The ongoing stand-off between the prominent insulin manufacturers and the price regulator got further aggravated with the Department of Pharmaceuticals (DoP) ordering not just reconsideration of the review petition filed by Eli Lilly, but also the revision of the guidelines.

The DoP, in a recent order, asked the National Pharmaceutical Pricing Authority (NPPA) to revisit the decision by considering all relevant information and applicable norms. Besides, it also directed the regulator to issue guidelines with prior approval of the Department.

The Department had some time back also ordered similar review in the case of Torrent Pharma which challenged the order by the NPPA in this regard. However, the NPPA asked the company to stick to the insulin ceiling price it had fixed earlier, after the review of the case.

Eli Lilly has challenged fixing the prices in respect of five different imported formulations of injection Insulin Lispro (Humalog) through an order dated July 19, 2012. The company first sought review with the NPPA on July 30, 2012.

“While examining the said review application, the Department observed and recommended that as per Para 1 (b)(vi) of the Guideline No 1/99, NPPA has amended the words “shall not exceed 50 per cent to 35 per cent. The term “shall not exceed 50 per cent” as contained in the provision to para 7 of the DPCO, 1995, can be anything between 0 per cent to 50 per cent, depending upon the specific circumstances of the case. This is amendment of the substantive provision of DPCO, 95 by changing a variable to fixed percentage based on the availability of the local substitute, which could be one of the factors and not the only factor,” the DoP order said.

“NPPA has limited the scope of the DPCO which is beyond the powers of NPPA. Proviso para 7 of DPCO, 1995 provides that landed cost shall form the basis of fixing pricing of imported formulations with a margin to cover selling and distribution expenses including interest and importers’ profit which shall not exceed 50 per cent of the landed cost. It was noted that this proviso does not relate the margin to whether an indigenous substitute exists or not. Linking indigenous substitute to the margin has changed the substantive provision of the DPCO and cannot be done without amendment of the DPCO,” it said.

“The said guidelines No.1/99 have been further amended in 121st Authority meeting held on 22.7.2011 thereby giving NPPA powers to suitably reduce the 35 per cent MAPE (should be margin) to bring the price at parity with the existing price to ensure fair and reasonable price to consumer public. This was done without going into the fact that there was a huge variation in the then existing prices already approved by NPPA. This clearly shows that NPPA did not bother to ensure parity among various importers. They had sufficient powers to suo moto fix the prices with a variable margin and bring all the importers at par. No guidelines can justify its discretionary powers which cause wide disparity among equal players. The guidelines could have been justified if the words “parity with other importers” have been used instead of words “parity with existing price”. The Department, therefore, proposed for quashing the said Guidelines viz. Para 1(b)(vi) of the Guideline No.1/99 and amendment to the said guidelines issued on 22.7.2012,” it said.

The order also has attached the earlier order by the Department that carried the observation by the Minister. “Insulins are life saving dissimilar biological analogues derived from different sources and processes resulting in different costs. As indigenous production is not sufficient to meet country’s total requirement, the import of insulin crystals/formulations is also necessary in the public interest to avoid shortages. As suggested by the Department and to establish the principle of natural justice, NPPA may follow the procedure under DPCO,1995 (Para-11) and it may revisit the decision under reference by considering all relevant information and applicable norms and also keeping in view of observation of the Hon’ble Court also,” it said.

Earlier Eli Lilly had also approached the Delhi High Court against the drug pricing authority when the American company was asked to share information about  its cost of production while it sought price revision. The prices of imported drugs were so far fixed based on their landed cost.