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DoP constitutes committee to reform pricing framework for drugs and medical devices
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Gireesh Babu, New Delhi
March 13 , 2024
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The Department of Pharmaceuticals (DoP) has constituted a Committee to reform the pricing framework for drugs and medical devices in the country and to prepare a draft Drugs and Medical Devices (Control) Order. The committee has to submit its report in three months.
The Committee will have three core members headed by Arunish Chawla, Secretary, DoP, with Kamlesh Kumar Pant, Chairman of National Pharmaceutical Pricing Authority (NPPA) and Awadhesh Kumar Choudhary, Senior Economic Advisor, DoP as members.
It will have two special invitees from the industry, one each from the Indian Pharmaceutical Alliance (IP Alliance) and Indian Drugs Manufacturers' Association (IDMA). The Committee will be free to invite anyone for seeking technical inputs or placing its views before the Committee.
The committee shall look into various aspects including the institutional reforms required for the NPPA, how to balance price and availability of essential medicines, while providing incentives to the industry to sustain growth and exports, how to design a price moderation framework for medical devices, while providing incentives to the industry to sustain growth and minimise imports, and how to design a price moderation framework for emerging and precision therapies to facilitate their timely reach to the needy patients.
The Committee is expected to come out with a draft Drugs and Medical Devices (Control) Order to achieve these objectives. It may be noted that the drug price order that currently prevails is named as Drugs (Prices Control) Order, 2013.
It may be noted that recently the Department-related Parliamentary Standing Committee on Chemicals and Fertilisers has recommended the Department to take up the matter of price control for medical devices with the NPPA, for inclusion of medium and high-end medical devices which are used for critical care of patients, observing that the devices which are required for critical care to the patients should be listed under the National List of Essential Medicines.
According to NPPA, the price control over drugs was first introduced in the country in 1962 under the Defence of India Act, 1915 with the introduction of Drugs (Display of Prices) Order, 1962, as there was a substantial increase in prices of medicines owing to the Indo-China war. The Order was updated through the Drugs (Control of Prices) Order, 1963.
These orders led to freezing of drug prices with effect from the beginning of 1963 and a series of price control orders were notified based on different principles.
Various committees constituted by the governments, including the Kelkar Committee in 1984, the Pharmaceutical Research and Development Committee (PRDC) and the Drug Price Control Review Committee (DPCRC), in 1999, Pronab Sen Committee set up in 2004, Sandhu Committee constituted in August, 2004, among others had their impact on the country's drug price policy and control orders from time to time.
The Kelkar Committee Report recommended exclusion of a number of drugs from the purview of price control, with various suggestions for determining the criteria for inclusion and exclusion and recognising the need for liberalising the profitability curbs. The Pronab Sen Committee report recommended price ceiling of 314 medicines that fall under essential drugs and said that the price regulation should be on the basis of essentiality of the drug and it should be applied only on formulations and not to upstream products, such as bulk drugs. It recommended that the ceiling price of essential drugs should normally not be based on cost of production but on easily monitorable market based benchmarks.
The Sandhu Committee looked into the span of price control including the trade margin in the light of National Common Minimum Programme and the observations from the Supreme Court on a matter prior to the formation of the Committee. It suggested a total trade margin of 24 per cent for scheduled drugs including 8 per cent margin for wholesalers and 16 per cent for retailers, 30 per cent total margin for branded category non-scheduled drugs and 50 per cent for generic non-scheduled drugs.
The National Pharmaceutical Pricing Policy (NPPP), notified on December 7, 2012, formulated with an objective to put in place a regulatory framework for pricing of drugs made a shift from earlier ‘cost based’ pricing under the Drug Policy, 1994 to ‘market based’ pricing. Following this, the government notified the DPCO, 2013.
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