National Pharmaceutical Pricing Authority and DPCO 2013

National Pharmaceutical Pricing Authority, Drug price control order 2013

1. P R Patil Institute of Pharmacy Talegaon SP Wardha National Pharmaceutical Pricing Authority Presented By Ashish R. Chaudhari (M.Pharm) Asst. Professor P R Patil Institute of Pharmacy Talegaon SP Wardha

2. INTROD U CTION Drugs play an important role in the health of both people and the economy of a country . must be regulated to ensure that they meet prescribed standards. Therefore, effective drug regulation is required to ensure the safety, efficacy and quality of drugs as well as accuracy and appropriateness of the drugs.

3. DRUG REGULATORY SYSTEM IN INDIA DRUGS REGULATORY SYSTEM IN INDIA is governed by both Centre and State Governments under the Drugs & C o s m et i cs Act, 194 . MAIN BODIES CENTRAL DRUG STANDARD CONTROL ORGANIZATION (CDSCO) MINIST R Y OF HEA L TH A N D F AMI L Y WE L F A R E INDIAN COUNCIL OF MEDICAL RESEARCH (ICMR) MINIST R Y OF CHEMIC A L A N D F E R TI L I Z E R MINISTRY OF SCIENCE AND TECHNOLOGY MINISTRY OF COMMERCE.

4. M I N I S T R Y OF C H E M ICAL A N D FERTILIZER DEPARTMENT OF PHARMACEUITICAL ORGANIZATION AND STRUCTURE. N A TI O NAL PH A RMA C EU T IC A L PRI C ING AU T H O RI T Y (NPPA) ACTIVITIE S AN D RESPONSIBIL I TIES : All matters relating to NPPA including its functions of price control and monitoring. Responsible for development of infrastructure, manpower and skills for the pharmaceutical sector.

5. N A TIONA L P H ARM A C E UTI C AL P R I C ING A U TH O RI T Y ( N P P A) The National Phar m ac e ut i cal Pri c ing Author i ty (NP P A), an independent body of experts in the Ministry of Chemicals and Fertilizers was formed by the Govt. of India at 1997. N P P A is an o r gani z a t ion of the Govern m ent of India which was established to fix/ revise the prices of controlled bulk drugs and formulations and to enforce

6. O R G ANI Z A TION Chairman Member Secretary Advisor (Pricing) Director (Formulation Division) Director (Monitoring & Enforcement Division) Director (Legal Division) Director (Admin Division)

7. FUNCTIONS OF NPPA To implement and enforce the provisions of the Drugs (Prices Control) Order in accordance with the powers delegated to it. To deal with all legal matters arising out of the decisions of the Author i ty; To monitor the availability of drugs, identify shortages, if any, and to take remedial steps; To render advice to the Central Government on changes/ revisions in the drug policy

8. DRUG PRICE CONTROL ORDER (DPCO) 2013 The drug price control order (DPCO) is an order issued by the government under the Essential Commodities Act 1955, which enables it to fix the prices of some essential bulk drugs and their formulations. The origin of this control dates back to 1970 when for the first time the government placed limits on profitability of pharmaceutical companies.

9. Objective of DPCO To ensure availability, at reasonable prices of essential and life saving and prophylactic medicines of good quality. Promoting the rational use of drug in country to encourage cost effective production with economic sizes.

10. DPCO provides The list of price controlled drugs. › Procedures for fixation of prices of drugs. › Method of implementation of prices fixed by Government. › Penalties for contravention of provisions All formulations containing the bulk drugs either in a single or combination form fall under the price control category

11. Main Features of the DPCO 2013 The new order will bring 348 drugs & their 652 formulations under price control Margins of wholesalers & retailers have been cut down to 8% & 16% respectively. Existing firms will not be allowed to stop production of any drug without permission from the government. Firms that launch new medicines can sell them at or below government-set price caps. The ceiling price would be calculated by taking the simple average of prices of all brands of a drug

12. SCHEDULES SCHEDULE 1: contains the national list of essential medicines, 2011 divided into 27 sections. ( 348 essential drugs ) SCHEDULE 2: contains various forms for approval or revision of prices of scheduled formulations.

13. PRICES OF BULK DRUGS PR I CE S O F BUL K DRU G S O THE R THA N THOSE SPECIFIED IN FIRST SCHEDULE Manufacturers of such drugs are required to furnish all details to the government within 30 days of the commencement of order to enable the government to fix their prices. In case of manufacture of new drugs details have to be given to the government within 14 days of the commencement of manufacture. If a manufacturer or importer of bulk drugs fails to furnish required details, the government can fix its price based on available information.

14. RETAIL PRICE OF FORMULATIONS For calculation of retail price of any drug formulation the following formula is used; R.P = ( M.C + C.C + P.M + P.C )x 1 + MAPE/100 + E.D R.P- Retail Price M.C- Material Cost(inclusive of processing losses) C. C - Con v ers i o n C o st P.M- Packing Material cost P . C - Packin g Charges MAPE- Maximum Allowable Post Manufacturing Expenses(inclusive of trade margins) E.D- Excise Duty

15. CEILING PRICE Step1: First the Average Price to Retailer of the scheduled formulation i.e. P(s) shall be calculated as below: Average Price to Retailer, P(s) = (Sum of prices to retailer of all the brands and generic versions of the medicine having market share more than or equal to one percent of the total market turnover) / (Total number of such brands and generic versions of the medicine having market share more than or equal to one percent of total market turnover on the basis of moving annual turnover for that medicine.) Step2. Thereafter, the ceiling price of the scheduled formulation i.e. P(c) shall be calculated as below: where P(s) = Average Price to Retailer M = % Margin to retailer and its value =16% P(c) = P(s).(1+M/100)

16. MAXIMUM RETAIL PRICE The maximum retail price of scheduled formulations shall be fixed by the manufacturers on the basis of ceiling price notified by the Government plus local taxes wherever applicable, as under: Maximum Retail Price = Ceiling price + Local Taxes The maximum retail price of a new drug shall be fixed by the manufacturers on the basis of retail price determined by the Government plus local taxes wherever applicable, as under: Maximum Retail Price = Retail Price + Local Taxes as applicable

17. A Text book of Pharmaceutical Jurisprudence by Dr. B. S. Kuchekar Drugs price control order, 2013. A textbook of Forensic pharmacy by B. M. Mithal REFERENCE

18. Thank You