Pharma companies will have to cut prices of 108 formulations of diabetic and cardiovascular drugs as per the July 10 notification issued by the National Pharmaceutical Pricing Authority (NPPA) although contentious internal guideline issued on May 29 stands withdrawn. Many companies have already cut prices as per July 10 order but some large companies are yet to effect the changes in prices as they are expecting a favourable Court order.

The NPPA move followed a directive from the government on September 22. “In compliance with the directions received from the Government in the Department of Pharmaceuticals under the Ministry of Chemicals & Fertilizers, the internal guidelines issued by the NPPA on May 29, 2014 under paragraph 19 of the DPCO, 2013 are hereby withdrawn with immediate effect,” said a NPPA press release issued on September 22.

In July, the drug pricing regulator invoked a special provision under the drug price control that gives it the right to fix the prices of any drug "in extraordinary circumstances, if it considers necessary to do so in public interest". It cited huge inter-brand price differences in these drug categories as 'extraordinary' in a set of special internal guidelines it issued in May.

The NPPA move has, however, been welcomed by drug companies which have been fiercely protesting against the July 10 order. Two cases against the NPPA’s order, filed by industry associations in Delhi and Mumbai high courts, are still pending.   

In an official statement emailed to Pharmabiz, Ranjana Smetacek, Director General, Organisation of Pharmaceutical Producers of India (OPPI) said, “We appreciate the Government’s decision to withdraw the guidelines on fixation/revision of prices of scheduled and non-scheduled formulations under Para 19 of the DPCO 2013. This move tells us we are being heard and we look forward to working with the Government toward a common goal. We are still trying to understand the precise impact of this order on our member companies.”

The price ceilings imposed by the regulator in July 10 remain, as NPPA has withdrawn the guidelines and not the order. The set of guidelines, which have been withdrawn, were issued in May by the NPPA, invoking a public interest clause, based on which it had reduced the prices of 108 medicines in the anti-diabetes and cardiovascular segment and promised to bring many more under price control. The NPPA decision to cap prices of the non-scheduled drugs in July affected the operating profit of companies negatively in the range of 2-23 per cent.

Pharma companies and lobbies had challenged both the guideline and the order. Industry bodies, including IPA and OPPI, went to court against NPPA’s move in July. The industry was also of the view that the NPPA had over-reached its powers by bringing even non-scheduled drugs under price control under Paragraph 19 of DPCO, 2013.

Before moving the court, the Indian drug makers sought the intervention of Ananth Kumar, Union minister of chemicals and fertilisers, claiming that inter-brand differences cannot be termed as "extraordinary".

Following July 10 order, NPPA through its September 15 notification, has also capped the prices of 43 formulations, which includes gastro-intestinal, anti-infectives drugs and vaccines. With this, sales of the new product basket worth Rs.450 crore is likely to get impacted by 33 to 40 per cent and trade margin by 6 per cent, according to trade bodies.