The Prime Minister's task force on drug pricing, in its final report has recommended an outline of the broad principles of drug price regulation the government should follow. It has suggested that the government should announce the ceiling price of all drugs contained in the National List of Essential Medicines (NLEM) on the basis of the weighted average prices of the top three brands by volume of single ingredient formulations prevailing in the market as on April 1, 2005. The taskforce has suggested the use of ORG-IMS data for calculating the ceiling prices. "For drugs which are not reflected in ORG-IMS data, the NPPA should prepare the necessary information based on market data information, it stated.

According to task force, the government should specify the reference product in terms of strength and pack size for each product which would form the basis for price determination. The price ceiling would be specified on a per dosage basis, such as per tablet/per capsule or standard volume of injection, it proposed.

The prices of all other strengths and dosages would be determined on the basis of a standard formula, which would be related to the ceiling price of the reference formulation, it suggested.

In the case of formulations which involve a combination of more than one drug in the NLEM, the ceiling price would be the weighted average of the applicable ceiling prices of its constituents.

However, the committee wanted the ceiling prices of essential medicines not to be used for estimating excise duty liability of the companies. "Excise duty should continue to be payable on the actual MRP of the individual medicines", it noted.

It has also suggested a 100 per cent mark up over the reference price based on bulk procurement made by government agencies while fixing the ceiling prices.

The committee also said that for all new formulations based on existing APIs, the companies should submit its intended price along with application for marketing approval to the regulator. The approval would come only if the indicated price is consistent with the relevant ceiling price. The committee wanted the offices of NPPA and DCGI to put in a coordinated effort to make this possible.

The committee wanted the Department of Health to set up a standing committee to periodically review the NLEM to reflect new drugs. The first review of NLEM should be undertaken by year 2008, it suggested. The proposals of the task force will now be considered by the department of chemicals while framing the new pharmaceutical policy.