Drug Pricing and Competition Issues in India Through Dpco and Cdcso Activites

Introduction Drug pricing is a complex phenomena. Different countries have different methodologies of pricing such as Germany has reference based pring. Canada has system of fixing pricing of patented drugs. India fix the prices of prescription drugs on the basis of cost of the drug. Cost is the main phemomena iin the pricing policies of the drugs. Pricing is important aspect of competition law also. But competition commission is not a price control agency. However price based anti-competitive practices are important area in competition law. DRUG REGULATORY REGIME IN INDIA Indian drug regulatory regime is devided in two branches.

Drug standards and marketing is dealt by CDCSO and drug pricing is controlled by NPPA. The CDSCO prescribes standards and measures for ensuring the safety, efficacy and quality of drugs, cosmetics, diagnostics and devices in the country; regulates the market authorization of new drugs and clinical trials standards; supervises drug imports and approves licences to manufacture the drugs. The process for drug approval entails the coordination of different departments, in addition to the DCGI, depending on whether the application in question is for a biological drug or one based on recombinant DNA technology.

The issues relating to patent are dealt by Department of Industrial Policy and Promotion. The Drugs Controller General of India (DCGI), who heads the Central Drugs Standards Control Organization (CDSCO), assumes responsibility for the amendments to the Acts and Rules. Other major related Acts and Rules include the Pharmacy Act of 1948, The Drugs and Magic Remedies Act of 1954 and Drug Prices Control Order (DPCO) 1995 and various other policies instituted by the Department of Chemicals and Petrochemicals. PRICING REGULATION IN INDIA The drug prices are regulated under Essential Commodities Act 1955.

It is administered by Department of Chemicals and Petrochemicals, Ministry of Chemicals and Fertilizers. The prices of drugs are fixed under the Section 3 of Essential Commodities Act 1955. National list of essential medicines is prepared under this Act. The prices are controlled according to Drug Price Order 1995. It employs Cost Based formula of drug pricing. In India Drug manufacturing, standards and marketing is done under Drug and Cosmetics Act 1940. There are Drug and cosmetics rule 1945 to assist and provide procedure for the assisiting the Act. NPPA has been reguaslting the drug pricing since 1997.

It fixes the prices of essential drugs. The list of essential medicines is updated at regular intervals. As mentioned earlier, pricing policy and industry regulation constitutes one of the key responsibilities of the NPPA. Price control on medicines was first introduced in India in 1962 and has subsequently persisted through the Drug Price Control Order (DPCO). As per the directive of NPPA, the criterion for price regulation is based on the nature of the drug in terms of whether it enjoys mass consumption and in terms of whether there is lack of adequate competition for the drug.

The year 1978 witnessed selective price controls based on disease burden and prevalence. The list of prices under DPCO subsequently witnessed a gradual decrease over a period of time. Around 80% of the market, with 342 drugs, was under price control in 1979. The number of drugs under DPCO decreased from 142 drugs in 1987 to 74 in 1995. Drugs with high sales and a market share of more than 50% are subjected to price regulation. These drugs are referred to as scheduled drugs. The NPPA also regulates the prices of bulk drugs. The MRP excise on medicines was levied by the Finance ministry in 2005.

The objective was to increase revenue and lower prices of medicines by using fiscal deterrent on MRP. This change may have had some impact in terms of magnifying the advantage to industries located in the excise free zones. This also succeeded in attracting some small pharmaceutical firms to these zones. (Gehl Sampath 2008, Srivastava 2008). General objective and scope of price regulation in India the general objective of price regulation India is to regulate the equitable distribution and increasing supply of bulk drugs and formulations in india and making it available in india. Consequences of excessive pricing

Impact of price regualation on indian drug pricing Coverage of drugs in India Prices of formulations based on scheduled bulk drugs are fixed in two ways: (i) based on applications of the manufacturers and (ii) on suo-motu basis. As per para 8 (2) of Drug (Prices Control) Order (DPCO), 1995, a manufacturer using scheduled bulk drug in his formulation is required to apply for fixation of price of formulation within 30 days of fixation of price of such bulk drug (s). Applications received in NPPA from manufacturers in Form III and importers in Form IV of DPCO are considered for price fixation.

As per para 8(4), the time frame for granting price approval on formulation is 2 months from the date of receipt of the complete information from the company. 2. Pricing and Competition Issues 3. NPPA pricing methodology a. DPCO 1995 b. National Drug Pricing Policy 2002 c. National Drug Pricing Policy 2006 Director General (Investigation and Registration) Vs. Fulford India Ltd. Ishaan Labs (P) Ltd v Union of India Director General (Investigation And Registration) Vs. Parke Davis India Ltd. And Ors. MANU/MR/0039/2003, I(2004)CPJ15(MRTP) Director General (Investigation And Registration) Vs.

Pfizer Ltd. MANU/MR/0008/1999 (2000)1complj405(MRTPC) Director-General (Investigation And Registration) Vs. Zandu Pharmaceutical Works Ltd. MANU/MR/0012/1994, [1994]81compcas377(NULL). Director General (Investigation And Registration) Vs Biddle Sawyer Ltd. On 11/7/2001 Director General (Investigation And Registration) Vs Infar (India) Limited On 24/8/1999 Director-General (I & R) Vs All India Organisation Of Chemists And Druggists And Ors. On 1/7/1996 Director-General (Investigation And Registration) Vs Indian Drugs Manufacturers Association And Anr.

On 16/8/1991 Director-General (Investigation And Registration) Vs Indian Drugs Manufacturers Association And Anr. On 16/8/1991 1992 73 Compcas 663 NULL Mars Therapeutics & Chemicals Ltd. V. The Union Of India & Anr W. P. (C) 10277/2009 & Cm Appl 8853/2009 Ranbaxy Laboratories Limited V. Union Of India Union Of India & Anr. Vs. Cynamide India Ltd. & Anr. 1987 Air 1802, 1987 Scr (2) 841 4. Canadian Patented Medicine Prices Review Board Legal Framework Policies Guidelines and Procedures Submissions by Patentees on Level of Therapeutic Improvement Comparable Dosage Forms Therapeutic Class Comparison Test

Reasonable Relationship Test Median International Price Comparison Test Highest International Price Comparison Test International Therapeutic Class Comparison Test Application of Price Tests for New Drug Products CPI-Adjustment Methodology DIP Methodology Criteria for Commencing an Investigation “Any Market” Price Reviews Offset of Excess Revenues Updates to the Compendium of Policies, Guidelines and Procedures ICN Pharmaceuticals Inc. v. Canada (Patented Medicine Price Review Board) [1996] F. C. J. No. 1065 Shire Biochem Inc. v. Canada (Attorney General [2007] F. C. J. No. 1688 Conclusion