To check the overpricing of the medicines, the National Pharmaceutical Pricing Authority (NPPA), the top drug pricing regulator, has warned companies of the penalty for entering the market with new drugs, and fix prices on their own. Penalty includes imprisonment or a fine or both, based on the nature of the violation.
“The companies which launch new drugs, either a new combination or new strength and/or dosage, need to get prices fixed and notified by the drug price watchdog based on the current provisions. Then only they can enter the market,” said sources in the Authority.
The move to streamline the drug pricing system came after it was found that some companies were launching new drugs immediately after they got approval from the NPPA. The authority has fixed ceiling prices for 700 scheduled formulations based on the National List of Essential Medicines (NLEM), 2022 and retail prices for 2,607 non-scheduled formulations under DPCO, 2013 till December 31, 2023.
The Authority, shot off an office memorandum to all manufacturers, industry associations and all stakeholders, pointed out that it has been observed by the office that in some cases, the applicants - the manufacturers or the marketers - are launching new drugs immediately upon filing of Form-I application with the NPPA, without waiting for fixation and notification of the retail price.
Such moves before notification of retail price is blatant and violate the extant provisions of law, said the sources.
They said that an exception has been taken in the matter and all the pharmaceutical makers have been directed to refrain from such practice and to ensure strict compliance with the extant provisions of law.
The communication to all the drug manufacturers, industry and stakeholders further pointed out that, "Otherwise, NPPA would be constrained to initiate penal action against the defaulting manufacturers under the provisions of DPCO (Drugs Prices Control Order), 2013 and Section 7 of Essential Commodities Act, 1995.”
As per the provisions, all the Form-1 applications are examined by NPPA and if found in order, the retail prices are fixed by the authority in accordance with the extant provisions. The retail prices so fixed by the Authority are notified in the official gazette. In addition, to promote the ease of doing business, NPPA ensures that all the Form-1 applications are processed and disposed of in a time-bound manner, said the Authority.
The Section 7 of the Essential Commodities Act specifies the penalties if any person contravenes any order in the matter such as supply, distribution etc., of essential commodities.