 "Pharma dept seeks view of law ministry on pricing cuts")
Last week, the pricing authority issued notifications slashing prices of around 50 cardiovascular and anti-diabetes medicines by up to 35 per cent under Para 19 of Drugs Price Control Order, 2013, which allows NPPA to slash prices of medicines in "extraordinary" situation in public interest. Similar price cuts are also expected soon in six other therapeutic categories, including anti-cancer drugs, anti-retrovirals, vaccines and medicines used in treatment of asthma, tuberculosis and malaria.
The move has created a stir in the pharmaceutical industry, which is already facing pressure on revenues due to price caps on 348 essential medicines.
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The DoP's move comes in the wake of the industry seeking government intervention in the matter, which companies feel amounts to "modifying" the National Pharmaceutical Pricing Policy (NPPP) determining drug price regulations in the country. The pricing policy, which was pending for over nearly 10 years and was finally cleared by the previous government in December 2012, aims at regulating prices of 348 medicines by capping their prices at an average of all medicines in a particular segment with a minimum market share of one per cent.
The regulator has now stretched its hands beyond these 348 medicines to bring more drugs under price control citing "inter-brand" price difference in a particular segment and various other reasons such as disease intensity and widespread usage of drugs such as anti-diabetic and cardiovascular.
On the other hand, the industry argues the disease environment was same when the government had cleared the policy and no "extraordinary circumstance" has emerged since then for the regulator to invoke Para 19 in public interest.
"We do not find that such extraordinary circumstances have risen since the promulgation of the DPCO 2013 to warrant their use," Indian Pharmaceutical Alliance, which represents domestic drug majors such as Lupin, Sun Pharma and others, wrote in its letter addressed to DoP Secretary Aradhana Johri.
Sources said top representatives from other pharma industry organisations such as Organisation of Pharmaceutical Producers of India, which represents multinational drug makers in the country, also met senior officials in the department on Tuesday.
Industry estimates show the latest NPPA order fixing prices of 50 new medicines, the total market of cardiac medicines under price control, including earlier ones, stands at 58 per cent, while 21 per cent of the anti-diabetic drug market faces price caps. Around Rs 5,500 crore of the drug market will be affected, with prices being reduced from 10-15 per cent to 35 per cent. The average reduction is around 12 per cent.
However, the total impact of price controls will be clear once the regulator fixes price in all eight categories it is examining.
The latest move has shaken almost all major players in the industry. While multinationals such as Sanofi, Pfizer and Abbott are seen to be most affected, revenues of domestic drug makers including Sun Pharma, Lupin, Dr Reddy's Laboratories and Genmark will also come under pressure following the regulatory action.