National Pharmaceutical Pricing Authority (NPPA) | Drug Price Control Order Para 19

Why in news?
The National Pharmaceutical Pricing Authority’s (NPPA) decision last week to expand the number of drugs under price control by a further 39 drugs has no doubt increased scope of price control but the pharmaceutical industry feels the overarching objective of increasing access to medicines is not being adequately addressed.

About NPPA: "Affordable medicine for All"

• NPPA is under Department of Chemical and Petrochemical, under Ministry of Chemicals, Fertilisers and Pharmaceuticals. 

WHAT DOES NPPA DO?

• regulate price of drugs by implementing drug price control order - DPCO which is issued under Essential commodities Act (ECA)
• In public interest
• Monitor production and availability of drugs
• Prevent and rectify shortage of drugs
• Maintain data on EXIM of drugs
• Does not give license for drugs - done by DCGI

WHICH DRUG's PRICES ARE MONITORED?

• All 348 drugs enlisted in National List of Essential Medicines under DPCO 2013
•  The formulation-combinations, which come under NLEM total over 650 now.

HOW IS PRICE DETERMINED? (of the 348 drugs under NLEM)

• Prices are capped at an average of all medicines in the segment having more than 1% market share.

The Story of Para 19:

• In case of shortage/emergency or extraordinary circumstances
• The Paragraph 19 of the DPCO, 2013, authorises the NPPA to control the prices drugs that are not under the NLEM (National List of Essential Medicines) under extraordinary circumstances (or shortage or emergency) in public interest. 
• The NPPA had invoked Para 19 of the DPCO to cap prices of 108 medicines, including cardiac, diabetes and HIV/AIDS drugs, in May 2014 
• Matter went to Delhi High Court. 
• In September 2014, Government revoked paragraph 19 from DPCO.
• NPPA automatically lost power to control prices of those 108 drugs, which are outside NLEM
• IMPACT: Significant price hike in 108 drugs

• e.g. - Glivec (anti-cancer) - 8500 ---> 1 lakh
• The Special 301 report angle:
• India under priority watch list in the Special 301 report  of US because of the unfavorable IPR regime. 
• Pharma companies criticize India for unfavorable patent and pricing rules.
• Maybe that's why Para 19 was revoked so that US (and other) MNCs could make profits in India--> more investment + generate more jobs in India

Impact of bringing more drugs under NLEM by NPPA:

• Price control on drugs, mandated by the 2013 Drug Price Control Order (DPCO) has not helped in improving access of these medicines in the country
• With the manufacture of non-controlled drugs becoming more profitable, smaller companies are exiting controlled products. 
• Competition was being eliminated leading to monopolies being created.
• The supply side is drying up as smaller and mid-sized players are increasingly opting to make non-NLEM drugs due to better margins offered

Conclusion:

• Price control has limited impact on improving patient access
• The authorities will have to decide on what the ultimate objective is — to have control over drug prices or to improve access to medicines
• Government’s priority should be on strengthening India’s healthcare infrastructure and extending universal insurance coverage

[Source: The Hindu, Economic Times]