NPPA Asks Importers To Furnish Data On Landed Cost To Check Violations

New Delhi, 18 March 2019: Just days after reducing the maximum retail price (MRP) of 463 non-scheduled cancer medicines through trade margin rationalisation, the National Pharmaceutical Pricing Authority (NPPA) has directed drug companies to furnish data regarding landed cost of imported formulations to check rule violations at the importers’ end.

 

Earlier this month, the government brought 42 non-scheduled anti-cancer medications, which were sold under 463 different brands, under price control by capping their trade margin at 30 per cent. A trade margin is the difference between the price at which the manufacturers sell the medicines to distributors and the price paid by the end user. The list of drugs whose prices have been drastically reduced was released on March 11. The regulator has invoked extraordinary powers under Para 19 of the Drug Price Control Order of 2013 to cap the prices of these non-scheduled medications. 

 

The latest step to obtain and examine data on imported formulations aims at ensuring regulatory compliance across the industry. In an office memorandum issued by NPPA Director (Pricing) Amarpal Singh Sawhney on March 14, drug companies have been asked to furnish details of the imported formulation including strength, dosage, brand name and the average landed cost for 2018. 

 

According to the NPPA, the MRPs have been revised on the basis of data submitted by manufacturers. The decision has put the spotlight back on trade margin rationalisation, which has been in the pipeline for quite some time. Recently, government think tank NITI Aayog has recommended capping trade margins charged by stockists and chemists to trim drug prices. The think tank is reported to have proposed a maximum trade margin of 24 per cent on first point of sale or stockiest for scheduled drugs and 30 per cent for non-scheduled drugs. 

 

So far, as many as 57 anti-cancer drugs were under price control as scheduled formulations. The regulator says the current intervention is a pilot for trade margin rationalisation ‘proof of concept’. More data is being collected from hospitals and manufacturers to finalise the list.

 

The NPPA currently fixes prices of drugs placed in the National List of Essential Medicines under Schedule-I of the DPCO. So far, around 1000 drugs have been price capped through this modality. The regulator ensures that the annual price increase in respect of scheduled formulations is not more than Wholesale Price Index.

 

The government also monitors and ensures that price increase in respect of the non-scheduled drugs is not more than 10 per cent per annum. The scheduled formulations currently under price cap form around 17 per cent of the pharmaceutical industry.Pharmabiz