New national pharmaceutical pricing policy

On 7 December, the Indian government notified the national pharmaceutical pricing policy of 2012 (NPPP-2012). This policy, through which the government regulates the prices of certain pharmaceutical drugs in the public interest, replaces the drug policy of 1994. Until now, the prices have been regulated through the Drugs (Prices Control) Order, 1995 (DPCO), made under the Essential Commodities Act, 1955. A new price control order is expected to be notified soon.

Under the previous policy, the prices of 74 bulk drugs and formulations were brought under price control. NPPP-2012 covers the prices of 348 drugs specified in the National List of Essential Medicines, 2011 (NLEM-2011). This is a list compiled by the Directorate General of Health Services, under the Ministry of Health and Family Welfare, based on the World Health Organization’s model list of essential medicines for national health programmes and emergency care. The government has reserved the power to add more drugs to NLEM-2011 in the public interest. Once added to the list, a drug will come under price control by virtue of NPPP-2012.

In the NPPP-2012, the price of drugs will be calculated by taking a simple average of the market price of drugs produced by manufacturers that have a market share of at least 1% of the total market turnover of that drug. The total market turnover will be calculated in terms of “moving annual turnover”. The moving annual turnover of each manufacturer will be calculated from data compiled by IMS Health, a company specializing in pharmaceutical market data.

The legislative and regulatory update is compiled by Nishith Desai Associates, a Mumbai-based law firm. The authors can be contacted at nishith@nishithdesai.com. Readers should not act on the basis of this information without seeking professional legal advice.