India introduces new drug pricing control

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India introduces new drug pricing control

Home/Policies & Legislation | Posted 31/05/2013 0 Post your comment

On 15 May 2013, India’s Directorate of Food and Drugs Administration announced the introduction of a new Drug Price Control Order (DPCO), which is expected to lead to price reductions of up to 80% in ‘essential drugs’.

The new DPCO, which affects both brand-name and generic drugs, replaces the 1995 Order which was based on production costs for drugs and regulated the prices of just 74 active pharmaceutical ingredients (APIs) and their finished formulations in the country’s National List of Essential Medicines [1].

The government will now regulate the rates of 652 medicines using a market price-linked cap for each drug. The DPCO proposes that the retail price of 348 ‘essential drugs’ be fixed at the simple average price of brands that have more than 1% market share.

The maximum retail price of a drug will also include a margin of 16% for the pharmacist. The prices prevailing in May 2012 will be taken as the reference point for calculating the caps. Drug producers will be permitted an annual increase in the retail price in line with the wholesale price index.

Companies selling medicines above the government-mandated ceiling rates will have to reduce prices to conform to the new rules, but those selling drugs below the ceiling price will not be allowed to raise their prices. Firms that launch new medicines can sell them at or below government-set price caps.

Existing firms will also not be allowed to stop production of a drug without permission from the government. Firms will have to issue a public notice and inform the Indian Government at least six months in advance if they want to stop making an essential drug and the government can ask them to continue producing the drug at a certain level for another year if in the public interest.

The National Pharmaceuticals Pricing Authority (NPPA) will implement the new DPCO, which will come into effect on 1 July 2013. The implementation of the new DPCO is expected to lead to reductions of 50–80% in the prices of many life-saving anticancer and anti-infective drugs.

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Reference

1. GaBI Online - Generics and Biosimilars Initiative. India may move away from compulsory licensing [www.gabionline.net]. Mol, Belgium: Pro Pharma Communications International; [cited 2013 May 31]. Available from: www.gabionline.net/Generics/General/India-may-move-away-from-compulsory-licensing

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Source: DFDA