The National Pharmaceutical Pricing Authority (NPPA) has released the draft working sheets for the fixation of ceiling prices for around 954 formulations, comprising 388 medicines, based on the database from market research firm Pharmatrac for the month of July 2022.

While the total number of unique formulations for which ceiling prices are to be fixed through the move is around 819, in view of the expansions to the revised Schedule 1 and others, the number of formulations may increase beyond 954 formulations to around 1,000 formulations, said the Authority.

The ceiling price revision is following the revision of Schedule 1 of the Drugs (Price Control) Order, 2013 replacing NLEM 2015 with NLEM 2022, notified by the Department of Pharmaceuticals (DoP) on November 11, 2022.

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As per the provisions of the DPCO, 2013, the ceiling prices for the medicines in Schedule I has to be fixed within 60 days from the notification of the Schedule.

While the general practice is that ceiling prices are fixed using market-based data for schedule formulation due to revisions in the first schedule, the data available for the month ending immediately before six months of notification of the revision in the first schedule, the authority beginning in July 2022, paying attention to industry associations' representations.

The associations requested the Authority not to consider the data of April 2022, which is six months prior to the date of notification of the revised Schedule 1, since it may not completely reflect the current Price to Retailer (PTR)/Maximum Retail Price (MRP) of formulations.

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This is considering that the ceiling prices were revised based on the Wholesale Price Index (WPI) of 10.8 percent based on the WPI notification issued on March 30, 2022, for scheduled formulations.

The industry also stated that the market-based data to be considered for ceiling price fixation should be post-implementation of revised prices for products, considering the potential time lag for implementation with regard to imported formulations.

They requested that the NPPA consider the latest month's data, which is of October or September 2022.

There are also provisions in the amended DPCO that, for fixing or revising the ceiling price for formulations, the government may, if it is necessary to do so, consider market-based data available for any month, as deemed fit.

Besides, the NLEM, 2022 was notified on September 13, 2022, and the latest database available with NPPA as of the date of release of the NLEM was that of July 2022.

The impact of ceiling price revision based on the WPI notification dated March 30, 2022, is expected to have been captured in the Pharmatrac database by July 2022.

Because the effect of the WPI increase on market prices should be reflected in the ceiling prices to be fixed, the Authority observed that data from April 2022 may result in the fixation of ceiling prices without capturing the effect of the WPI increase.

Also, it may not be appropriate to use the March 2022 data and apply the WPI increase to it, as not all manufacturers may avail themselves of the full WPI increase, it said.

The Authority meeting held on November 23, to consider the ceiling price revision, added that in case of common formulations, the ceiling price is fixed under the earlier Schedule-I of DPCO, 2013 that is NLEM, 2015 may be taken as the base price while fixing ceiling price under the revised Schedule-I and in case of the present PTR to any line item is found to be in excess of the Maximum Permissible PTR then the same may be restricted to the such Maximum Permissible PTR.

As per para 18(1) Ceiling prices need to be revised every five years and in case of drugs for which prices were increased through notifications on July 1, 2021, the cutoff date for five years may be calculated from original fixation of ceiling price under DPCO, 2013.

However, in respect of such formulations, no differentiation in data selection may be considered and data as appearing for July, 2022 may be considered for pricing, added.

The Authority has uploaded the draft working sheets for fixation of ceiling prices of formulations for 10 working days to invite comments, if any.

“Companies may submit their representations to NPPA on the draft working sheets supporting their Price to Retailer (PTR) and Moving Annual Turnover (MAT) data along with supporting documents like copies of invoices to retailers and samples of July, 2022 in order to take necessary action in this regard.

Such representations should reach NPPA within 10 working days of the upload of draft worksheet,” added the Authority.

Further issues regarding methodology that are likely to come up during the price fixation may be taken up for deliberation in the subsequent meetings of the Authority, it maintained.

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