Medicine prices: DPCO loopholes will deny cheaper essential drugs–Part2

While market based pricing can potentially reduce rates for two-third essential medicines, there are far too many loopholes in the move. Pharma companies have exploited such escape routes in the past


According to the Drug Prices Control Order (DPCO), 2013 the ceiling price of essential medicines is fixed based on the simple average of the prices of all brands of that drug that have a market share of at least 1%. The national list of essential medicines lists 348 bulk drugs, which are sold as 650 formulations. The DPCO itself covers only 14 %-17% of the Rs75,000 crore pharma market, which means only a small subset of the market will be impacted. The good news is that for two-third essential medicines, there can be average price reduction of 22% (even though some reports claim reduction by 30%-40%).  The bad news is that there are far too many loopholes to really see reduction in your chemist bill.

 

Read Medicine prices: Encouraging profiteering from essential drugs
 

According to Dr Chandra M Gulhati, editor, Monthly Index of Medical Specialities (MIMS), “Major lacuna with DPCO 2013 are (a) Fixed Dose Combinations (FDCs) out of price control, (b) increase of roughly 10% on 1st April year after year, (c) patented drugs not covered which will lead to domestic manufacturers suffering and MNCs benefitting. There are about 900 total medicines. The price regulation will cover 348 drugs. There will be lots of opportunity to shift from regulated to unregulated drugs. Combinations of two drugs (within 348) will be out of price control. An estimated half of all dosage forms will be out of price control on this account. The policy and its instrument, the DPCO 2013, are shockingly silent on these escape routes.”
 

According to S Srinivasan, managing trustee, LOCOST (Low Cost Standard Therapeutics), “Experience shows that manufacturers producing medicines under price control, in this case the drugs in National List of Essential Medicines (NLEM) 2011, are likely to stop making them and migrate to other medicines of the same chemical class as these other equivalent drugs are not in the NLEM 2011 and therefore, out of the purview of DPCO 2013. The other route to escape price control is by making a FDC of the drug under price control, or, by manufacturing non-standard strengths of the same drug (like 650 mg instead of 500 mg paracetamol). Since these strengths are not mentioned in the scheduled list of DPCO 2013, they will not fall under the price control radar.”

 

Dr Gulhati, says, “Since ordinary customers do not understand drugs and their composition and combinations, it is a breeding ground for unethical practices and mis-selling by pharma manufacturers. There are many ways in which this happens. Companies evade the price ceiling by the simple trick of adding or changing one or more ingredients in a price-controlled drug.”

 

Some of the examples of such manipulation, already done in the past, are as follows - Aciloc-RD of J Chemicals (where the price-controlled ranitidine was replaced with omeprazole); Cetrizet-D of Sun Pharmaceutical (price-controlled pseudoephedrine replaced with phenylepherine), Normet of Emcure (price-controlled norfloxacin replaced with ofloxacin) and Brakke Suspension of Franco-Indian Pharmaceuticals (price-controlled ciprofloxacin replaced with ofloxacin). The brand name was never changed in the above-mentioned cases.

 

Mr Srinivasan, says, “The remedy to prevent such ‘migration’ is to put all chemical analogues (the ‘me-toos’  and/or iso-mers) of the medicines included in NLEM under price ceiling. Thus not only enal-april but all other angio-converting-enzyme (ACE) inhibitors, not only ator-vastatin but all other statins, most if not all anti-diabetics, et al, would need to be under price ceiling. Otherwise the purpose of the DPCO 2013 stands defeated.”

 

All India Drug Action Network and other NGOs want all combination drugs, patented drugs, life saving drugs and molecules in the same therapeutic class under price control.

 

Para 32 of the DPCO 2013 lists cases eligible for exemption from price regulation for five years: drugs that have a product/process patent in India and “new drugs” as per Rule 122E of the Drugs and Cosmetics Rules, 1945 with the proviso that such drugs be developed through indigenous research and development (R&D). 

 

According to Mr Srinivasan, “This clause, apparently good intentioned, is likely to boomerang for the following reasons - It is doubtful whether many of the pharma-related patents, awarded post-2005, really deserve their patents. The frequency of frivolous plus undeserved patents may increase because the related medicines would be exempt from price regulation. The other provision for exemption for new indications and new dosages and new delivery systems (under Rule 122E) would only increase frivolous claims for new indications/new non-standard dosages and/or result in existing simple tablets, for  example, being put unnecessarily in a sustained release form – which will then be a “new drug” under 122E and therefore price control exempt. Hence, there is a need to have a good system to assess such claims by manufacturers.”

 

In the third part of the article, we will look at the grey areas about what constitutes “essential drugs” and “unessential drugs”.

 

Read-
Drug Abuse
 

Will you really get cheaper medicines?
 

New drug pricing policy may increase prices of essential medicines

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    COMMENTS

    Dhaval Hathiwala

    6 years ago

    @madhav deshpande; Mr. madhav deshpande, do you really know what are the principles of "Pharmacoeconomics"? You were talking about Price fixation based on pharmacoeconomics principles, and of course, it is mentioned in DPCO,2013; but actually in order to follow pharmacoeconomics principles, our country need to have our country specific GUIDELINES FOR PHARMACOECONOMICS, which doesn't exist at all, and I am confident enough that you would be totally unaware about the situation. Go to the website http://www.ispor.org, learn something from this website, what actually means - Pharmacoeconomics. Till date, 33 counties have their own country specific GUIDELINES FOR PHARMACOECONOMICS, but the problem is that people in India, including you Madhav Deshpande, don't know even about simple basics of PHARMACOECONOMICS, this creates chaos while debating on national issue. Without reaching the roots of matter, we will start commenting on such sensitive issues. Learn, understand, analyze the information you got around, Mr. Deshpande.

    madhav deshpande

    7 years ago

    this is further to my posting pint 15 in DPCO order is as follows
    15. Fixation of retail price of a new drug for existing manufacturers of scheduled formulations.– (1) The Government shall form a Standing Committee of such Experts, as it may deem fit, within sixty days of notification of this order with a view to recommend the retail prices of new drugs on the principles of “Pharmacoeconomics”.
    (2) Where an existing manufacturer of a drug with dosages and strengths as specified in National List of Essential Medicines launches a new drug, such existing manufacturers shall apply for prior price approval of such new drug from the Government in Form-I specified under Schedule-II of this Order.
    (3) On receipt of the application under sub-paragraph (2), in the event of the new drug available in domestic market, the Government shall fix the retail price of the new drug in accordance with the provision of sub-paragraph(1) of paragraph 5 and in the event of the new drug not available in domestic market, the Government shall forward the same to the Standing Committee of Experts who shall examine the application on the principles of “Pharmacoeconomics” and make recommendations of retail price of the new drug to the Government within thirty days of the receipt of application.
    (4) The Government shall, on receipt of recommendation under sub-paragraph (3), within thirty days, fix the retail price of such new drug and such price shall be applicable to such applicant of such new drug.

    madhav deshpande eutherva

    madhav deshpande

    7 years ago

    This is true in the past people have done change of molecule.But in the new DPCO there is term "New product" and as it says any one who launches the new product in the form of combinations from above listed DPCO molecule ,they need to take price approval before launch
    (u) “new drug” for the purposes of this Order shall mean a formulation launched by an existing manufacturer of a drug of specified dosages and strengths as listed in the National List of Essential
    Medicines by combining the drug with another drug either listed or not listed in the National List of Essential Medicines or a formulation launched by changing the strength or dosages or both of the same drug of specified dosages and strengths as listed in the National List of Essential Medicines
    2) (i) the price to retailer of a new drug, not available in domestic market, shall be fixed by the Government on the principles of
    Further the order says
    “Pharmacoeconomics” of the new drug, on the recommendation of a Standing Committee of Experts formed under paragraph 15.
    (ii) the retail price of such new drug shall be fixed by adding sixteen percent margin to retailer on the price to retailer as fixed in item (i):
    if our understanding is wong we request expert to comment on above
    Madhav deshpande
    director
    eutherva medicament pvt ltd

    MOHAN SIROYA

    7 years ago

    I fully agree with the logical analysis of Raj Pradhan.

    All the policies made by the 'Interested bureaucrats, made and Government enacted in laws, it was solely with a purpose to leave loopholes, thru' which politicians and the entire Corrupt Government system will reap benefits and allow the bulging pockets of Industrialists and Manufacturers to fatten up more at the cost of gravely neglected CONSUMER public. The system breeds all such ills.

    REPLY

    raj

    In Reply to MOHAN SIROYA 7 years ago

    thanks

    raj

    In Reply to MOHAN SIROYA 7 years ago

    thanks

    Rajhans

    7 years ago

    At retail point before last price reduction from DPCO we were getting 10% discounts on all drugs on mrp but after dpco order chemist stopped this discount which was availed since long time.So in the end patient is the looser.Whatever this DPCO does but the real benefit will never come in hand of users.All this announcement are just eye wash instead prices of many drugs are increasing.

    REPLY

    MOHAN SIROYA

    In Reply to Rajhans 7 years ago

    Increasing? It has already increased. For instance an essential Urine flow drug( Prostrate patients)like Hittrin , Urimax D etc. now costs almost 25 percent extra in MRP than it used to be 6 months ago. Except generic vitamin B , daily use multi diatary vitamin tablets like Neurobion or Macraberin Forte or Asprin tabs are maintiaing price line because they under 'Controlled" category.
    All other drugs MRP has increased.
    I used to spend about Rs.1000 p.m. now the same drugs cost me about 1200-1250 p.m.

    raj

    In Reply to Rajhans 7 years ago

    which chemists have stopped giving discount? which drugs have increased prices? you can write to [email protected]

    madhav deshpande

    In Reply to Rajhans 7 years ago

    dear rajhans
    you may pl recheck with chemist most of the companies have given the discounts as per old systems so there is no reason why tour chem now can reduced you 10%
    madhav deshpande

    Medicine prices: Encouraging profiteering from essential drugs – Part1

    While market based pricing can potentially reduce pricing for two-thirds of essential medicines, there are far too many loopholes to reduce your chemist bill. Ironically, the set ceiling price of the remaining one-third of essential medicines is higher than market leader’s price. Can the prices of these drugs actually increase?

    According to the new drug pricing policy, the ceiling price of essential medicines is fixed, based on the simple average of the prices of all brands of that drug that have a market Medicine prices: Encouraging profiteering from essential drugs – Part1share of at least 1%. The national list of essential medicines lists 348 bulk drugs, which are sold as 650 formulations. The good news is that for two-third essential medicines, there can be average price reduction of 22% (even though some reports claim reduction by 30%-40%).
     

    The bad news is that there are far too many loopholes to really see reduction in your chemist bill. Market-based pricing (MBP) actually sets the ceiling price higher than even the market leader in the remaining one-third of essential medicines. Does it mean the market leader can legitimately raise its price to meet the higher ceiling price and in-effect can make a mockery of the new drug pricing policy?

    It may not happen, but there is no penalty in case of violation. According to Para 13(2) of Drug Price Control Order (DPCO), 2013: “All the existing manufacturers of scheduled formulations, selling the branded or generic or both the versions of scheduled formulations at a price lower than the ceiling price (plus local taxes as applicable) so fixed and notified by the Government shall maintain their existing maximum retail price.

     

    According to Dr Chandra M Gulhati, editor, Monthly Index of Medical Specialities (MIMS), “There is no penalty for not following government policy on ‘not increasing the prices to ceiling levels’ unlike for those that do not decrease the price to ceiling levels. It is like saying that ‘drive on the left side but even if you don’t we will not take any action.’ There are also practical problems (a) Once the government fixes the MRP, it can not legally force manufacturers to sell the same product below MRP, such an order will be unconstitutional (b) there is no data on prices prevalent in 2012 and (c) it will hurt manufacturers who are at the bottom of the price ladder and making very little profit in case there is price increase in raw material, conversion costs etc. Thus in reality the government will be penalizing honest manufacturers.”
     

    For the two-third essential medicines there can be average price reduction of 22%, but DPCO has given leeway of 10% price increase every year. It means that the savings can get wiped out in two years even if the raw material prices do not increase at the same rate. According to S Srinivasan, managing trustee, LOCOST (Low Cost Standard Therapeutics), “WPI (whole-sale price index) may be even more than 10 %. If they had a cost based ceiling price instead of MBP, you could factor the actual increase of raw material and other conversion costs you could have given at the same rate as say the WPI.”

     

    NGO All India Drug Action Network has filed PIL (public interest litigation) in SC contending that MBP is never used for any price regulatory purposes and under the new policy simple average ceiling prices are in many cases higher than the market leader price. According to the NGO, “We stick to our stand of reversing to the cost-based pricing mechanism from the newly-adopted market based pricing.

                                               

    Mr Srinivasan, says, “Price control for all drugs (scheduled and unscheduled) needs to be strengthened by a grievance mechanism for the consumers to allow complains about lack of access, overpricing of medicines or any unethical marketing practices in the trade. At present in the DPCO 2013 under para 31, the ’aggrieved person(s)’ appear to be only manufacturers. There is no room for consumer grievances on unreasonable prices.”        

    DPCO itself covers only 14%-17% of the Rs75,000 crore pharma market. There are some wrong estimates given about it covering two-third of pharma market.

    In the second part of the article, we will look at the escape routes that pharmaceutical industry can exploit to ensure there is minimum dent in their profitability.

     

    You may also want to read…

    Will you really get cheaper medicines?

    New drug pricing policy may increase prices of essential medicines

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    User 

    Celebrity chef, author Tarla Dalal no more

    Tarla Dalal died of heart attack Wednesday morning at her residence in South Mumbai

    Tarla Dalal, known for her popular cookery show and several top selling books on cookery passed away on Wednesday morning following a fatal heart attack in Mumbai. She was 77.

     

    This message was posted on Tarla Dalal's Facebook page by her team:

     

    "We would like to thank all of you for your support and affection through the years of Mrs. Tarla Dalal's career. She is no more with us as she expired in the early hours of this morning. We thank her for all the happiness that her talent has given to us and our families..."

     

    The celebrity chef was also awarded the Padma Shri in 2007.

     

    She started taking cooking classes in Bombay in 1966 and published her first cookbook in 1974. The book was an instant success and went on to become a classic in cookery books and sold over 1.50 lakh copies.

  • User 

    COMMENTS

    VIJAY SHAH

    7 years ago

    TARLA DALAL JEE WAS BORN ON 2nd JUNE, 1936

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