SC asked Centre to respond on the Drug Pricing Policy under NPP Policy

SC agreed to examine the new National Pharmaceutical Pricing Policy framed by the government for fixing prices of essential medicines.

Created On: Aug 7, 2013 11:47 ISTModified On: Aug 7, 2013 13:07 IST

The Supreme Court of India on 6 August 2013 sought the response from the Union Government on the PIL that challenged the fixing of the ceiling price of essential drugs on basis of the market rates, following provisions of the National Pharmaceutical Pricing Policy.

The Supreme Court bench of two Judges, Justice GS Singhvi and Justice V Gopala Gowda agreed for examining the validity of the new policy set by the Government.

The PIL filed against the policy has alleged that the new policy will result in price hike of the essential and non-essential drugs, as under the new policy, the margin of profit for drug manufacturer and dealer has become 10-1300 per cent.

The PIL also contended that National List of Essential Drugs consists of only 348 drugs and left out many essential medicines from price control. The PIL also mentioned to bring in the medicines specially used in HIV AIDS, cancer, mental health, chronic non-communicable diseases like asthma and rheumatoid arthritis, under price control mechanism.

The Union Government has delayed the issue of price fixation for past 10 years, although several committees that include a parliamentary committee were working on it. The Government has also failed in controlling the prices of the drugs in past 18 years. The Government was also pulled for its failure in taking any decision to bring more drugs under the price control after 1999. The Apex Court also pulled the Government by saying the any formula for price fixation which goes against common man should be quashed.

National Pharmaceutical Pricing (NPP) Policy
The Union Cabinet of India on 22 November 2012 passed the National Pharmaceutical Pricing Policy (NPPA). As per the new pricing policy declared by the Union Government, 348 essential drugs would come under price control policy of the nation, which would lead to price reduction of the same. The policy was approved with an objective to put in place a regulatory framework for pricing of drugs to ensure availability of the required medicines – essential medicines – at reasonable prices even while providing sufficient opportunity for innovation and competition to support the growth of the industry, thereby meeting the goals of employment and shared economic well being for all.

Ceiling Price
Ceiling price means a price fixed by the Government for Scheduled formulations in accordance with the provisions of this order in DPCO 2013.

Formulae for fixing the ceiling price of the scheduled formulation set by the Ministry of Chemicals and Fertilizers (Department of Pharmaceuticals) via notification issued on15 May 2013, in DPCO 2013.

Step I. Average Price to Retailer, P(s) = (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) / (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.)

Step II.

P(c) = P(s).(1+M/100)
Where, P(s) = Average Price to Retailer for the same strength and dosage of the medicine as calculated in step1 above.

M = % Margin to retailer and its value = 16


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