NPPA Modifies Guidelines for a Change in Manufacturer to Allow Existing Market Entity to Produce in its Own Plant

The National Pharmaceutical Pricing Authority (NPPA) has changed the limits in its rules for permitting manufacturers to change once the retail pricing of formulations is approved, allowing the existing marketing entity to produce the medicine in its own facility. The decision to change the standards, which will be finalised in May 2023, will be a relief to marketing firms, as they will have the option to begin manufacturing the products on their own if necessary.

However, the Authority refused to accept the industry's recommendation that the change of manufacturer be notified by filing Form V only, rather than seeking approval, at its recent meeting that authorised the adjustment. In its meeting on July 31, 2023, the NPPA added the point enabling "Shifting of manufacturing to its own plant by the existing marketing entity," to the conditions under which the Authority may authorise a change in manufacturer in future cases. The parameters set in an earlier meeting of the Authority on May 26, 2023, to allow change in manufacturer on conditions such as cancellation or seizure of the manufacturing company's licence; natural calamity or civil riots leading to destruction of the manufacturing company's plant; dissolution or winding up of the manufacturing company; closure of the concerned business segment by the manufacturing company, etc; or any other circumstance(s) proved to be beyond the control of the manufacturing The applicant corporation will have the burden of proving these conditions with documentary evidence, and the request will be reviewed on a case-by-case basis, with previous decisions not serving as precedent for future cases. "Hence, simply filing Form-V intimating the change in manufacturer may not be sufficient.

Further, ensuring availability of the drug is primarily the responsibility of the marketer, hence shifting of the manufacturing from manufacturer to its own plant by the marketer may be allowed," decided the Authority meeting. The guidelines were issued to reduce the increasing instances of companies changing the manufacturers with or without informing the authority. The pricing authority, in the past, has allowed the marketing companies to change the manufacturer after approval of retail price in some of the cases, keeping in view of the unavoidable circumstances highlighted by the marketing companies in their submission to NPPA and this has triggered more companies coming up with such requests. “This was also keeping in view the overall vision of the government for promoting Ease of Doing Business,” said NPPA after the Authority meeting on May 26.