Government withdraws NPPA powers to cap prices of non-essential medicines in public interest

Sometime in May 2013, the Department of Pharmaceuticals, part of the Ministry of Chemicals and  Fertilizers, Govt. of India, released a Drug Price Control Order (DPCO) whereby the DOP expanded  the list of Essential Medicines (to which the DPCO applies) from 74 to 348 drugs.

The National Pharmaceutical Pricing Authority is the body that regulates the prices of Essential  Medicines and draws power from the DPO. Post issuance of the said DPCO, the NPAA, in July 2014  capped the prices of 108 non-essential medicines anti-diabetic and cardiovascular formulations. The  NPAA repeated this act more recently in September 2014, when it further expanded the list of  essential medicines to 384.

Huge interbrand variation is the cause. Power drawn from the DPCO The NPAA invoked Para 19 of the DPCO to cap the prices of 108 non-essential medicines.

Paragraph 19 of DPCO, 2013, authorizes that the NPPA may “in extraordinary circumstances, if it  considers necessary so to do in public interest, fix the ceiling price or retail price of any drug  for such period as it deems fit”.

Industry up in arms - Knocking on the door of the court. No respite!

These surprise and rather bold moves by the DPO/ NPAA left the entire Indian Pharma industry  significantly disturbed. The price caps were deemed arbitrary. The decision to add these extra  drugs into the list of Essential Medicines was questions again and again by Pharma industry  lobbyists - Organization of Pharma Producers of India (OPPI) and Indian Pharma Alliance (IPA) who argued that such sever actions could  eventually result in a decrease in the availability of essential lifesaving drugs in India. The  NPAA decision was challenged before the Delhi High Court wherein the jurisdiction of the NPAA as  the pricing regulator to determine prices of non-essential medicines and the interpretation of  Paragraph 19 was challenged. The court refused to stay the NPAA Price Cap decision and directed the  NPAA to submit its response. A query was thereafter posed by the Department to the Solicitor General of India.

The Solicitor General of India opined that “the power NPPA has exercised should be used sparingly  under truly extraordinary circumstances such as “epidemic, financial deficit, restricted supply of  lifesaving drugs” in public interest for a fixed time period. The special clause NPPA has invoked  cannot be used in a routine manner. NPPA cannot use a residuary and emergency power as a method of  general dispensation.

Withdrawal is prospective and does not affect previous orders.