The National Pharmaceutical Pricing Authority (NPPA) may find it difficult to fix a ceiling on maximum retail prices of scheduled drugs if the proposed National Pharmaceutical Policy 2006 comes through without further changes. This is because the draft policy only states that the maximum post manufacturing expenses (MAPE) should be inclusive of all local taxes. It doesn't have a mention about the excise duty which makes it unclear about the way NPPA is supposed to fix prices. The authority is known to have pointed out the anomaly before its administrative ministry (Chemicals & Fertilizers ministry).
Another interesting point noticed by NPPA is that the draft policy lacks a single approach on control of prices. While all drugs, both single ingredient as well as multiple ingredient that contains at least one among the 74 scheduled bulk drugs come under price control, the same criteria is not applicable for drugs that come under National Essential Drugs List 2003. Here, only the single ingredient formulations mentioned in the list comes under price control. Similarly, the draft policy, now under circulation for comments from various ministries, do not specify the parameters of price monitoring to be carried out by NPPA. The steps to be taken in case of breach of parameters, the action to be taken against errant companies and traders are also not mentioned. The NPPA desired a clarification in this regard as it wanted to make price monitoring mechanism more effective.
Meanwhile, the Drugs Price Control (Amendment) Order 2006 makes it very clear that all drugs manufactured from October 2, 2006 should carry maximum retail prices inclusive of all taxes printed on it. The notification also states that the components that add up to the MRP include material cost, conversion cost, packing material cost, packing charges, ex-factory cost, MAPE (100 per cent), excise duty, sales tax/value added tax and other local taxes. Ministry sources informed that the industry is expected to calculate the MRP on their own according to the specifications given in the notification. What remains to be seen is whether NPPA would fix the ceiling prices or announce the ceiling prices with a provision to add the excise duty by the companies themselves.