IDMA strongly advises the NPPA to apply prospective batch pricing in order to reduce overcharging and ensure ease of doing business

The Indian Drug Manufacturers' Association (IDMA) has encouraged the National Pharmaceutical Pricing Authority (NPPA) to apply prospective batch pricing to eliminate overcharging and ensure business comfort. IDMA has been asking prospective batch pricing for many years because anytime the prices of scheduled pharmaceuticals are reduced, the new price must be made effective immediately.

According to industry analysts, overnight ceiling price implementation is not conceivable since pharmaceutical companies are unable to bear the burden of alerting and coordinating with the country's over 9 lakh pharmacies. IDMA has expressed concern that if a single store in the country is discovered with one unit of formulation at a price greater than disclosed, pharma companies are issued overcharging letters, which lead to show cause notices (SCN) and legal actions.

As per industry official involved in the development, "pharma companies can enable price changes until carrying and forwarding (C&F) agents, depots, and stockists but have no control over 9 lakh chemists in the country leading to litigations even if one strip is found with the old rate with the chemist after 3 to 4 months." To address this issue, IDMA has proposed that the prospective batch pricing mechanism be enabled, such that the notified price becomes effective with the next manufactured batch and is not applicable to market stocks manufactured prior to the notification.

To overcome this genuine issue, IDMA has suggested that para 2(e) of Drug Prices Control Order (DPCO), 2013 be modified to delete the word 'Retailer' from the definition of the 'Dealer' as the pharmaceutical companies have no control over prices charged by the retailers. As per the current DPCO 2013, “Dealer" means a person carrying on the business of purchase or sale of drugs, whether as a wholesaler or retailer and includes his agent. This deliberation was a part of the recent meeting of the industry captains with Department of Pharmaceuticals (DoP) Secretary S Aparna and the NPPA chairman Kamlesh Pant.

This issue is high on the industry’s agenda as the DoP had also recently urged the pharmaceutical companies to study the number of cases of overcharging and report it to the NPPA towards making policy interventions for prospective batch pricing. IDMA also communicated that all the data of pharmaceutical companies are officially on record through GST records and e-way bills. As per DPCO 2013, all pharmaceutical companies submit online on IPDMS 2.0, their Form II, Form V as well Form III where quarterly data of production and sales are available. Hence, prospective batch pricing should be implemented for ease of doing business and ensuring that the industry provides affordable medicines for all Indians.