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Above: A cancer patient being given radiation at a hospital in Agartala/Photo: UNI

In a welcome move, the centre has reduced the prices of 42 non-scheduled cancer drugs. This will affect over 390 cancer medicines and annually save about Rs 800 crore for patients

Dr KK Aggarwal

Last month, the National Pharmaceutical Pricing Authority (NPPA) invoked extraordinary powers in public interest and brought 42 non-scheduled cancer drugs under price control. As per the provisions of the Drug Price Control Order (DPCO), NPPA fixes the ceiling price for medicines in the controlled category.

Since 2013, all essential medicines as defined under the national list of essential medicines are treated as scheduled formulations. One must remember that it does not mean that all drugs brought under price control are essential medicines. As per Para 19 of the DPCO 2013, the government may, in case of extraordinary circumstances and in public interest, fix the ceiling price or retail price of any drug, whether scheduled, non-scheduled or a new drug, for such period as it may deem fit. It also has powers to revise the ceiling or retail price of the drug which is already fixed and notified, irrespective of annual wholesale price index for that year (based on which companies are automatically permitted under DPCO to revise the prices annually).

In this case, the government invoked the powers in “public interest” as per provisions of Para 19 of the DPCO to bring 42 non-scheduled anti-cancer drugs under price control through trade margin rationalisation. It capped the trade margin at 30 percent.

The NPPA can cap the price of any medicine by bringing it under scheduled drugs (as was done in the case of stents) or by capping the trade margins. So far, 57 anti-cancer drugs are already under price control as scheduled formulations. With 42 non-scheduled anti-cancer medicines added, the total list will become 99. This will cover most anti-cancer treatments. As per data available with NPPA, the maximum retail price (MRP) for most brands containing these 42 drugs will be reduced by up to 85 percent.

This is not the first time the government has exercised powers under Para 19. The NPPA had formulated internal guidelines with an intention to have a uniform standard for fixation/revision of prices of the drugs. As per these guidelines, the NPPA monitors “inter-brand price differences” of non-scheduled formulations (not under price control regime) on the basis of monthly maximum retail price (MRP). On the basis of MRP-based data, the NPPA identifies those cases where if the price exceeds 25 percent of the average price of medicines in that group, it will initiate price fixation under Paragraph 19.

Initially, these guidelines applied to single-ingredient formulations/medicines used for cancer, HIV, tuberculosis, malaria, and so on, but now have been extended to heart, diabetic and cancer drugs. The NPPA also has responsibility to examine cases of shortages of scheduled and non-scheduled formulations reported by state drugs controllers or the government on a case to case basis for fixation or revision of prices as per Paragraph 19.

In July 2013, the NPPA fixed prices of 50 anti-diabetic and cardiovascular medicines. This was the first time the government brought drugs outside the national list of essential medicines under price control. The prices of 652 drugs under the NLEM were fixed by the government last year under DPCO 2013. Capping the prices of 42 new drugs will affect over 390 cancer medicines. These medicines contain one or more of the 42 drugs. This move was aimed at curbing undue profiteering by chemists and drug wholesalers and is expected to result in an annual saving of Rs 800 crore for patients.

Scheduled formulations are currently under a price cap with a trade margin of eight percent to the stockist and 16 percent to the retailer. For non-scheduled drugs, the current practice has been 10 percent for stockists and 20 percent for retailers. But it was not mandatory and companies were at liberty to decide the margin.

The ceiling price is determined by first working out the simple average of price to retailer (PTR) in respect of all branded-generic and generic versions of that particular drug formulation having a market share of one percent and above, and then adding a notional retailer margin of 16 percent to it. The ceiling price fixed/revised by NPPA is notified in the Gazette of India (Extraordinary) from time to time. The ceiling prices are usually notified as exclusive of excise duty, local tax, and so on.

High trade margins have been the main cause of concern for new or unscheduled drugs. In cancer, the cost of medicine may reach up to 70 percent of the total cost. Two months after hospitalisation, the cost of drugs must be borne by the patient. Making newer anti-cancer drugs within the reach of a common man will go a long way in its treatment.

Article 19 should also be applied to all essential (life-saving or quality saving) drugs or available drugs in the interests of society. The huge numbers will give enough profits to the company. Non-compliance of price notification, depending on the gravity of the offence, could attract prosecution under the Essential Commodities Act (ECA), 1955.

  • Section 7 of ECA provides for imprisonment for a term which shall not be less than three months, but which may extend to seven years and shall also be liable for fine
  • Section 9 of ECA makes false state/in­for­mation also punishable with imprisonment for a term which may extend to five years or fine or both
  • Under Section 10, offences committed by companies are punishable, and shall apply to every person who, at the time the contravention was committed, was in charge of, and was responsible to, the company for conduct of the business
  • Every offence committed under ECA is a cognisable offence.

—The writer is President, Heart Care Foundation of India and President Elect, Confederation of Medical Associations of Asia and Oceania

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