The Department of Pharmaceuticals (DoP) has directed the National Pharmaceutical Pricing Authority (NPPA) to revise the prices of frusemide 10 mg/ml injections, phenarmine maleate injection 22.75 mg/ml and frusemide 40 mg tablet under para 4(1) of DPCO, 2013 and not under para 6.

The DoP was acting on review applications filed by Sanofi Ltd against the fixation/revision of ceiling prices of these medicines. Earlier, the NPPA vide its notification S.O. No. 2360(E) dated 15/9/2014 issued under Drugs (Prices Control) Order, 2013 (DPCO, 2013) had fixed/revised ceiling price of frusemide 10 mg/ml injections, phenarmine maleate injection 22.75 mg/ml and frusemide 40 mg tablet.

Aggrieved by the notification, Sanofi submitted review applications dated 13.10.2014 under para.31 of DPCO, 2013 for the review of NPPA price fixation order S.O.No.2360 (E) Dated 15.9.2014.

In the review applications, the petitioner Sanofi Ltd asked the reviewing authority DoP to give them relief which is available under para 19 of DPCO, 2013 which can be used in public interest as the products are life saving in nature and there are no other formulator of these products available in the market.

The NPPA in its comments mentioned that there are only two methods of pricing under DPCO, 2013 – one is averaging and another is monopoly method. Since Sanofi was the only manufacturer having more than 1% MAT value, the case was considered as a monopoly item and price was fixed in line with provisions of DPCO, 2013.

After hearing both the petitioner and the NPPA, the DoP commented that the formulations covered in all the three petitions are those which were under price control under DPCO, 1995 and they continue to be under price control under DPCO, 2013. NPPA has noted that the company is the only formulator and, therefore, they have applied the monopoly condition and fixed the price as per DPCO provisions. It may be mentioned that pricing of formulations covered under DPCO, 1995 and also DPCO, 2013 are to be fixed under para 10 of the DPCO, 2013. As per para 10 (1) and 10(2) the price fixed and notified under the provisions of DPCO,1995 will remain effective for one year.

Manufacturers may revise the prices of such formulations as per annual WPI for the previous calendar year and thereafter the formula as per sub-paragraph 1 of paragraph 4 of this DPCO,2013 shall be applied for fixing the ceiling price of such formulations. Further under para 6(1) it is mentioned that where the average price to retailer of a scheduled formulation, arrived at as per the formula specified in sub-paragraph (1) of paragraph 4, has the effect of ,- a) no reduction in average price to retailer with respect to the prices to retailer of the schedule formulation; and b) there are less than five manufacturers for that formulation having one percent or more market share. The ceiling price calculation is given in subsequent sub-paras using monopoly condition, the DoP commented.

Since these drugs were already covered under price control under DPCO, 1995 in most of the cases no reduction was expected. The framers of DPCO, 2013 had, therefore, made a conscious exception under para 6(2) of DPCO, 2013 as under – “6(2) Notwithstanding anything contained in this paragraph, where the price has been fixed and notified by the Government under the Drugs(Price Control) Order, 1995 the provisions of sub-paragraph (1) shall not apply”.

The prices of these drugs were not to be fixed under paragraph 6 i.e no reduction in prices due to absence of competition. NPPA has erred in fixing the prices under section 6 of DPCO, 2013.  

Based on the above and other documents on record, the DoP ordered: “NPPA may be directed to fix the price under para 4(1) of DPCO, 2013 and not under para 6.”