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DoP notifies amendments to DPCO, 2013 to fix retail price for new drugs with components going off-patent
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Gireesh Babu, New Delhi
May 15 , 2023
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The Department of Pharmaceuticals (DoP) has amended the Drugs (Prices Control) Order, 2013 to include provisions by which the retail price of new drugs with ingredients that have become off-patent or about to become off-patent will be arrived at by reducing 50 per cent of the price calculated as per the provisions of the price control order.
The National Pharmaceutical Pricing Authority (NPPA) has been mulling on bringing in such a regulation for almost a year now, and has earlier fixed a methodology under which the price for new drug with a molecule of ingredient which has become off-patent or is about to become off-patent by cutting the price of the molecule under patent by 50 per cent.
Similar provision has also been notified by the DoP for the revision of ceiling price of scheduled formulation after expiry of patent issued under the Patents Act, 1970.
According to the notification, which announced the Drugs (Prices Control) Amendment Order, 2023 that came into force on the date of publication of the Order in the Gazette on May 11, 2023, the DoP has added a provision in the sub-paragraph 1 in the Paragraph 5 of the DPCO, 2013.
The Paragraph 5 deals with the calculation of retail price of a new drug for existing manufacturers of scheduled formulations, and the sub-paragraph 1 details that the retail price of the new drug available in domestic market shall be calculated as per the calculation step provided in the Paragraph 4 of the DPCO, 2013.
Under this sub-paragraph, the amendment has added the provision that this is valid provided that the retail price of a new drug or the new drug that contain molecules or components or ingredients that have become off-patent or about to become off-patent under the Patents Act shall be fixed as per the provisions of the sub-paragraph 3 of the amendment.
It then proceed to insert the sub-paragraph three to the DPCO, which states, “the retail price of the new drug shall be arrived by reducing fifty per cent of the price calculated under sub-paragraph (1) of paragraph 4, and if the new drug is not available in the domestic market, the retail price of the new drug shall be fixed as per the provisons of the sub-paragraph (2) of this paragraph”.
The sub-paragraph (2) of the Paragraph 5, which is already present, provides that the price to retailer of a new drug, not available in domestic market, shall be fixed by the Government on the principles of pharmacoeconomics of the new drug, on the recommendation of a standing committee of experts formed under the DPCO, 2013. The retail price of such new drug shall be fixed by adding 16 per cent margin to retailer on the price to retailer, it added.
The new sub-paragraph (3), inserted through the fresh notification, further adds that after one year from the date on which the retail price was fixed as per the Order or the date on which price to retailer of at least one company fixed under the regulation is captured in the pharmaceutical market database, whichever is later, the retail price for the subsequent manufacturers shall be fixed as per sub-paragraph (1) of Paragraph 4.
This is provided that while fixing the retail prices under this, the prices of the brand of the manufacturer having the patent and the manufacturer holding the permission granted by the patentee shall be excluded.
Further, the amendment added one more paragraph, 18A after the existing paragraph 18, to add that the revision of ceiling price of scheduled formulation after expiry of patent issued under the Patents Act, 1970 (39 of 1970), into the price control order.
“In the case of scheduled formulation or its molecules or components or ingredients, which are patented under the Patents Act 1970 (39 of 1970), the ceiling price, on expiry of the patent, shall be revised by reducing the present ceiling price by fifty per cent, and after one year, the ceiling price shall be revised again as per the provisions of sub-paragraph (1) of paragraph 4, based on the market data of the preceding month,” said the new paragraph.
It may be noted that the NPPA has discussed the issue of price fixation of new drugs for which a molecule or ingredient becomes off-patent or soon to become off-patent, last April. In the first half of 2022, the NPPA fixed the prices of generic fixed dose combinations (FDCs) of sitagliptin and linagliptin, the diabetes drugs which were going off patent, with a 50 per cent reduction on the patented component. The same methodology was accepted while fixing the prices for some of the other drugs, which also went off patent following this.
The decision was considering that if the price of these drugs are reduced based on the six month prior market data, the price of the patented period would be taken into consideration and the benefit of price reduction would not be passed on to the consumers.
However, some of the industry members and organisations raised their concerns over fixing the prices of the generic versions of the drugs while it is still under patent. The NPPA said that it is obliged to give price to the existing manufacturer on receipt of application for price approval and patent disputes on the drug cannot affect this process as per the law.
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