DoP Forms Committee to Reform Drug Pricing Framework

The objective is to strike a balance between ensuring the availability of essential medicines and incentivizing the industry for sustainable growth and exports.

The Department of Pharmaceuticals (DoP) has constituted a committee with the mandate to prepare a draft Drugs and Medical Devices (Control) Order. The committee has been tasked with submitting its report within three months.

With this, the DoP has initiated a significant step towards reforming the pricing framework for drugs and medical devices in India.

The committee, chaired by Arunish Chawla, secretary of the DoP, comprises three core members. Kamlesh Kumar Pant, chairman, National Pharmaceutical Pricing Authority (NPPA), and Awadhesh Kumar Choudhary, senior economic advisor, DoP, are also part of the committee.

Additionally, there will be two special invitees from the industry, representing the Indian Pharmaceutical Alliance (IP Alliance) and the Indian Drugs Manufacturers' Association (IDMA).

Scope of Work

The committee's scope of work encompasses various aspects related to drug pricing and availability, as well as incentives for the pharmaceutical industry.

Key focus areas include:

1. Institutional reforms required for the NPPA

2. Balancing price and availability of essential medicines

3. Designing a price moderation framework for medical devices

4. Designing a price moderation framework for emerging and precision therapies

The objective is to strike a balance between ensuring the availability of essential medicines and incentivizing the industry for sustainable growth and exports. The committee is also expected to explore ways to minimize imports of medical devices and facilitate timely access to emerging therapies for patients in need.

The committee is expected to develop a draft Drugs and Medical Devices (Control) Order to achieve the outlined objectives. It is noteworthy that the current drug price order in effect is named the Drugs (Prices Control) Order, 2013.

Parliamentary Recommendations

The move comes in response to recent recommendations by the Department-related Parliamentary Standing Committee on Chemicals and Fertilizers.

The committee further advised the DoP to collaborate with the NPPA to consider price control for medium and high-end medical devices critical for patient care. It emphasized the importance of listing such devices under the National List of Essential Medicines.

The history of drug price control in India dates back to 1962 when the Defence of India Act of 1915 introduced the Drugs (Display of Prices) Order 1962.

Subsequently, the Drugs (Control of Prices) Order of 1963 was implemented to freeze drug prices due to increased costs during the Indo-China war.

Over the years, various committees, including the Kelkar Committee, Pronab Sen Committee, and Sandhu Committee, have influenced drug price policies and control orders.

The National Pharmaceutical Pricing Policy (NPPP), notified on December 7, 2012, marked a shift from cost-based pricing to market-based pricing for drugs.

This policy shift was aimed at establishing a regulatory framework for drug pricing. Subsequently, the government notified the Drugs (Prices Control) Order, 2013 to align with the principles outlined in the NPPP.

The formation of the committee by the Department of Pharmaceuticals represents a significant step towards reforming drug pricing and regulation in India. By engaging stakeholders and drawing on past experiences, the committee aims to draft comprehensive guidelines that balance the interests of patients, pharmaceutical companies, and the healthcare ecosystem as a whole.

In another development, the DoP made substantial changes to the Pharmaceutical Technology Upgradation Assistance Scheme (PTUAS) sub-scheme, focusing on aiding MSMEs in the pharmaceutical sector. These alterations include offering reimbursement subsidies ranging from 10 to 20% to assist MSME manufacturers.