 "Image via Shutterstock")
Tension between pharmaceutical companies and the price regulator for the sector is on the rise. While the industry has taken some of their disputes with the National Pharmaceutical Pricing Authority (NPPA) to court, many others have landed up time and again at the central government’s department of pharmaceuticals (DoP).
In the first six months of this year alone, drug companies have filed 22 review petitions with the DoP, which is close to double of previous year’s 13 such cases, according to official data. In the past three years, an estimated 60 review applications have been filed by the industry.
In all these cases, companies have not only challenged the ceiling prices of various drugs as fixed by the NPPA but also the method of computing the price, an official said.
Companies have argued that NPPA has failed to take into account the annual inflation, while deciding prices. Also, they have submitted to DoP that in many cases, NPPA did not consider all the companies selling a particular drug, while computing the ceiling price. In addition, there have been cases where companies have said that prices NPPA has fixed will cause them significant losses.
Of all the cases taken up by DoP against NPPA, 71 per cent cases so far this year have been in favour of companies contesting the price revision, according to D G Shah, secretary-general of the Indian Pharmaceutical Alliance. That’s a substantial increase from 32 per cent cases, where DoP overruled NPPA, thereby favouring companies, in 2013-14.
Advantage companies
Among the recent cases where companies saw victory was a review application filed by Ajanta Pharma in March this year. It challenged the NPPA notice that ordered downward revision of azithromycin and dexamethasone phosphate eye drops. The company not only challenged the downward price revision of the drug, but also mentioned that its product is superior to moxifloxacin and difluprednate manufactured by Sun Pharmaceutical at almost double the price. The DoP directed NPPA to revise the price of the drug based on additional data furnished by the company.
Earlier in 2013, Lupin challenged the NPPA order, which froze the prices of rifampicin capsule and rifampicin syrup for a year. When NPPA did not revise the price in 2014 based on Wholesale Price Index (WPI)-based inflation, Lupin demanded a review by DoP.
In another recent example, Alembic requested DoP to impugn NPPA’s order of fixing the price of Azithromycin 250 & 500 mg tablets for the second time in one year. The company argued that NPPA had ignored the actual situation in the industry linked to retailers’ margin. DoP quashed NPPA’s order despite the latter arguing that the amended Drug Price Control Order (DPCO), 2016, allowed the price revision.
Pharma company Boehringer Ingelheim, too, accused NPPA of not following the right procedure, while computing the value of Paracetamol 500 mg tablet. DoP directed NPPA to review its order, based on the data furnished by Boehringer Ingelheim.
In 2014, Sanofi challenged NPPA’s price recommended for a drug used to treat patients with fluid retention due to cardiac and renal failure. The company argued that the price fixed by NPPA made the drug unviable. NPPA was ordered to revise the ceiling price. DoP also noted that NPPA had erred, while computing the price of the drug on the basis of “monopoly”.
In yet another case, Cadila Healthcare got partial relief from NPPA’s order to revise the ceiling price of dexamethasone injection. While DoP noted that NPPA should consider a revision of price of the drug based on 2013 WPI, the allegation by the company that the price fixation for 2 ml vials, 5 ml vials, 10 ml vials and 20 ml vials in the same bunch would make it untenable for companies to sell smaller vials was rejected.
When NPPA won
Recently, DoP rejected Torrent Pharmaceuticals review petition against NPPA’s order fixing the ceiling price of Deplatt-CV 20 forte capsule. The government noted that, “It appears the company has applied as a new drug and claimed a price three times more than which was fixed in 2012. When NPPA realised this, they have withdrawn the price fixation as a new drug and, rightly so, in accordance with the provisions of the DPCO. The review petition is rejected, as the action of the NPPA has been in accordance with the provisions of the DPCO.”
In another case, when Ranbaxy approached DoP, seeking reversal of NPPA’s order to revise the price of ciprofloxacin hydrochloride drop, the department sided with NPPA, noting it should stand by the price revision. DoP observed that NPPA should ensure that all companies adhere to the ceiling price as fixed by the price regulator.
In 2014, DoP quashed Abbott’s petition to review the ceiling price of Elixir. The department observed, “The review application of the petitioners is disposed of with the direction to NPPA to apply reduction in the case of Elixir/Syrup 5mg/5ml only once as conceded by the NPPA representative during the hearing. Till that time, ceiling price notified by NPPA must be adhered to by the petitioners, as per the provisions of DPCO, 2013.”
Middle ground
When Wockhardt appealed against the ceiling price of erythropoietin injection, on the basis that NPPA did not consider the bigger manufacturers of the drug, the government directed NPPA to examine the Wockhardt data and revise the price, should there be any merit in the company’s submission.
