Pharma experts feel more drugs need price increase

Understanding the rising cost of active pharmaceutical ingredients (API) in the country and the industry’s dependency on China for API and its impact on certain essential medicines, the National Pharmaceutical Pricing Authority (NPPA) has recently announced a one-time price increase of 50 per cent for heparin injection for 1000IU and 5000IU/ ml. Although, it is a time-bound exercise for six months – until December 31, 2020, the industry observers are raising concern over short-term consideration of price revision and are in opinion that more drugs require similar consideration.

According to the AIOCD AWACS data, there are approximately 37 brands of different dosage forms and strength of heparin injection from 14 different manufacturers namely Abbott Healthcare, Biocon, Biological Evans, Celon Labs, Claris Healthcare, Fresenius Kabi, Fusion Healthcare, Gland Pharma, Samarth Lifesciences, Troikaa Pharmaceuticals, United Biotech, VHB Lifesciences and Veritas Healthcare.

In this regard, Shirish Ghoge, Ex-Senior Director – Public Policy and Government Affairs, Sanofi India, said, “It is strange to see the price increase granted only for six months and one does not understand the reasons why the NPPA departed from their practice of one year whenever DPCO para 19 in public interest was applied – whether for increase or reduction.”

Although, Dr Ketan R Patel, Chairman and Managing Director, Troikaa Pharmaceuticals felt satisfied and commented, “It’s a good decision. And we believe that the 50 per cent rise is quite substantial and a fair decision. In November, the government may review the situation and depending on the price of the API, take the decision to continue, decrease or increase the MRP.”

This move is in response to the several applications received by the NPPA from the companies involved in manufacturing/ marketing of heparin injection 1000IU/ ml and heparin injection, 5000IU/ ml, and having a major market share in the Indian pharmaceutical market. They expressed that due to the cost of APIs, which constitute a major portion of the input cost and which is mainly imported from China, has risen to a considerable extent, which is making the companies entirely unviable to continue to manufacture and market these formulations.

While giving a background to the situation, Dr Patel informed, “Subsequent to our representation, the government has taken a timely decision in the interest of the patients as well as the pharma industry.”

Besides this, the pharma companies involved in manufacturing of heparin injection have also contended that over the years, the regulated price has decreased whereas, there is a consistent increase in the price of imported APIs making it commercially unsustainable for the drug manufacturers to manufacture the said product. Therefore, the heparin injection manufacturers requested the NPPA for upward revision of ceiling prices of the injection by invoking under para 19 of DPCO 2013.

Ghoge said, “This increase is a welcome step and shows how NPPA has equal concern of availability of this life-saving anticoagulant drug, as they have for affordability. Moreover, it is a good balance to draw.”

Commenting on the price revision and questioning if it will increase the access to medicines, Vivek Padgaonkar, Independent Healthcare Consultant Ex -Director OPPI, Ex GSK said, “Industry experts believe that the DPCO 1995 was certainly not in line with the needs of a liberalised country and reasonably growing Indian pharma sector. The DPCO 1995 cost-based policy had certain limitations and resulted, in fact, into a negligible impact on patients/consumers while having an adverse impact on the ecosystem and industry. Further, the actual impact of the DPCO 1995 was not more than 20 per cent of the APIs chosen. Many feel that it is one of the key reasons for the demise of API manufacturing in India.”

Going forward, is price revision of finished formulation the only solution, or the government-announced API scheme will take care of it?

Padgaonkar seemed to be confident about the government-announced schemes as he commented, “Now, the government has announced the production-linked incentive scheme for the promotion of the domestic manufacturing of critical Key Starting Materials (KSMs), Drug Intermediates (DIs) and APIs in India. This scheme intends to boost domestic manufacturing of APIs by attracting large investments in the sector to ensure their sustainable domestic supply and thereby reduce India’s import dependence on other countries.”

However, Ghoge pointed out, “Since heparin is manufactured in India, it is clearly seen as an encouragement for API manufacturing in India. However, it is a moot point whether it will reduce dependence on China as the raw material will still be sourced from there because we neither have the pig population nor the kind of bovine sourcing due to restrictions on cow slaughter.”

Heparin and its connection with COVID-19 treatment

Reportedly, the Ministry of Health and Family Welfare (MoH&FW) has included Heparin injection 5000IU/ml as an essential medicine for the treatment of COVID-19 patients. On the contrary, the reports of shortage have also been received for heparin injection.

Analysing the industry’s concerns, the committee which was constituted to monitor export/import trends of APIs, formulations and medical devices needed for COVID-19, communicated through a letter dated June 19, 2020, that there has been a considerable increase in the price of API heparin when compared to the base year of September 2018. Therefore, the committee recommended a short-term upward price revision of heparin injection.

Thereafter, the NPPA issued a notification and informed the manufacturers that the authority has fixed the ceiling prices of heparin injection 1000 IU/ml 1 ml and heparin injection 5000 IU/ml 1 ml at Rs 24.39 and Rs 60.54, respectively. It has also directed all the manufacturers of scheduled formulation, selling the branded or generic or both the versions of scheduled formulations at a price higher than the ceiling price (plus goods and services tax as applicable) need to revise the prices of all such formulations downward, not exceeding the ceiling price.

Commenting on the price revision of heparin injection by the NPPA, Padgaonkar said, “On average, the contribution of API to the overall cost is approximately 40 per cent, but in certain cases, it may go up to 70–80 per cent depending on the prevailing API prices. These costs have been increasing since Feb 2020 and now reaching to the new heights in the new normal situation. However, in the last six months, there have been huge escalations not only for API, KSMs, Dis, but also excipients, glass ampules, vials as well as logistic cost.”

He added, “By invoking para 19, the NPPA is practicing NPPP 2012 in letter and spirit. However, it may be noted that for the first time, the NPPA has allowed the price increase for a very limited time period for heparin injection 1000IU/ ml and Heparin injection 5000IU/ ml upto Dec 31, 2020. The mandate of NPPA is to ensure the availability of drugs at affordable prices. So, while ensuring affordability, access cannot be jeopardised and life-saving essential drugs must remain available to the general public at all times. Therefore, the financial unviability of these formulations should not lead to a situation where these drugs become unavailable in the market and the ailing patient is forced to switch to costly alternatives.”

This is not for the first time the NPPA has received the representation from the industry, it has been receiving applications for upward price revision under para 19 of DPCO, 2013 since last two years citing various reasons like increase in API cost, increase in the cost of production, exchange rates, etc,. resulting in challenging to sustain production and marketing of the drugs.

Ghoge further informed, “Heparin injection is a scheduled formulation under DPCO and is an essential drug. Besides, government hospitals like AIIMS, JIPMER, NIMS and many state drug procurement agencies like Gujarat, Rajasthan, Andhra have rate contracts with the heparin marketing companies where the agreed price is less than ceiling price fixed by NPPA. The price increase of 50 per cent will ensure that manufacturers will not discontinue its production like what NPPA did for 21 formulations last year with a similar increase in ceiling prices. However, there are similar representations for other essential drugs too which also must be considered by NPPA.”

Learning from the past

Late last year, the NPPA observed that the 21 scheduled formulations, being considered for upward price revision under para 19 of DPCO 2013, which are low-priced drugs, have been under repeated price control. Most of these drugs are used as the first line of treatment and are crucial to the public health programme of the country. Many companies have applied for discontinuation of the product on account of the financial unviability of the business.

In addition, to address the issue arising due to repeated price control, a one-time price increase of 50 per cent from the present ceiling price was being considered in the public interest as an exceptional measure as advised by the Standing Committee on Affordable Medicines and Health Products (SCAMHP).

Revised prices of 21 scheduled formulations of 12 drugs dated Dec 13, 2019 are:

1. BCG vaccine – each dose (Rs 8.75)

2. Benzathine benzylpenicillin powder for injection 12 lakh units; anti-biotic – each pack (Rs 17.84)

3. Benzathine benzylpenicillin powder for injection 6 lakh units; anti-biotic – each pack (Rs 11.81)

4. Benzyl penicillin powder for injection 10 lakh units; anti-biotic – each pack (Rs 7.64)

5. Chloroquine tablet 150mg; anti-malarial – 1 tablet (Rs 1.16)

6. Dapsone tablet 100 mg; leprosy – 1 tablet (Rs 0.35)

7. Furosemide tablet 40 mg; diuretic/anti hypertensive – 1 tablet (Rs 0.74)

8. Furosemide injection 10mg/ml; diuretic/anti hypertensive – 1 ml (Rs 2.43)

9. Metronidazole oral liquid 200 mg/5ml; anti-biotic/antiprotozoal – 1 ml (Rs 0.44)

10. Metronidazole tablet 200 mg; anti-biotic/antiprotozoal – 1 tablet (Rs 0.68)

11. Metronidazole tablet 400 mg; anti-biotic/antiprotozoal – 1 tablet (Rs 1.25)

12. Metronidazole injection 500mg/100ml; anti-biotic/antiprotozoal – 1 ml (Rs 0.20)

13. Ascorbic Acid (Vitamin C) tablet 500 mg; vitamin – 1 tablet (Rs 1.34)

14. Co-trimoxazole (Sulphamethoxazole (A)+Trimethoprim (B)] tablet 400 mg (A)+ 80 mg (B); anti-biotic – 1 tablet (Rs 0.77)

15. Co-trimoxazole (Sulphamethoxazole (A)+Trimethoprim (B)] tablet 800 mg(A)+160 mg(B); anti-biotic –1 tablet (Rs 1.98)

16. Co-trimoxazole (Sulphamethoxazole (A)+Trimethoprim (B)] oral liquid 200 mg(A)+40 mg(B)/5ml; anti-biotic – 1 ml (Rs 0.32)

17. Pheniramine injection 22.75 mg/ml(10ml); anti-allergy – 1 ml (Rs 1.67)

18. Pheniramine injection 22.75; anti-allergy – 1 ml (Rs 2.24)

19. Prednisolone drops 1 per cent; anti-allergy – 1 ml (Rs 4.92)

20. Clofazimine capsule 50 mg; leprosy – 1 capsule (Rs 2.13)

21. Clofazimine capsule 100 mg; leprosy – 1 capsule (Rs 3.63)

However, this time, the NPPA has also informed that it will also be monitoring the price of heparin sodium API on a monthly basis upto December 31, 2020.