NPPA issues final guidelines to discontinue making medicines under price control

The National Pharmaceutical Pricing Authority (NPPA) has issued the final guidelines for discontinuation of manufacturing medicines, which are under price control regime. The issued guidelines are also applicable to scheduled medical devices which have been notified as a drug.

The NPPA website will be updated, based on the application filed by pharma companies and approved by the competent authority for discontinuation of scheduled formulations from the market on a monthly basis.

According to the final guidelines, any manufacturer who is intending to discontinue any scheduled formulation from the market, needs to issue a public notice in the newspaper, which varies based on the company’s moving annual turnover (MAT) value. If the MAT of the company is one per cent or less than one per cent then it has to be one newspaper, whereas, in the case of more than one per cent, the public notice has to be put in at least two national newspapers, one in English and one in Hindi. Besides this, the manufacturer also needs to intimate the government through form-IV at least six months prior to the intended date of discontinuation.

The final guidelines also inform that wherever the MAT of the company is more than one per cent or less than one per cent of total MAT value, it has to inform at least six months prior to the proposed/intended date of discontinuation and in such cases, it will be noted that without issuing any direction to the company, the case will be deemed approved. Whereas, in the case of more than one per cent of the total MAT value, the company will be directed with the approval of Chairman NPPA within a period of 60 days from the receipt of Form IV, intimating the request has been noted.

Besides this, the company will be directed to continue production/import and sale of the formulation for a period of up to 12 months from the date of issue of public notice.

In the final guidelines, the authority has mentioned that to ensure that there is no shortage of the formulation in the market, the government may direct the manufacturer of the scheduled formation to continue with the required level of production or import for a period not exceeding one year, from the intended date of discontinuation within a period of 60 days of receipt of such intimation.

It has directed that after getting the permission of discontinuation from the NPPA, the intending company should not reduce the level of production by more than 25 per cent of last year in each quarter.

It has also mentioned that wherever concerns regarding shortage are apprehended or a formulation is found to be critical for public health; based on the circumstances and also in cases where it is established that the company is intending to discontinue production/import and sale of a scheduled formulation and has already launched or intends to launch ‘a’ new drug to evade a price control; cases requiring continuance of production/ import and sale beyond 12 months or any other case related to this will be referred to the standing committee after the approval of NPPA’s Chairman.

Stakeholder reactions

The NPPA had received several applications from pharma companies to discontinue their brands from the market.

Following this, in June, the NPPA issued draft guidelines for discontinuation of scheduled formulations and invited the industry’s comments on it. Based on industry stakeholders’ comments and suggestions, NPPA has released the final guidelines.

The industry has appreciated the authority for considering and incorporating their suggestions while drafting the final guidelines.

Vivek Padgaonkar, Independent Healthcare Consultant, Ex-Director OPPI, Ex GSK commented, “The NPPA has always been uniform, consistent and transparent in its approach to make the essential medicines available to needy patients. The revised guidelines for discontinuation of scheduled formulations under Para 21(2) is a very good approach by NPPA.”

While giving the background to this development, he informed, “In fact, in the last few years, many companies have approached the NPPA for the same reason and a few companies, with the fear of losing brand identity, continue to sell those brands though not financially viable for the business. It must be appreciated that the NPPA has not combined para 21 (2) with any other paras like para 3 or Para 19 as each para to the DPCO 2013 has a specific purpose.”

Dr Amit Rangnekar, Chairman, Pricing Committee, IDMA, said, “IDMA has just received the revised guidelines for discontinuation of scheduled formulations under Para21 (2) of DPCO 2013 issued by the NPPA, and are studying the same. Prima facie, the number of slabs have been reduced to two, for brands with less than one per cent MAT share and those with more than one per cent MAT share. Now, scheduled formulations with less than one per cent MAT share will be granted deemed approval subject to their adhering to the requisite conditions, which will be beneficial for small brands wishing to discontinue. We are glad that all Form 4 applications that are approved will now be uploaded on the NPPA website, this was one of the points raised by the IDMA in their representation. However, we request that the prevailing situation should be taken into account while applying the revised guidelines, especially regarding maintaining the average production levels of previous quarters, which would be very challenging in the current context.”

Sunil Attavar, President, Karnataka Drug and Pharmaceuticals Manufacturers Association, expressed, “This is positive news for the industry, especially the MSMEs who may have some products with very low sales and need to discontinue the product for some reason. There is also built-in protection to ensure that there are no shortages.”

Harish Jain, Secretary, Karnataka Drugs and Pharmaceutical Manufacturers Association too stated, “Issue of these guidelines is a welcome step and gives a clear understanding and pathway to discontinue the drug. The guidelines have a built-in mechanism for the stakeholders to prepare for the discontinuation. In the case of a single manufacturer of the drug, the possibility is that the NPPA can refuse discontinuation or can motivate other manufacturers to produce. Overall, it is a step in the right direction reflecting the confidence of NPPA in the industry.”

Shirish Ghoge, Ex-Senior Director of Public Policy and Government Affairs, Sanofi India highlighted and said, “NPPA should be complimented for considering the comments of industry and making it simpler by dividing the discontinuation into less than one per cent and more than one per cent market share category. However, by bringing in subjective terms like the apprehension of shortage or for evading price control by the possible intention of launching a new product are a bit stretched. There is also no timelines stipulated for the formation of this committee and the decision on the same. Perhaps NPPA is leaving too many decisions to committees which defeats the purpose of making a law.”

Dr Viranchi Shah, National Vice President, IDMA said, “IDMA welcomes the notification. It is in line with requests given by IDMA in response to the draft notification. However, we still believe that there is scope for further simplification in future. We also urge that in the current situation certain norms might have to be relaxed until the operations stabilise. On the whole, it is a very positive step.”

Padgaonkar recommended some amendments in the guidelines:

1. The NPPA should invoke under Para 19 for the upward price revision of the loss-making formulations on case to case basis.

2. The period mentioned for continuing production/import and sale of formulation, after notice of discontinuation by the given company, as specified in the revised guidelines will create an additional financial burden for those companies who have applied for discontinuing the formulations. This is more significant in the backdrop of a severe impact post-COVID-19.

3. Allow discontinuing the scheduled formulations having market share one per cent or below with immediate effect instead of after six months.

4. Instead of issuance of a public notice, the companies can be advised to upload Form-IV scheduled formulations on the NPPA website for public information.

He also said, “NPPA is expected to follow the guiding principles of National Pharmaceutical Pricing Policy 2012 i.e. to put in place a regulatory framework for the pricing of drugs so as to ensure availability of the essential medicines at reasonable prices even while providing sufficient opportunity for innovation and competition to support the growth of the industry, thereby meeting the goals of employment and shared economic well-being for all.”

These guidelines have come just before a meeting of the Standing National Committee on Medicines (SNCM) with the industry stakeholders and key government authorities to discuss the pricing of oncology, anti-diabetes and typhoid drugs. An industry observer feels that soon the NPPA will release NLEM 2020 which will have to bring more drugs from these therapeutics under price control.