National Pharmaceutical Pricing Policy 2012 (NPPP-2012) was formulated and placed before the Cabinet. The Cabinet considered NPPP-2012 in its meeting held on 22.11.2012 and approved the same with certain modifications.