NATIONAL PRICING AUTHORITY (1).ppt

Pharmaceutical Jurisprudence
Pharmacy Council of India syllabus B.pharm fifth semester
DME ER 2020 D.pharm second year Law and ethics

1. NATIONAL
PHARMACEUTICAL
PRICING AUTHORITY
PHARMACEUTICAL JURISPRUDENCE
PREPARED BY
K.S.DINESH
ASSISTANT PROFESSOR

2. INTRODUCTION
•Drugs are considered as essential commodities and
they should be made available always at a
reasonable cost of price.
•Drug Price Control Orders (DPCO) are issued by
the Government, in exercise of the powers
conferred under Section 3 of the Essential
Commodities Act, 1955, for enabling the
Government to declare a ceiling price for essential
and life saving medicines (as per a prescribed
formula) so as to ensure that these medicines are
available at a reasonable price to the general
public.
•The latest Drug Price Control Order (DPCO-2013)
was issued on 15th May 2013.

3. OBJECTIVES OF THE DPCO ACT
1. To regulate the equitable distribution of essential
bulk drugs.
2. To fix the maximum retail prices of essential bulk
drugs and drug formulations.
The DPCO has threeclasses of schedules of drugs:
Schedule I: It contains the list of essential bulk drugs
that are included in 27 different sections of National list
of Essential Medicines (NLEM), 2011 rule.
ScheduleII: It contains various forms for the approval,
fixation or revision of prices ofScheduled formulations.
Schedule III: It specifies the maximum pre-tax return
on the sales turnover ofmanufacturers or Importers of
formulations

4. DEFINITIONS
•Drugincludes:
(i)All medicines for internal or external use of human
beings or animals and all substances intended to be
used for, or in the diagnosis treatment, mitigation or
prevention of any disease or disorder in human
beings or animals, including preparations applied on
human body for the purpose of repelling insects like
mosquitoes.
(ii)Such substances, intended to affect the structure
or any function of the human body or intended to be
used for the destruction of vermin or insects which
cause disease in human beings or animals, as may
be specified from time to time by the Government by
notification in the Official Gazette.

5. (iii)Bulk drugs and formulations.
•Bulk Drugmeans any pharmaceutical, chemical,
biological or plant product including its
salts,esters,stereo-isomers and derivatives,
conforming to pharmacopoeial or other standards
specified in the Second Schedule to the Drugs and
Cosmetics Act, 1940, and whichis used as such or
as an ingredient in any formulation.
•Scheduled Bulk Drugmeans a bulk drug specified
in the First Schedule.
•Non-scheduled Bulk Drugmeans a bulk drug not
specified in the First Schedule.

6. •Scheduled Formulationmeans a formulation
containing any bulk drug specified in the First
Schedule either individually or in combination with
other drugs, including one or more than one drug or
drugs not specified in the First Schedule except
single ingredient formulation based on bulk drugs
specified in the First schedule and sold under the
generic name.
•Non-Scheduled Formulationmeans a formulation
not containing any bulk drug specified in the First
Schedule.
•Ceiling Pricemeans a price fixed by the
Government for Scheduled formulations

7. •Retail Pricemeans the retail price of a drug arrived
at or fixed in accordance with the provisions of
DPCOand includes a ceiling price.
•Sale Turn-overmeans the product or units of
formulations sold by a manufacturer or an importer,
as the case may be, in an accounting year multiplied
by retail price inclusive of sales tax, if any, paid on
direct sales by the manufacturer or importer, but
does not include excise duty and local taxes, if any.

8. SALE PRICES OF BULK DRUGS
•The Government may fix from time to time, by
notification in the Official Gazette, themaximum sale
price at which any bulk drug specified in the First
Schedule can be sold.
•No person can sell a bulk drug at a price exceeding
the fixed price plus local taxes if any.
•Any manufacturer who commences the production
of any bulk drug specified in the First Schedule, after
the commencement of this order, is required to
furnish the necessary details in Form I within fifteen
days of the commencement of the production of
such bulk drug to the Government.

9. •The Government may then, after making the
necessary inquiries, fix the maximum sale price of
the bulk drug by notification in the Official Gazette.
•Every manufacturer of a Scheduled bulk drug or a
non-Scheduled bulk drug has to submit to the
Government a list of all bulk drugs produced by him
indicating the details of the cost of each bulk drug
within thirty days of the commencement of this Order
and by 30th September thereafter every year.
•The government may, in public interest, fix or revise
the price of any non-Scheduled bulk drug and the
manufacturer or importer of such bulk drug shall not
sell the same at a price exceeding the price so fixed
or revised, within fifteen days of receipt of the order.

10. Calculation of Retail Price of Formulations
The retail price of a formulation can be calculated in
accordance with the followingformula,
R.P=(M.C.+C.C. + P.M. + P.C.) x (1 + MAPE/100) +
E.D.
•where R.P. means retail price;
•M.C. means material cost and includes the cost of
drugs and other pharmaceutical aids used including
overages, if any, plus process loss thereon specified
as a norm from time to time by notification in the
Official Gazette in this behalf;
•C.C. means conversion cost worked out in
accordance with established proceduresof costing
and shall be fixed as a norm every year by notification
in the Official Gazette in this behalf;

11. •P.M. means the cost of the packing material used in
the packing of concerned formulation, including
process loss, and shall be fixed as a norm every year
bynotification in the Official Gazette in this behalf,
•P.C. means packing charges worked out in
accordance with the establishedprocedures of
costing and shall be fixed as a norm every year by
notification in the Official Gazette in this behalf
•MAPE (Maximum Allowable Post-manufacturing
Expenses) means all costs incurred by the
manufacturer from the stage of ex-factory cost to
retailing andincludes trade margin for the
manufacturer and it shall not exceed 100 per centfor
indigenously manufactured Scheduled formulations;
•E.D. means Excise duty.

12. PRICE OF FORMULATIONS (BRANDED OR
GENERIC) LISTED IN THE NLEM LAUNCHED BY A
MANUFACTURER
A manufacturer, launching a scheduled
formulation, shall be free to fix the price of the
scheduled formulation equal to or below the ceiling
price fixed for that scheduled formulation by the
Government. Where an existing brand is re-launched
by another manufacturer, the provisions shall be
applicable.
Price of Scheduled Formulations for the Existing
Manufactures:
•All the existing manufactures of scheduled
formulations, selling the branded or generic or both
the versions of scheduled formulations at a price

13. higher than the ceiling price (plus local taxes as
applicable) so fixed and notified by the
Government, shall revise the prices of all such
formulations downward not exceeding the
ceiling price (plus local taxes as applicable).
•Provided that, in case of scheduled
formulations produced or available in the
market before the date of notification of ceiling
price, the manufacturers shall ensure within a
period of 45 days of the date of such notification
that the MRP of such scheduled formulation
does not exceed the ceiling price (plus local
taxes as applicable).

14. •All the existing manufactures of scheduled
formulations, selling the branded or generic or both
the versions of scheduled formulations at a price
lower than the ceiling price (pluslocal taxes as
applicable) so fixed and notified by the Government
shall maintain theirexisting MRP
Fixation of Ceiling Price of Scheduled
Formulations:
•The Government shall fix and notify the ceiling
prices of the scheduled formulations in accordance
with the provisions of DPCO,and no manufacturer
shall sell the scheduled formulations at a price
higher than the ceiling price (plus local taxes as
applicable) so fixed and notified by the Government.

15. •Where any manufacturer sells a scheduled
formulation at a price higher than the ceiling price
(plus local taxes as applicable) fixed and notified by
the Government, such manufacturers shall be liable
to deposit the overcharged amount along with
interest thereon from the date of such overcharging.
Fixation of the Retail Price of a New Drug for
Existing Manufacturers of Scheduled
Formulations
•The Government shall form a Committee of Experts
to recommend the retail prices of new drugs on the
principles of "Pharmacoeconomics".(Compares the
values of one pharmaceutical drug to another drug
mainly cost and effects)

16. •Where an existing manufacturer of a drug with
dosages and strengths as specified in NLEM launches
a new drug, such existing manufacturers shall apply
for prior price approval of such new drug from the
Government in Form-I under Schedule-ll of this Order.
•On receipt of application, in the event of the new drug
not available in domestic market. the Government
shall fix the retail price of the new drug in accordance
while in the event of new drug not available in
domestic market, the Government shall forward the
same to the Standing Committee of Experts who shall
examine the application on the principles of
"Pharmacoeconomics" and make recommendations of
retail price of the new drug to theGovernment within
30 days of the receipt of application.

17. •The Government shall, on receipt of the
recommendation of the Standing Committee of
Experts fix the retail price of such new drug and
such price shall be applicable to such applicant of
such new drug.
•Where existing manufacturer of scheduled
formulation fails to apply for prior approval of the
price of the new drug in Form-1 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