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NPPA rejects demand for suo-moto upward revision of ceiling prices of 33 bulk drugs
Ramesh Shankar, Mumbai | Tuesday, June 17, 2008, 08:00 Hrs  [IST]

Close on the heels of its rejection of the industry's demand for a unilateral upward revision of thousands of formulations, the National Pharmaceutical Pricing Authority (NPPA) has once again turned down the industry demand for a suo-moto increase in the ceiling prices of 33 bulk drugs which the NPPA had suo-moto reduced on March 20.

In its letter to the national pharma regulator, the industry had demanded that the NPPA should immediately revise the prices of 33 bulk drugs which were reduced by the NPPA on suo-moto basis on March 20. The NPPA had reduced the prices of 33 bulk drugs on March 20 due to revision in the excise duty/CVD, and also due to the appreciation of rupee against US dollar which stood at Rs 40.26 at that time.

Industry pleaded with the NPPA that since the rupee has depreciated to the tune of 6 per cent during the last two months and is quoting at Rs 42.50, the industry has to pay more for imported bulk intermediaries as well as the customs duties thereon. Stating that this means heavy losses for those manufacturers who are already reeling under the low margins allowed on such bulk drugs, the industry demanded that the bulk drug prices which were reduced on suo-moto basis should be reworked on the depreciation of rupee at 5.5 per cent and should be revised accordingly.

The industry warned that if timely action is not taken by the NPPA, there will be an acute shortage of bulk drugs and the formulations will not be available to the people as the bulk drug manufacturers are not in a position to put up with uneconomic prices and they will have no other option but to stop production of such uneconomic items.

The industry also brought to the notice of NPPA that the crude oil price has also gone up to more than US dollar 126 per barrel and there is a cascading effect of this on the bulk drugs based on the petro chemical intermediaries. Additionally, there is an acute shortage of several chemicals and intermediaries in India as well as in the world. Over and above, due to the forthcoming Olympics, China has already stopped production in several factories due to environmental reasons.

Meanwhile, in its letter to the industry dated 27th May, the NPPA has said that out of 33 cases, the majority of cases (28 items) revised downwards were of less than 5 per cent and only in 5 cases the price reduction was of more than 5 per cent mainly because of higher content of imported raw materials.

However, the NPPA has said that as per the provisions of DPCO 1995, the manufacturers have the option to file a price revision application.

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