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A Pricey Issue

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As part of the ongoing revision of the National List of Essential Medicines (NLEM) 2011, the National Pharma Pricing Authority (NPPA) has shared a recommendation from Mumbai’s Tata Memorial Centre that three drugs need to be taken off NLEM 2011 while 12 other drugs relating to oncology need to be added to it.

TMC’s recommendation will impact many oncology drug manufacturers as the three drugs recommended for price decontrol have restricted use or are no longer used, whereas the 12 drugs in the latter list are used in different types of cancer (like breast cancer, non-Hodgkins lymphoma (NHL), etc). With the increasing incidence of cancer, as well as the long term use of such drugs, the costs to patients are heavy.

This is but the latest in a series of moves by India’s pricing authority designed to increase public awareness about prices as well as check over-pricing by manufacturers. For instance, on November 18, NPPA had asked industry stakeholders to comment on a draft proposal to require the display of a distinguishing mark and ceiling price/ unit (it suggested a bold red strip with the words “DPCO Scheduled Drug” printed on it in black ink) on Scheduled Drugs under DPCO 2013.

While the NLEM revision process is still underway, Express Pharma takes stock of industry’s position on this issue. While the issue seems to have united both the MNC as well as Indian pharma companies, there is no doubt that both sides – the pharma industry in the country as well as the regulator – will need to find common ground keeping the larger long term interests of both patients as well as industry in mind. By Usha Sharma

‘Any arbitrary pricing decisions are detrimental to the investment climate for market expansion’

Ranjana Smetacek

The National List of Essential Medicines (NLEM) 2011 covers 348 drugs in 27 therapeutic areas and was drawn up considering prevailing disease conditions and the healthcare needs of India. Importantly, it was designed for ‘satisfying the priority healthcare needs of a majority of the population’. The list serves as a reference for the prescription of cost-effective medicines, of appropriate dosage form and strength. This NLEM was prepared by a core committee supported by 87 experts of diverse disciplines from across the country. Stakeholders represented regulatory bodies, public health entities and leading medical and scientific institutions, including the All India Institute of Medical Sciences (AIIMS), the Department of Pharmaceuticals (DoP), the Ministry of Health & Family Welfare (MoHFW), WHO, etc. as well as the pharmaceutical industry.

The National Pharmaceutical Pricing Policy (NPPP) of 2012, drawn up after a series of consultative dialogues across stakeholders, and with the approval of the Cabinet, lays down three key principles of pricing (a) Essentiality of Drugs (b) Control of Formulation prices only and (c) Market-based pricing. The essentiality criterion is addressed by the NLEM, with price control on the dosage and strengths as listed.

The revision of the NLEM is being undertaken, right now, by a core committee of experts from the MoHFW. The committee is following a robust and inclusive process, reaching out to various stakeholders across the nation. Two, of the six, planned consultations have been completed in Mumbai and Hyderabad respectively, while others are scheduled in Kolkata, Guwahati and so on. It is as part of this process that representatives from the Tata Memorial Hospital may have proffered their comments, along with other stakeholders. It is important to recognise that revision of the NLEM is still underway and it would be premature to surmise or speculate about any suggested inclusions, before the process is complete!

The mandate of the National Pharma Pricing Authority (NPPA) is to implement the provisions of the Drugs Prices Control Order (DPCO) within the ambit of the powers delegated to it. While the price control of drugs is a legally mandated exercise under the Essential Commodities Act, the indiscriminate expansion of price controls will negatively impact the pharmaceutical sector, particularly research in newer and safer medicines. The industry seeks stability and predictability in the regulatory environment and our expectation has been reinforced by assurances from the departments and officials in the Ministry of Chemicals and Fertilizers. The ministry committed to a consultative process with all stakeholders and transparent, market-based pricing caps on essential medicines, with continued flexibility in the pricing of other medicines. We have been assured that government would work in close consultation with industry and that the intent was to build mutual trust and cooperation. Any arbitrary pricing decisions run contrary to these sentiments are detrimental to the investment climate for market expansion, brand building and employment generation in the future.

The pharma industry is an integral part of the healthcare system and its growth and sustainability is critical to a robust healthcare environment. Ultimately, a healthy industry is necessary for a healthy nation.

Ranjana Smetacek, Director General, Organisation of Pharmaceutical Producers of India

‘The recent activities of NPPA clearly suggest that it means biz’

Arijeet Mukherjee

On August 29, 1997 through a resolution of the Ministry of Chemicals and Fertilizers, an independent body of experts was established called the National Pharmaceutical Pricing Authority (NPPA). One of the primary objectives of the NPPA was to fix / revise the prices of controlled bulk drugs and formulations and to enforce prices and availability of the medicines in India. The NPPA’s mandate extended to monitoring the prices of decontrolled drugs in order to keep them at reasonable levels.

It is estimated that by the year 2020, the Indian pharmaceutical sector would grow to $ 55 billion, with the potential to reach $70 billion in an aggressive growth scenario. In view of such massive potential growth, the NPPA has relevance, more than ever before, to ensure that this growth does not prejudice the general populace of the country.

Recently, much to the dislike of many, the NPPA has been flexing its muscles. The NPPA has issued price control orders for various drugs, the latest being the price control of ‘Dettol’. These price control orders have made the industry come at loggerheads with the NPPA, the decision to control the prices of certain diabetic and cardiovascular drugs in July 2014 has already been challenged before various high courts.

Cancer has seen a steep rise in India and it is estimated that the number of cancer deaths in India will increase to seven lakhs by 2015. In such a situation, oncology drugs have become more important than ever before. Recently, the NPPA invited comments on the recommendations of Tata Memorial Centre for the deletion of three oncology drugs, and addition of 12 oncology drugs to the National List of Essential Medicines (NLEM).

The prime consideration for the proposed inclusion of the 12 drugs is their high cost, making them unaffordable for many. Further, for many of these drugs there is a substantial price difference between innovator brands and generic brands, suggesting ample scope for price control. From an industry perspective, sales of these drugs yield substantial profits and controlling their price would, in all probability, be resisted fiercely.

One of the key factors that makes a regulatory body stay relevant is flexibility and ability to adapt. The NLEM is not written in stone and must be updated by including those drugs which are needed the most and removing those which have restricted or uncommon use. It would be interesting to see whether NPPA will go ahead with updating the NLEM or will the pharma industry and NPPA lock horns yet again.

The NPPA has also recently invited comments on the proposal that all controlled drugs should bear a distinguishing mark which will state that the drug is a ‘DPCO Scheduled Drug’ and also state the ceiling / retail price. This is NPPA’s yet another effort to raise consumer awareness, reduce overcharging cases and enhance accountability and self-regulation among the pharma industry and trade.

On November 27, 2014, the NPPA has issued a notice on issues regarding fixation of retail price for a ‘new drug.’

The recent activities of NPPA clearly suggest that it means business. The industry reaction may, however, be unwelcoming of this pro-activeness. However, perhaps the middle path can only be found when NPPA plays the balancing act between its objects and the growth aspirations of the booming Indian pharma industry.

Arijeet Mukherjee, Associate, Khaitan & Co

‘Frequent tinkering with prices will break pharma industry’s back’

Dr Ajit Dangi

Over the past couple of decades successive governments have reduced the span of price control on pharmaceuticals in a phased manner reducing it to only 75 drugs. This pragmatic policy resulted in robust growth of the Indian pharma industry earning it the distinction of being recognised as ‘Pharmacy of the World.’

However, in DPCO 2013, the government took a U turn and brought 348 drugs of the NLEM under price control citing the Supreme Court’s order. A moronic formula of simple average prices of drugs with one per cent or more market share as ceiling price was adopted for this new order. Before the industry could digest this blow, the market was disrupted because of anti-competitive practices of AIOCD over trade margins reducing 2013 growth of the industry to single digit. When the industry was gradually coming to normalcy, NPPA slapped one more blow by bringing 108 more drugs which are not in NLEM, under price control, justifying that these drugs are routinely used for controlling diseases like diabetes and CVD which have high prevalence in the country. This order was later withdrawn due to high court’s intervention. As if this was not enough, NPPA is now mulling over controlling prices of over a dozen anticancer drugs whose prices according to the Tata Memorial Centre for cancer are beyond the reach of common man. This frequent tinkering with the medicine prices will break the back of pharma industry and the industry is beginning to shy away from further investment.

In an intensely competitive business with over 10,000 manufacturers churning out more than 70,000 generic brands, such needless intervention from the NPPA is uncalled for. As such prices of medicines in India are one of the lowest in the world. Not only they are lower than those in the BRICS countries but also lower than the neighbouring countries like Pakistan, Bangladesh, Sri Lanka etc.

While medicines constitute less than 25 per cent of the total healthcare costs and diagnostic tests, doctors’ consultation, hospital charges, post operative care etc. constituting the rest, focusing on medicine prices alone is superfluous when other costs are outside the purview of price control. The real solution lies in improving the access to medicines which is one of the lowest in the world at less than 40 per cent, by improving the health infrastructure and tightening the regulatory measures to improve the quality of medicines so that menace of counterfeit and substandard drugs is eliminated.

Preliminary investigation of deaths of over dozen young women recently in Chhattisgarh whose sterilisation surgeries were botched up shows that one of the reasons for this tragic incident was contaminated drugs. This is an eye opener. Also, expanding the span of health insurance as over 80 per cent population pays for medicines from its own pocket, requires urgent attention. The government gets away by spending just about one per cent of its GDP on healthcare but expects the industry to bear the brunt of medicine prices.

According to one PwC report, the Indian pharma industry has a potential to reach $70 billion in sales by 2020. With such regressive policies of DOP and NPPA, these ambitious goals are likely to remain as dreams. Perhaps the time has come to review the role of NPPA and question must be asked whether it should go the Planning Commission way.

Dr Ajit Dangi, President and CEO, Danssen Consulting

‘We earnestly request NPPA to withdraw the draft proposal’

S V Veerramani

We appreciate that NPPA is making efforts to promote consumer awareness, which the Indian pharma Industry has been supporting all along. However, the manner in which this is being considered is not practical and implementable, as it raises many issues which would defeat the very purpose of our providing affordable efficacious medicines to the consumers.

The concerns that need to be addressed are as follows:

  1. The Drugs and Cosmetics Rules under Rule 96 (xi) stipulates as follows: “[(xi) In addition to the other particulars which are required to be printed or written under these Rules, the label of innermost container of the following categories of drugs and every other covering in which the container is packed shall bear a conspicuous red vertical line on the left side running throughout the body of the label which should not be less than one mm in width and without disturbing the other conditions printed on the label under these rules, namely: — Narcotic analgestics, hypnotics, sedatives, tranquillisers, corticosteroids, hormones, hypoglycemics, anti-microbials, anti-epileptics, anti-depressants, anti-coagulants, anti-cancer drugs and all other drugs falling under Schedules ‘G’, ‘H’, and ‘X’ whether covered or not in the above list.” Over and above what exists in the Drugs and Cosmetics Rules as above, proposal for a distinguishing mark (may be a bold red strip with the words ‘DPCO Scheduled Drug’ printed on it in black ink) would mean that the scheduled drugs will need to carry two red lines which would create more confusion among the consumers.
  2. For all packs which are very small, it would not be possible to add any additional field or lines. The size of the packs of ampoules, strips etc are very small and the requirements under the Drugs and Cosmetics Rules 96 and 97 regarding declarations to be made on each pack of drug is mandatory. And this distinguishing mark would not be able to fit in, in addition to all the declarations already required to be displayed on each such pack.
  3. The draft proposal also mentions that the pack will carry the information on ceiling price per unit additionally along with the MRP already printed as per DPCO 2013 Rules. This would be totally confusing to the consumers as they are not aware of the state-wise VAT taxes (local taxes) added to the ceiling prices. This could also create ill-will and chaos among the consumers, as they naturally would prefer to pay the lesser printed price, i.e. the ceiling price and not the MRP, which they need to pay.
  4. Also, when the Supreme Court has ruled that no pack should be available at two different prices at the same time to avoid confusion among the consumers, how is it mandatory to print the ceiling price and MRP on the same pack and expect the consumer to understand the working of DPCO to calculate the MRP to be paid?
  5. All the packs and labels of scheduled drugs will have to be changed and artworks redesigned and printed reprinting of labels/ cartons/ foils, etc. to incorporate the new suggestions, entailing additional costs running into hundreds of crores, which are not covered under DPCO 2013.
  6. In addition to preparation of art work, which is a onetime cost, the cost of packing material will also go up.
  7. Regarding invoking Legal Metrology Act 2009 and the Legal Metrology (Packaged Commodities) Rules 2011, Drugs are exempted from the provision of these Rules under Rule 26(c). And this exemption stems from the very fact that there already exists under the Drugs and Cosmetics Act more than adequate labeling provisions so that the labeling provisions under the Packaged Commodities Rules would be redundant. If the exemption is removed, then all drugs available in the market will also have to additionally comply with these Rules and be governed by the size of fonts and principal display concepts etc. embodied in the legal metrology (packaged commodities) Rules for declarations.
  8. A drug which falls under the scheduled category for one manufacturer as a ‘new drug’ may not necessarily be a scheduled drug for another manufacturer. This will have some drugs with red line and the same drugs without the red line and will only add to the confusion among the consumers and medical doctors.

In view of the facts and concerns mentioned above, it would be more pertinent to consider better and more practical methods of publicising the provisions of the DPCO, of fixing ceiling prices of formulations and publicising those prices of scheduled formulations as well as of non-scheduled formulations. We earnestly request NPPA to withdraw the draft proposal in the interest of the public, the manufacturers and the regulatory authorities.

S V Veerramani, President, Indian Drug Manufacturers’ Association (IDMA)

‘Reducing prices of innovator drugs will not help’

The National List of Essential Medicines (NLEM) policy has been adopted to strike a balance between the growing pharmaceutical industry and the need to make reasonably priced medicines available to consumers, particularly the poor masses.

The Tata Memorial Centre recommendation of taking three drugs off the NLEM-2011 list is worth appreciating as these drugs have restricted use or are no longer used. So, taking them off the list would not make any difference to either the pharma industry or the general masses.

However, the suggestion to add 12 drugs catering to the oncology segment to the NLEM is a bit ambiguous if the sole idea is to bring price parity.

One of the important aspects of bringing any drug under the NLEM is to fix ceiling prices for the benefit of the general public. From that perspective, adding those drugs to the NLEM which already have cheaper and cost-effective substitutes available in the market does not serve the desired purpose. For instance, the cost of the innovator brand of Zoledronic Acid for one vial of 4 mg strength is Rs 10,000, whereas its generic equivalent is available in the market for a mere Rs 265 for one vial of 100 mg strength. So, it is not clear how reducing the prices of innovator drugs will help the general masses, especially when they already have access to equally good drugs at a fraction of the cost.

Secondly, some of the 12 drugs suggested for inclusion in the NLEM do not have any comparator in the market. In this case, it is not clear as to how the weighted averages will be calculated to fix their prices in order to safeguard public interest.

However, if this notification gets through, it will have little impact on Venus Remedies as it manufactures only some of these 12 products, the prices of which are already very low as compared to the innovator drugs. Moreover, the products that Venus Remedies manufactures out of this list of 12 drugs largely cater to the overseas market, where the concept of MRP holds no relevance.

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