New Drugs Exempted from Price Control

The Ministry of Chemicals and Fertilizers (Department of Pharmaceuticals) has, by way of notification dated January 3, 2019, notified an order amending the Drugs (Prices Control) Order, 2013 (‘DPCO 2013’). The DPCO 2013 controls and regulates the prices of all drugs (including medical devices) that are sold in India. The salient features of the Drugs (Prices Control) Amendment Order, 2019 (‘Drugs Order’) are set out below:

i.       Exemption of Patented New Drugs from Price Control: The Drugs Order grants all manufacturers of patented new drugs an exemption from price control under the Indian Patent Act, 1970 for a period of five years from the commencement of ‘commercial marketing’ in India. Earlier, such exemption was only available to a manufacturer of patented new drugs (i) not produced elsewhere; and (ii) developed through indigenous research and development. These requirements have now been done away with. The other exemptions under the DPCO 2013 available to a manufacturer producing new drugs in India viz.: (i) by a new process developed through indigenous research and development; and (ii) involving a new delivery system developed through indigenous research and development, continue to remain in force.

ii.      Exemption available for drugs treating orphan diseases: The Drugs Order also empowers the Government to exempt from price control, certain drugs that treat orphan diseases. This power was not available under the DPCO, 2013.

iii.     Collecting and using market based data: The Drugs Order further empowers the Government to obtain price related data on drugs from any company specializing in pharmaceutical market data and allows the Government to validate such data by appropriate evaluations and surveys. Under the DPCO, 2013, the Government had no flexibility and was required to exclusively source such data from IMS Health. The Drugs Order also empowers the Government to use the market data on price of drugs of any given month (as it deems fit), for the purpose of fixing the price of notified drugs, without any rigid requirement of using data pertaining to the previous six months only (as was required under the DPCO 2013).