India’s new drug pricing policy comes into effect

The Government of India’s Department of Pharmaceuticals announced last week that the Drug Price Control Order 2013 will come into effect immediately.

This new order authorizes the National Pharmaceutical Pricing Authority (NPPA) to regulate prices of essential medicines – this means a price reduction of 348 essential medicines for patients in India. Experts say prices could decrease between 30 – 60% depending on the drug. The drugs include paracetamol, tramadol and vitamin c, to name a few.

Under terms of the new policy, prices of medicines will now be capped by taking a simple average of all brands that have more than 1% market share instead of input costs.

The policy also includes promotion of non-branded generic low-cost drugs, which has caused concern for the growth of the Indian pharma industry, which is heavily dependent on R&D investments.

“We welcome this move as it ends the uncertainty on the pricing policy that has been stuck for so many years. The shift to a market-based price control model is commendable as it puts an end to the arbitrary pricing regime. The consumer stands to benefit with lowered prices of medicines.

“At a company level, we were aware of the upcoming policy and have factored in the impact which is likely to be in the range of 3-4 per cent of our finished dosage sales in India. We have plans in place to ride over this impact.”

Dr Reddy’s Vice-Chairman and MD Satish Reddy.

The National List of Essential Medicines (NLEM) Pricing Policy is expected to cover approximately 18% of the retail pharmaceutical market.

“We don’t believe that the policy in its current form is negative. The policy is based on average price mechanism and thus follows competition. Given the price competition, the policy is unlikely to have any major negative implication for the sector.”

Sarabjit Kaur Nangra, Angel Broking Analyst.



Related news:

New drug policy a welcome move for consumers: Pharma cos (Economic Times)

Govt notifies new drug price control order (Indian Express)

Reference links:

Government of India, Department of Pharmaceuticals

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