The National Pharmaceutical Pricing Authority (NPPA) has dropped its plan to seek the help of the Costs Accounts Branch (CAB) of the Ministry of Finance to conduct a study into the revision of conversion and packing costs of pharmaceuticals.
The NPPA has, however, decided to entrust the task to a professional agency, which can examine the issue in a scientific manner as it was promised to the industry earlier. The authority is close to finalizing the agency and it has taken up a separate study to revise the packaging material costs as well.
Speaking to Pharmabiz.com, Arun Kshetrapal, chairman NPPA informed that the revision of conversion costs and packaging costs are under the active consideration of NPPA and the authority will identify the right agency within a month. He said that the time frame needed for completing the study and making recommendations on the revision of the existing norms can be known only after the job is entrusted to the right agency. He ruled out the possibility of involving CAB in the study. With regard to the study on packaging material costs, he said NPPA has already initiated an internal study.
The NPPA decision is in tune with the industry demand to have an independent costing agency outside the government. The industry, on its part, had earlier suggested the names of agencies like PriceWaterhouse, Ernst &Young and Anderson as their choices. Claiming that these firms had adequate expertise in pharmaceutical costing, they had requested the authority to appoint one of these agencies to study the conversion and packaging material costs before fixing the Maximum allowable post manufacturing expenses (MAPE) for pharma companies.
The exercise is to frame the new norms for raw material conversion costs (CC) and packaging costs (PC).
The NPPA had first notified the CC and PC norms in July 1999 and these norms were re-notified twice without any changes.