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Ramesh Shankar, Mumbai June 01 , 2017
The Indian pharmaceutical major Cipla Ltd has has received favourable ruling from the Department of Pharmaceuticals (DoP) on its three formulations as the DoP has directed the NPPA to refix the ceiling prices of the formulations amlodipine 5 mg, ciprofloxacin 250 mg and 500 mg and azithromycin 250 mg & 500 mg.

Earlier, Cipla had filed a review application against price fixation of “Amlodipine 5 mg, ciprofloxacin 250 mg and 500 mg., azithromycin 250 mg & 500 mg.” by NPPA vide its order No. S.O. 1686(E), dated 09.05.2016 issued under DPCO 2013.

During the examination of the review petition, the reviewing authority DoP noted that  the main contentions of the company are that the ceiling prices of the aforesaid formulations should not be revised as the formulations were in NLEM 2011 and continue to be included under the revised NLEM 2015. Ceiling prices of the above mentioned formulations were already in force prior to issuance of SO No.1686(E) dated 09.05.2016.  Further, only those brands having more than 1% market share should be considered for the purpose of calculation of the ceiling prices.  

As regards the contention of the petitioner company that ceiling prices for the medicines “added” in the NLEM 2015 have to be fixed and not for the products which are already in NLEM 2011, it is stated that Para 18(i) of DPCO 2013 clearly states that the revision of ceiling prices on the basis of moving annual turnover value shall be carried out “as and when the National List of Essential Medicines is revised by the Ministry of Health and Family Welfare or five years from the date of fixing the ceiling price under this Order whichever is earlier.”   

In view of this, NPPA has revised the ceiling prices of the formulations, mentioned in amended list of scheduled formulations, strictly as per the provision of DPCO 2013. Therefore, the petitioner company has no merit in this contention, the DoP noted.

Regarding the contention of the petitioner company about the criteria for fixing ceiling price of the subject formulations, on examination, it is found that NPPA has erred in calculating ceiling price as per para 4 of DPCO, 2013, which reads as under :- “4. Calculation of ceiling price of a scheduled formulation (1) The ceiling price of a scheduled formulation of specified strengths and dosages as specified under the First Schedule shall be calculated as under:- Step 1: First the Average price to Retailer of the scheduled formulation i.e. P(s) shall be calculated as below:- Average Price to Retail P(s) = (Sum of prices to retailer of all the brands and generic versions of the medicine having market share more than or equal to one percent of the total market turnover on the basis of moving annual turnover of that medicine)/(Total number of such brands and generic versions of the medicine having market share more than or equal to one per cent of total market turnover on the basis of moving annual turnover for that medicine).” It clearly mentions the medicines which are to be taken for calculation.

In the instant case, the principles applied by NPPA go beyond what is mentioned in DPCO. Hence, NPPA may be directed to refix the ceiling price in accordance with the provisions of DPCO. The DPCO does not recognise a company for average PTR but only medicines/ formulations. Thus, only those formulations are to be considered, which are having MAT value of more than 1% market share.

In view of the above, the contention of the petitioner company, that ceiling prices for the medicines “added” in the NLEM 2015 have to be fixed and not for the products which are already in NLEM 2011, has got no merit as NPPA has revised the ceiling prices in accordance with the provisions of para 18(i) of DPCO, 2013. However, NPPA may be directed to refix the ceiling prices of the formulations by considering only those medicines/formulations having MAT value of more than 1% market share, as DPCO does not recognise a company for average PTR but only medicines/formulations.

After examining the case, the DoP orderes, “NPPA is hereby directed to refix the ceiling prices of the formulations amlodipine 5 mg, ciprofloxacin 250 mg and 500 mg., azithromycin 250 mg & 500 mg. by considering only those medicines/formulations having MAT value of more than 1% market share, as DPCO does not recognise a company for average PTR but only medicines/formulations.” 

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