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Aug. 06 2013
Centre against companies' move to sell old stocks at above-ceiling rates
Drug of war: Centre against companies' move to sell old stocks at above-ceiling rateS

The Department of Pharmaceuticals (DoP) is clear that drug companies will not be allowed to sell old stocks of essential medicines, which are under price control, at prices higher than the ceiling set by the National Pharmaceutical Pricing Authority (NPPA).

“They (pharma companies) have to either send in fresh stock relabeled with revised prices within 45 days of notification of ceiling prices, or send a price list to retailers reflecting the reduced rates of essential drugs falling under the new DPCO,” said sources.

Around 151 drugs, including the commonly used painkiller paracetamol, antibiotic azithromycin and antidiabetic insulins, should have been available at the NPPA-set discounted rates from July 29, when the 45-day period from the day of notification of the ceiling price expired. However, industry players said only 15-20% of the 151 medicines with relabelled packs have reached the markets.

With companies like Cipla and Sun Pharma moving court to delay implementation of the new drug price control order (DPCO), there has also been some confusion at the chemist and retailer levels over the actual price that needs to be charged for these medicines to the patients.

Drug makers had petitioned to the courts that they be allowed to sell medicine stocks already available at the retailer level at earlier prices while new batches manufactured will have the reduced rates. They contended that the entire exercise of bringing back unsold stocks and resending them with price-label changes was logistically expensive and, in some cases, where stocks are in remote


villages, impossible. Moreover, some companies also said that in case of injectibles, drops and vials, repackaging could even damage the medicine.

Sources said that in case a pharma company cannot change the price label within 45 days due to logistical reasons or otherwise, it can send a price list to its retailers and chemists with revised rates, which can be used to sell the medicines under new DPCO, till new stocks can be arranged.

The finance ministry has also exempted drug makers from the excise duty on repacking or relabelling. The notification said that exemption would be available for 45 days after the prices of the essential drugs are notified by NPPA, to ensure smooth transition to the new drug price regime.

The notification also states that pharma companies will not have to pay excise duty once more on essential drugs which have already been sent out of their factories and, even if they choose to carry out the re-printing, relabeling at sites other than the facilities registered under the Central Excise Act.

The Delhi High Court order of June 30, granting interim relief to Cipla and Sun Pharma, also does not stop the implementation of the DPCO.

The order only says: “If the petitioner furnishes the price list/supplementary price list in respect of the formulations covered under various price notifications issued under DPCO 2013 and the price lists are distributed to the dealers, the state drug controller and the government, then in that case, the respondent (the government) shall not take



coercive measures against the petitioner (drug firm) in respect of the said formulations (essential drugs manufactured by the company).”

"Earlier, the rule was 15 days, within which the new stock with revised pricing was supposed to be sent to the retailer. Due to industry demand, it was changed to 45 days. Even now some companies seem to have issues. This is not understandable and any firm found overcharging would be liable to pay a penalty,” said CP Singh, chairman, NPPA.

NPPA is already trying to recover over R2,500 crore from pharma companies as fine for selling drugs at rates higher than the ceiling fixed by the regulator. Cipla has the highest overcharging liability, at R1,600 crore.

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