Indian pricing authority to address overcharging by pharma companies

Published: 13-Apr-2016

NPPA has decided to chase drug majors for defaulting on penalties that have been imposed for overcharging consumers for medicines

The National Pharma Pricing Authority (NPPA) of India is to consider a number of measures to address the overcharging of drugs by pharmaceutical companies.

Drugs used for the treatment of life threatening diseases like HIV/AIDS, high blood pressure, diabetes, tuberculosis and epilepsy tend to cost less in India, since the the price regulator fixes an upper price limit. The NPPA had brought 628 formulations under the price controls, which cover roughly 13% of the Indian pharmaceutical market. The government agency is in the process of fixing a price ceiling for drugs as per the National List of Essential Medicines, 2015, which includes 376 medicines covering 799 formulations under 30 therapeutic categories.

However, the regulator has run into disputes with drug makers over penalties for allegedly charging higher for medicines. The NPPA has been trying to recover a massive US$684m, including interest, from various pharma companies for overcharging consumers for their medication.

The NPPA has decided to chase drug majors for defaulting on penalties that have been imposed, and has sent 'show cause' notices to some companies. The defaulters include Cipla Healthcare, Lupin , Dr. Reddy’s, Glenmark, Cadila and Baxter Pharmaceuticals.

Since its inception in August 1997 up to March 2016, NPPA has issued a list of 1,407 cases, demanding $740m towards the overcharged amount including interest. Now the NPPA has decided to look at bigger violations. 'We have expedited the legal process to recover the overcharged penalty amounts. Companies that have to pay a penalty of over $1.5m are our major focus,' said an official, adding that consumers tend to get hurt when companies overcharge. As much as 82% of the total amount is under litigation in various High Courts and the Supreme Court. NPPA is actively pursuing the court cases.

However, pharma industry lobbyists Organisation of Pharma Producers of India (OPPI) and the Indian Pharma Alliance (IPA) have challenged the NPPA decision. The OPPI claims that the NPPA, in July 2014, arbitrarily and without notice fixed prices for a range of antidiabetic and cardiovascular drugs, even though these were outside the scope of the Drug Price Control Order (DPCO) 2013. NPPA’s notification also extended beyond the  National Pharmaceutical Pricing Policy 2012.


'The regulatory intent is to reduce prices of essential medicines and allow access to patients in need, not to debilitate the pharmaceutical industry,' stated an OPPI spokesperson. 'We would ask that Government engage and partner with us to procure quality medicines and make them available at affordable prices to vulnerable populations, rather than resorting to arbitrary pricing decisions.

'It is documented that patients do not have increased access to medicines as a result of price reduction. In fact, arbitrary price reductions create instability in any industry and certainly become a disincentive for future growth and investment.

'It was after much consideration, and as a last resort, that pharmaceutical industry associations were compelled to take the extreme step of moving to the courts,' the OPPI added.

In a separate move in April, the NPPA fixed an upper price limit for 103 drug formulation packs. This has made some critical drugs for fatal and potentially fatal diseases like HIV/AIDS, TB and Hepatitis C cheaper.

HIV/AIDS drugs such as Tenofovir, Lamivudine and Raltegravir, and Sofosbuvir, which is used against Hepatitis C have been capped. The first three have become cheaper, with prices ranging from $0.01-$0.06 per tablet, while Sofusbuvir has been capped at $0.25 per tablet, which is lower than previously.

Other therapeutics like Parkinson's drug Levodopa , anti-epileptics like Levetiracetam and Phenytoin, and cardiovascular disease drug Atorvastatin have also been made cheaper.

At present, the government caps prices of essential drugs based on the simple average of all medicines in a particular therapeutic segment with sales of more than 1%. The government also regulates prices of all other medicines and companies are allowed to hike prices of such drugs by a maximun of 10% in a year.

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