The National Pharmaceutical Pricing Authority (NPPA) has issued internal guidelines for price fixation/revision of bulk drugs under DPCO, 1995.

As per the guidelines, a letter to companies for collection of data in prescribed format is required to be issued at least before six months of expiry of the validity period of the existing price.  The data/information shall be collected by issuing questionnaire and company shall be asked to submit the information required in the questionnaire along with Form I of DPCA, 1995 and cost-audit report, annual report, etc. Study shall be completed on the basis of available information, where no data/information received from the concerned manufacturers.

Another salient feature of the guidelines is that plant visits should be made for verification of data and collection of additional data, understanding product, process, etc. and holding discussions with the officials of the company.   The additional information/data required for CPS shall be communicated in advance to the company before undertaking the visit.

The guidelines further says that if a single unit produces 90 per cent or more of the total production in the country, the data of other unit(s) need not be studied in detail i.e. data of unit(s) producing 10 per cent or less of the total production may not be considered for the purpose of price fixation provided that cost of production claimed by the unit(s) producing 10 per cent or less of the production is higher than the cost of production of the major producer.

If there are more than three producers of the bulk drug and a single producer holds 80 per cent or more share of total production, the data relating to the remaining 20 per cent of the total production may preliminarily be scrutinized. If the second unit producing more than 10 per cent then this unit may also be studied for the purpose of price fixation. In case the third unit/company producing 10 per cent or less is cost efficient, then this unit may also be studies.  In case 70 per cent of the total production is manufactured by one producer and balance 30 per cent is produced by the second producer, both the units should be studied.   If the balance 30 per cent production is shared by two units equally the data of the units may be scrutinized and the cost efficient unit out of the all may be taken up for detailed study.

As per the guidelines, the actual cost and the details of the bulk drug worked out on the basis of above should be shared and discussed with the management of the companies manufacturing the bulk drug.