New drug pricing order challenged in court

Pharma companies oppose vociferously 45 days' time period given to them for replacing existing stocks

Taking their cue from Cipla and Alembic, many in the pharmaceutical industry have challenged the new drug price fixation orders that were to be implemented from July 29. The move is expected to delay the introduction of low-priced medicines in the market.

Official sources said Sun Pharma and two major industry bodies — the Indian Drug Manufacturers Association and the Confederation of Indian Pharmaceutical Industry — had recently approached the Delhi High Court, challenging the 45-day period given to companies to replace existing stocks. Besides, firms such as IPCA Labs and multinational drug maker Abbott had filed a review petition with the Department of Pharmaceuticals, challenging other aspects of the new price regulation, sources said.

The National Pharmaceutical Pricing Authority (NPPA), the pricing regulator, had started notifying the prices of essential medicines, according to the new policy, from mid-June. The notification said companies were required to replace existing stocks in the market with newly priced batches within 45 days of the notification. While the first notification was brought out on June 17 for 151 drugs, companies selling those drugs had to implement the new pricing from July 29. However, with several companies challenging the norm, it is likely medicines would continue to be available at earlier prices. Some trade sources confirmed companies were yet to replace stocks.

However, NPPA has started its vigilance process. “We are writing to state drug controllers to keep a strict watch on the market and report to us immediately if any violation is noted,” said a senior NPPA official. Soon, the authority plans to collect random samples from the market to check whether its orders were being followed or not, he added. If companies were found selling drugs at prices more than the notified ceiling price, they would face action, the official said. Meanwhile, the finance ministry has issued a notification exempting excise duty on re-printing, re-labelling, re-packing and putting stickers on essential drugs within 45 days of NPPA’s price notification. The move would be of immense help to companies while re-labelling existing stocks.

“The scheduled formulations, in respect of which the manufacturer is liable to ensure that  the Maximum Retail Price (MRP) of such formulation does not exceed the ceiling price within forty-five  days of the date of notification of the ceiling price by National Pharmaceuticals Pricing Authority (NPPA), have been removed from the place of removal on payment of appropriate duty,” the notification by Department of Revenue said.

While the industry has welcomed the move, it continues to argue that recalling the existing stocks from the retail level is practically not possible and therefore the government should allow companies to sell the existing stocks at the previous price.

However, the regulator says the move is important keeping in mind the public interest because without a deadline companies are likely to misuse the provision and dodge price control.