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Industry calls for amendments to DPCO 2013 to ensure fair pricing and simplify regulations
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Shardul Nautyal, Mumbai
September 04 , 2024
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The pharmaceutical industry is advocating for key changes to the Drug Price Control Order (DPCO) 2013, highlighting the need for amendments to maintain a level playing field and prevent complications related to pricing. Industry leaders have recommended the deletion of Paragraph 13(2) of the DPCO- 2013 to avoid a dual pricing mechanism, which they argue could lead to market distortion and unfair competition.
Paragraph 13(2) of the DPCO has been a point of contention for the pharmaceutical companies. This provision effectively allows for dual pricing of medicines, where the same drug could be sold at different prices depending on its inclusion in the National List of Essential Medicines (NLEM). Industry representatives argue that this dual pricing mechanism creates discrepancies in the market, favoring certain companies over others and leading to price disparities that can confuse consumers and healthcare providers.
“Maintaining a uniform pricing structure for medicines is crucial to ensuring that all players in the market compete on an equal footing,” said a spokesperson for a leading pharmaceutical company. According to Industry experts, “The existence of dual pricing not only complicates the market but also goes against the principles of fair competition. Deleting Paragraph 13(2) would help create a more transparent and equitable pricing environment.”
Industry has also voiced concerns regarding the pricing of formulations included in both previous and current versions of the NLEM. Specifically, Industry recommends the deletion of the clause in Paragraph 18(i) that mandates re-averaging of prices for formulations that were part of the previous NLEM and are included again in the subsequent list.
According to an industry association, this clause creates unnecessary complexity and may result in inconsistencies in pricing. “Re-averaging prices for formulations that continue to be listed in updated versions of the NLEM can lead to abrupt price changes, causing confusion and potential disruptions in the supply chain. By removing this clause, we can ensure more stable pricing, benefiting both manufacturers and consumers,” stated an Industry representative.
Para 13(2) directs existing manufacturers of scheduled formulations to maintain MRP of their scheduled formulation, if it is lower than the notified ceiling price. This deprives existing manufacturers with price less than the notified ceiling price from selling at the notified ceiling price, when the entire competition is selling at the notified ceiling price.
Despite the annual price revisions based on the wholesale price index (WPI), Para 18(i) (amended on August 12, 2021), mandates the re-averaging of prices of all brands with more than 1% market share of that scheduled formulation. Studies show that due to annual price change as well as re-averaging of prices every 5 years, there is a further significant reduction in the ceiling price of that scheduled formulation by between 12-20%. Hence re-averaging prices every 5 years (Para 18(i)) and inability to increase their price to the notified ceiling price Para 13(2) force many companies to market such scheduled formulations at unviable prices despite the increased input and quality costs.
Molecules like ciprofloxacin, co-trimoxazole, salbutamol, anti-TB drugs, ibuprofen have been included successively under DPCO 1995 as well under NLEM 2011, 2015 and 2022 whereas molecules like pilocarpine and timolol maleate have been included successively under NLEM 2011, 2015 and 2022. Molecules subjected to successive and excessive price control become unviable to market due to continuous downward price revisions and price re-averaging on account of Para 18(i) and Para 13(2) and many companies exit these segments.
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