Government to Overhaul Drug Pricing Committee Amid Industry Pushback

Reportedly, the proposed changes come after numerous complaints from pharma associations about the current pricing framework.

The government has initiated plans to restructure the Central Committee responsible for fixing drug prices following mounting protests from the pharmaceutical industry over existing regulations.

In response to growing dissatisfaction among pharmaceutical associations, the Center is set to reform the committee that issues Drug Price Control Orders (DPCO), which enable the government to declare a ceiling price for essential and life-saving medicines.

According to officials privy to the discussions, the proposed changes come after numerous complaints from pharma associations about the current pricing framework.

The committee presently includes three key members including the secretary of the Department of Pharmaceuticals (DoP), the chairman of the National Pharmaceutical Pricing Authority (NPPA), and the Drug Controller General of India (DCGI).

Concerns have been raised regarding the DPCO's pricing mechanism, prompting pharma companies and associations to voice their discontent.

Additionally, a meeting is slated for July, where representatives from these bodies will be invited to share their perspectives and suggestions.

"The focus is on strengthening and enhancing the effectiveness of the DPCO before considering amendments to the relevant Act, which is now a decade old," an official stated.

Committee’s Mandate

The committee's primary mandate is to balance drug pricing with the availability of essential medicines while incentivizing the industry to encourage growth and exports.

Drug prices in India are regulated under the provisions of the Drugs (Prices Control) Order, 2013, by the NPPA, which operates under the DoP.

This body sets the ceiling price for scheduled medicines and the retail price for new drugs produced by existing manufacturers of scheduled formulations.

"The committee has always been concerned about ensuring that drug pricing remains at stable position so that it does not affect the consumers. In the past couple of months, there have been some revisions in the pricing and the committee keeps on holding meetings before making such announcements. If there is a requirement of expansion of the committee that will happen," stated another official.

Listing of Medicines

The DPCO lists 680 scheduled drug formulations across 27 therapeutic groups.

Further, it stipulates that when fixing the ceiling price of scheduled formulations and the retail price of new drugs, a 16% margin for retailers must be allowed.

Under the DPCO, drug manufacturers are permitted a retail margin of 6% to 10% for branded medicines and 8% to 15% for generic medicines. However, there are no obligations regarding trade margins for manufacturers.

Revisiting the Enactment

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 DPCO aims to ensure the availability of high-quality essential, life-saving, and prophylactic medicines at reasonable prices while promoting the rational use of drugs.