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Rediff.com  » Business » Price-control noose tightens on drug firms

Price-control noose tightens on drug firms

October 19, 2012 11:29 IST

Drug makers attempting to flout price control by adding new ingredients to products could now have to face prosecution and penal action.

The National Pharmaceutical Pricing Authority (NPPA) has tightened the norms, making it mandatory for drug companies to seek price approval from the regulator while making any changes to an existing product.

A company would attract action for not only overcharging consumers but also for selling a scheduled product without price approval. According to the revised norms, all such sales will be treated as "unauthorised".

For instance, if a company wants to add or remove an ingredient from an existing composition of a product, currently under price control, it will have to seek a new price approval from the NPPA before making the changes.

Similarly, even for a change in packaging of a scheduled drug, its manufacturer or the marketing company will require to get a nod from the authority.

The move is aimed at keeping a check on drug makers who try to circumvent price control. According to a senior official in the NPPA, companies would often add or remove an ingredient or make minute changes in products (under price control) and then do not follow the notified price or even the pricing of the nearer composition.

"When we charge them for overcharging, these companies often dispute that, saying the composition of the product is different and therefore, it cannot be called overcharging," the official said.

Such cases would now be treated under the 'without price approval' category, the official said.

The NPPA currently fixes the prices of 74 bulk drugs and all formulations containing one or more of these bulk drugs. Companies are required to seek prior permission from the regulator for any price increase of these drugs. Whenever a company is found selling a medicine above the ceiling price, the NPPA takes action.

However, so far, there were gaps in its norms that allowed companies to tweak the composition. So far, there were no separate provisions in NPPA norms to capture those changing their composition and selling it without price approval.

Sushmi Dey in New Delhi
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