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The national drug price watchdog, the National Pharmaceutical Pricing Authority (NPPA), has recently come out with a circular in which the Authority has warned of penal action against the pharmaceutical companies which launch new drugs, either a new combination drug or new strength and/or dosage, before they get prices fixed and notified by the Authority. The Authority’s stern warning to all the pharmaceutical manufacturers, industry associations and other stakeholders comes from the fact that it has come to the notice of the NPPA that some companies - 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 launch of new drugs before price approval and notification of retail price by the NPPPA is blatant and deliberate violation of the extant provisions of law. As per the existing provisions, to deal with such violations, the NPPA can 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. Section 7 of the Essential Commodities Act specifies the penalties if any person contravenes any order made by the government using powers to control production, supply, distribution, etc., of essential commodities. The penalty includes imprisonment or fine or both, based on the nature of violation. It is clear that there is a tendency among some companies to launch new drugs immediately upon filing of Form-I application with the NPPA, without waiting for fixation and notification of the retail price by the Authority. A case in point is that early last year, the multi-disciplinary committee of experts of the NPPA had recommended to the NPPA to examine the launch of ibuprofen injection by three companies - Cipla, Hetero Healthcare and Sandor Medicaids - without price approval from the Authority.
No doubt, launching a new drug without the price approval from the NPPA is a serious default. The existing provisions are very clear on launch of new drugs in the country. As per Paragraph 15(2) of DPCO, 2013 where an existing manufacturer of a scheduled drug intends to launch a new drug by combining the scheduled drug with another drug or by changing the strength or dosages or both of the scheduled drug, such existing manufacturer should apply for prior price approval in Form-I to the NPPA. 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. The NPPA’s warning is quite justified as the NPPA was established by the Union Chemicals & Fertilizers Ministry way back in 1997, exclusively to monitor and control the prices of drugs in the country. The Chemicals Ministry's action in this regard was prompted by the fact that there were rampant violations of DPCO by the pharmaceutical companies. Now, the pharmaceutical companies in the country should take the NPPA’s warning seriously and should not jump into the conclusion that upon filing Form-I application with the NPPA, it can launch the new drug. It should wait for the Authority’s decision on price fixation. It is a fact that to promote the ease of doing business, the NPPA ensures that all the Form-1 applications are processed and disposed of in a time-bound manner. For whatever reason, the NPPA should not allow the companies to launch new drugs without price approval from it. Otherwise, the Authority cannot justify its existence.
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