In a rare invocation of a lesser-used provision in the Drug Price Control Order (DPCO), NPPA has fixed the prices of 108 formulation packs of 50 anti-diabetic and cardiovascular medicines.
What makes the development significant is that NPPA has fixed prices of those medicines which are not listed under the national list of essential medicines (NLEM). Prices of 652 drugs under NLEM were fixed by the government last year under DPCO 2013.
The provision, Paragraph 19 of DPCO, 2013, authorizes the NPPA "in extraordinary circumstances, if it considers necessary so to do in public interest, fix the ceiling price or retail price of any drug for such period as it deems fit. The notification to fix prices of these medicines, which are non-scheduled formulations, was issued wherever the maximum retail price (MRP) of the brand of a particular formulation exceeds 25% of the simple average price, the same will be capped at the 25% level. Simply put, if the price of a drug brand exceeds the simple average price in that therapy group by 25%, or the price at which a new drug is launched for the first time is higher than the most expensive brand existing in the group, NPPA would initiate the process of fixing a price cap.
The drugs that will become cheaper include Gliclazide, Glimepiride, Sitagliptin, Voglibose, Amlodipine, Telmisartan and Rosuvastatin, Heparin and Ramipril. With this list, the total market of cardiac medicines under price control, including the earlier ones, stands at 58%, while 21% of the anti-diabetic market comes under the purview. It is estimated that around Rs. 55 billion of the pharma market will be impacted, with the range of prices being reduced from 10-15% to as high as 35%, with the average reduction around 12%.
Sarabjit Kour Nangra, vice president Research-Pharma, Angel Broking said, "For companies, the biggest impact will be felt for companies like Sanofi (Rs 1.39 billion lost sales), Zydus Cadila (Rs 400 million lost sales), Ranbaxy (Rs 380 million lost sales), Cipla (Rs 190 million lost sales), Lupin (Rs 320 million lost sales), DRL (Rs 140 million) and Sun Pharma (Rs 250 millin lost sales), on the basis of AIOCD AWACS."
"Thus, amongst the domestic and MNC player, the latter would be impacted the most, as they mostly price their products much higher than the competition and then derive their 100% of the sales from domestic markets. The domestic companies not having very huge exposure to the domestic market will be insulated to a large extent, as the pricing is not the key growth driver for their growth. Their products are therefore competitively priced. Thus, we maintain our recommendations in the sector," Nangra added.
