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DoP rejects Wockhardt's plea of irrational & unscientific to calculate average PTR on dosage basis in case of liquid formulations
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Ramesh Shankar, Mumbai
May 25 , 2017
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The Department of Pharmaceuticals (DoP) has rejected the Indian drug
major Wockhardt Limited's plea that in case of liquid formulations, it
is irrational and unscientific to calculate average price to retailer
(PTR) on dosage basis. The DoP's order in this regard came while
examining a review application filed by Wockhardt against price fixation
of “Povidone iodine solution 5% (Wokadine 5% solution)” by the NPPA
vide its order No. S.O. 3431(E), dated 10.11.2016 issued under DPCO
2013.
In the review petition, Wockhardt contended that in case of
liquid formulations, it is irrational and unscientific to calculate
average price to retailer on dosage basis. A 100 ml bottle pack cannot
be equated with 1,000 ml bottle pack for averaging purpose. Cost of
packaging and conversion cost per ml are much higher in case of smaller
packs. This is resulting in major drop in prices of smaller packs which
contribute more than 85% of overall sales.
The company further
contended that larger packs are mostly for hospital supply and priced
much lower than common packs. These packs therefore should not be
considered for arriving at average price to retailer for most commonly
used packs. As per Para 4 of DPCO, 2013 for calculation of ceiling price
of a scheduled formulation, average Price to Retailer shall be
calculated as: “ (Sum of prices to retailer of all the brands and
generic versions of the medicine having market share more than or equal
to one per cent 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 percent of total market turnover on the basis of moving annual
turnover for that medicine.)”.
The petitioner argued that it is
clear from the formula definition that average price to retailer which
is reflected in considered data base having more than 1% market share
would be considered as it is. However it is seen in the working sheet
that manual adjustment in average price is made for few packs. For
example in Povidone iodine 5% Betadine 5 % solution 100 ML price per
unit is showing as Rs. 0.81/- however in column price per unit
considered is Rs. 0.37/-.
During examination of the case, the DoP
noted that the main contention of the petitioner company is that to
calculate average price to retailer on dose basis,100ml bottle pack
cannot be equated with 1000ml bottle pack for averaging purpose. The
company in the review application stated that the cost of packaging and
conversion cost per ml are much higher in case of smaller packs. As per
DPCO, 2013, the basis while fixing the ceiling price has moved to market
based data and considering cost based data is uncalled for. Moreover,
since there is no added therapeutic advantage mentioned by the company,
separate ceiling price cannot be considered based on pack size under
para 11(3) of DPCO 2013. As regards the second grievance, as per para
4(i) of DPCO, 2013, 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 is to be considered for fixing the
ceiling price.
The DoP further noted that DPCO does not
recognise a company for average PTR but only medicines / formulations.
Thus, only 5 formulations are to be considered having MAT value of more
than 1% each instead of 12 considered by NPPA in its calculation.
Regarding the price per unit of Providone iodine 5% Betadine 5% solution
100 ml, it is seen from the calculation sheet that the price per unit
as per August,2015 data is Rs.0.81. However, NPPA has considered the
price as Rs.0.37/per unit. On examination, it is found that the ceiling
price of the formulation was fixed as Rs.0.42/ml (including 16% retailer
margin) for Povidone Iodine Solution 5% vide SO 644(E), dated 2nd
March, 2016 (S.No.424). Based on this, the NPPA has rightly restricted
the price to Rs.0.37/ml. It is also observed that the prices of the
formulation of other companies are between 0.18 to Rs.0.35 per unit.
Hence, the grievance of the company has got no merit.
After
detailed examination, the DoP ordered, “The grievance of the company
that price of 100ml bottle pack cannot be equated with 1000ml bottle
pack for averaging purpose on the ground that the cost of packaging and
conversion cost per ml is much higher in case of smaller packs cannot be
considered since in DPCO, 2013, the basis while fixing the ceiling
price is market based data and not cost based data. Moreover, there is
no added therapeutic advantage of smaller pack mentioned by the company.
Therefore, the grievance of the company cannot be accepted. The
grievance that NPPA has considered the price of Rs. 0.37/unit for
Providone iodine 5% Betadine 5% solution 100 ml. instead of Rs.
0.81/unit has also got no merit, as NPPA has rightly restricted the
price at Rs. 0.37/ml, based on ceiling price fixed vide SO 644(E), dated
2.3.2016.
'However, NPPA is directed to re-fix the ceiling price
of Povidone iodine solution 5% (Wokadine 5% solution) in accordance
with the provisions of DPCO by considering the PTR of 5 formulations
only having more than 1% market share, as the DPCO does not recognise a
company for average PTR but only medicines / formulations.”
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