Pharma Sector – Drug Pricing, NPPA, FDC, Generics, etc.

Govt. body hikes prices of essential medicines again, says ‘it’s minuscule’

Explained | Science Tech | Mains Paper 3: Awareness in various sc and tech fields
Note4Students

From UPSC perspective, the following things are important :

Prelims level: National Pharmaceutical Pricing Authority (NPPA)

Mains level: Achievement of India's Pharmaceutical Industry and challenges

Why in the News? 

Recently, the National Pharmaceutical Pricing Authority (NPPA) implemented a 0.00551% increase in the Maximum Retail Price (MRP) for scheduled formulations of drugs starting from the commencement of the fiscal year 2024–25.

Context:

  • The Department of Pharmaceuticals has released its yearly update of revised ceiling prices for 923 scheduled drug formulations and adjusted retail prices for 65 formulations.
  • These revised ceiling rates took effect on April 1. The Central Government attributes the price adjustments to fluctuations in the Wholesale Price Index (WPI).

What is the National List of Essential Medicines? 

  • As per the World Health Organisation (WHO), Essential Medicines are those that satisfy the priority healthcare needs of the population.
  • Ministry of Health and Family Welfare hence prepared and released the first National List of Essential Medicines of India in 1996 consisting of 279 medicines.
    • Currently, India has approximately 400 molecules and 960 formulations covered under the National List of Essential Medicines.
  • The prices of non-essential drugs are also monitored by the government to ensure that the manufacturers of these drugs don’t increase MRP by more than 10% annually.

The issue of the present Current Price Increase:

  • Manufacturers are allowed to increase the Maximum Retail Price (MRP) of scheduled formulations based on the Wholesale Price Index (WPI) without prior government approval.
  • Pharmaceutical companies argue that a rational increase in the cost of drugs is necessary for quality control.
  • Government’s Stance on Current Hike: Despite the recent increase, the government suggests that it will only marginally impact the cost of essential drugs such as antibiotics and painkillers.
    • The National Pharmaceutical Pricing Authority (NPPA) follows the Drug Price Control Order (DPCO) of 2013, allowing price hikes in line with changes in the WPI index.
    • Medicine prices were raised by 12% last year and 10% in 2022.

BACK2BASICS:

  1. National Pharmaceutical Pricing Authority (NPPA):

The National Pharmaceutical Pricing Authority was set up as an attached office of the Department of Chemicals and Petrochemicals (now Department of Pharmaceuticals since July 2008) on 29th August 1997. It has been entrusted inter-alia, with the following functions

  • Enforce the provision: To implement and enforce the provisions of the Drugs Price Control Order (DPCO), 1995/2013 under the powers delegated to it and to undertake and/or sponsor relevant studies concerning the pricing of drugs/formulations.
  • Monitor Demand and supply: To monitor the availability of drugs, identify shortages, if any, and take remedial steps. To collect/maintain data on production, exports and imports, market share of individual companies, profitability of companies, etc. for bulk drugs and formulations.
  • Manage legal matters: To deal with all legal matters arising out of the decisions of the Authority. To render advice to the Central Government on changes/revisions in the drug policy.
  • Assist Government: To help the Central Government in the parliamentary matters relating to drug pricing.
  1. Drugs (Prices Control) Order (DPCO):
  • The Drugs Prices Control Order, issued by the Government of India under Section 3 of the Essential Commodities Act, 1955, aims to govern and regulate drug prices.
  • Provides the list of price-controlled drugs: The Order interalia provides the list of price-controlled drugs, procedures for fixation of prices of drugs, method of implementation of prices fixed by Govt., penalties for contravention of provisions, etc.
  • Regulate only listed drugs: According to the regulations outlined in DPCO 2013, the National Pharmaceutical Pricing Authority oversees and regulates only the prices of drugs listed in the National List of Essential Medicines (NLEM).

 

Achievements of India’s Pharmaceutical Industry:

  • Advanced Industries: India boasts one of the most advanced pharmaceutical industries among developing nations, ranking third globally in terms of volume and 13th in terms of value.
  • Export Destinations: The United States serves as the largest export destination for bulk drugs from India. This is noteworthy considering the stringent regulatory standards in the US.
    • Other significant export destinations include Brazil, Bangladesh, Turkey, China, the Netherlands, Nigeria, Vietnam, and Egypt.
  • India’s Role as a Supplier for Global South (developing countries): India ranks among the top five suppliers of bulk drugs to several developing countries, including Bangladesh, Nigeria, Vietnam, Egypt, Iran, and Pakistan.
    • Despite China’s dominance as a larger supplier, India remains a substantial exporter in this regard.

The challenge is Dependency on China: Despite India’s robust pharmaceutical sector, it heavily relies on China for the supply of bulk drugs and drug intermediates. Approximately two-thirds of India’s total imports in this category originate from China.

Conclusion: The recent price increase by the NPPA aligns with fluctuations in the Wholesale Price Index, aiming to regulate drug costs. India’s pharmaceutical industry faces challenges of import dependency on China, despite its global presence.

Mains PYQ

Q What do you understand by Fixed Dose Drug Combinations (FDCs)? Discuss their merits and demerits. (UPSC IAS/2013)

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