Tuesday, March 11, 2008


NPPA and drug prices

The National Pharmaceutical Pricing Authority (NPPA)on Monday asked pharmaceutical companies to pass on the benefits of the recent excise duty cut (provided in the 2008 Budget by P Chidambaram) to consumers, even on medicines that are outside the government’s price control. This will reduce prices by 4.58% on brands that account for three-fourth of the Rs 33,000-crore domestic pharmaceutical market.

Drugmakers have to submit a revised price list to NPPA soon. The National Pharmaceutical Pricing Authority (NPPA) had reduced prices of controlled medicines, accounting for the rest one-fourth of the market, by an equal measure immediately after the Budget.

Although companies are allowed to raise prices of control-free drugs by 10% in a year, market competition sometimes discourages them from it. Companies, increasing prices beyond the ceiling, risk their products to be brought under the government’s direct price control.

Companies avoid that because once a product is under direct price control, they cannot hike prices within 10% ceiling as well. Even for a minor revision, they have to go to the regulator. NPPA entertains requests for price revisions only after the company first complies with its order within 15 days of bringing it under the government control. If the company misses the 15-day period, even that window is lost almost permanently.

The NPPA in action last year (August 2007) forcing companies to rollback rising drug prices:
India’s National Pharmaceutical Pricing Authority (NPPA) is on an overdrive. Since June, it has forced several drug companies to reverse price hikes. The Delhi-based watchdog, which directly controls the prices of 74 drugs specified in a 1995 government order, clamped down on drug prices outside its list for the first time since 1998. NPPA’s action covers one supplement for healthy joints, two commonly-prescribed antibiotics, one for irritable bowel syndrome, two anti-ulcerants, and an anti-allergy drug. Just the threat has got 29 companies to cut prices of 49 packs on other medicines.

The NPPA’s recent actions on drugs outside price control are made possible by a provision that allow it to intervene when companies raise prices beyond 20 per cent in 12 months.

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