Even as the drug price regulator NPPA has started fixing ceiling prices of 348 essential drugs as per the new DPCO 2013, confusion prevails over the formula being used by the NPPA for calculation of ceiling prices as the industry says that it is contrary to the formula specified in the NPPP 2012 and the DPCO 2013. So far, the NPPA has fixed the ceiling prices of 191 drugs of a total of 348 essential drugs.

While calculating the ceiling price, the drug price regulator clubbed all the brands of one drug sold by a company to decide whether a firm commands more than one per cent market share in a particular therapeutic category. Under this formula, if one company sells more than one brand of the same therapeutic category, the market share of all these brands has been added.

But, the industry was under the impression that if one company sells five brands under a category, each of these brands would be considered independently and only the brands with a market share of one per cent or more would be considered while fixing ceiling prices.

According to NPPA, the term 'brand' in the new DPCO 2013 is defined as 'a name, term, design, symbol, trademark or any other feature that identifies one seller's drug as distinct from those of other sellers.' It has interpreted 'seller' to mean a drug manufacturer.

Meanwhile, the industry has taken up the issue with the drug price regulator. In a letter to NPPA chairman C P Singh, Indian Pharmaceutical Alliance (IPA) secretary general D G Shah pointed out that the formula used by the NPPA for calculation of Ceiling Price of a scheduled formulation is contrary to the formula specified in the NPPP 2012 and the DPCO 2013.

The formula, as per Para 4(iv) of the NPPP 2012 and Para 4 of the DPCO 2013, stipulates that brands having more than and equal to one per cent of the total market turnover will only be considered and there is no ambiguity about the prices of brands/ generic versions to be considered for calculation of ceiling prices, Shah in his letter to the NPPA said.

“However, we understand that the first lot of prices being notified is calculated using brands and generic versions having less than one per cent market share for companies having more than one brand. This is contrary to the above noted provisions and could distort the balance sought to be achieved by the NPPP 2012,” the letter said.

The industry also asked the NPPA to withhold the price notification until the formula used by the NPPA is modified and asked to publish the ceiling price calculations in the interest of transparency, as envisaged in the NPPP 2012.

“These actions are important not only for compliance with the Cabinet decision on the Policy but also maintain confidence of the industry in the NPPA,” the IPA letter said.