The Bombay High Court has the government cannot impose price controls on the variants of the drugs under the Drugs (Price Control) Order, 2013 (DPCO 2013). The court order clarified that formulations that are not specifically part of the national list of of essential medicines (NLEM) will remain exempted from the price ceiling imposed by the National Pharmaceutical Pricing Authority (NPPA).
The ruling particularly exempted the specific drug delivery systems like sustained release (SR) and controlled release (CR), which are mechanisms used in tablets and capsules to dissolve a drug at specific times or location.
“We are of the opinion that if a formulation was not specifically included in the first schedule to DPCO 2013, NPPA could not insist on such a formulation being covered by a ceiling price,” the April 10 order said.
The court also ruled that the stand taken by the NPPA is against the interpretation of the DPCO 2013 issued by the department of pharmaceutical (DoP) and therefore, its notices and demands are rendered unsustainable.
What do industry execs say?
An official of the leading pharma association told FE that the order has put an end to a long-standing demand of the industry to grant exemption to the specific drug delivery systems. “Unless a formulation with a specific drug delivery system stands included under the price ceiling, the innovative dosage form of scheduled formulations cannot be kept under the price controls. The SR, CR and modified release (MR) forms are different from the conventional medicines by having different therapeutic approach,” the official said.
In its defence, NPPA told the court that when a product prepared from a particular salt is part of the NLEM, a formulation providing for a new drug delivery system would not cease to be a scheduled drug merely because such new drug delivery system was not specifically mentioned in the essential medicines list.
“It was further submitted that the petitioners IDMA and Franco Indian Pharmaceuticals never approached the authorities for prior price approval under DPCO 2013 and they cannot escape the liability of overcharging merely because the specific drug delivery system used by them, was not included in the schedule, so long as the particular salt/drug was mentioned in the schedule to DPCO 2013,” the order said.
K.M. Gopakumar, co-convenor at Working Group on Access to Medicines and Treatment said that the judgment exposes the gaps in the DPCO 2013, which contains various loopholes that allow companies to escape price control by manufacturing SR or fixed-dose combination drugs.
“The current judgment, while providing judicial sanction to such gaps in the DPCO, also bears the risk that companies with deep pockets could bypass the DPCO by producing new formulations and SR variants. The government should urgently take steps to close these gaps by bringing all molecules listed in the NLEM under price control regardless of dosage form, sustained-release status, or combination type,” he said.
The NLEM comprises 384 medicines with a substantial number of drugs (over 85%) registered as single drug formulation. Fixed dose combinations (FDCs) that offer a proven advantage over individual ingredients also form part of list. In 2013, the DPCO shifted from a cost-based to a market-based pricing system aimed at improving the accessibility of medicines by setting prices based on average market rates instead of individual company production costs.
Further, the drugmakers are allowed to increase the prices of NLEM-scheduled drugs once a year based on the change in the wholesale price index (WPI) for the preceding calendar year. Additionally, NPPA mandates that companies cannot hike the prices of non-scheduled drugs by over 10% annually.
This dispute began in 2014 when the Indian Drug Manufacturers Association (IDMA) started receiving notices from NPPA claiming that they had overcharged for certain formulations. The IDMA challenged NPPA’s claims by filing writ petitions in the Bombay HC.