DoP rejects Zydus’ review petition against NPPA for fixing retail price of sitagliptin-metformin combo

In a significant decision, the Department of Pharmaceuticals (DoP) has rejected a review petition filed by Zydus Healthcare against the National Pharmaceutical Pricing Authority (NPPA) for fixing the retail price of anti-diabetic combination formulation comprising sitagliptin and metformin, observing that while the NPPA has not acted strictly by the books, it protected the public interest.

Zydus Healthcare in its review petition filed on July 11, 2022, questioned NPPA’s decision to fix the price based on its self designed pricing mechanism without following the Market Based Data (MBD) model under the Drugs (Prices Control) Order, 2013 which is to apply the Principles of Pharmacoeconomics, for price fixation.

Zydus filed the review application against NPPA’s notification on June 30, 2022, fixing the retail price of sitagliptin 50/100 mg and metformin hydrochloride 500/1000 mg extended release or sustained release tablets.

After extensive investigation and looking at different Court decisions, the DoP said, “….it is apparent that, while NPPA behaved in a manner strictly not prescribed in DPCO, 2013, it protected the public interest in light of the ground facts. Also, there is nothing to show that NPPA acted with mala fide or with ulterior motives. It cannot be taken as arbitrary and ad-hoc.”

It alleged that the self-designed and self-invoked Pricing Principle of NPPA is used to reduce the price by 50% w.r.t. drugs which has become/on the verge of becoming off patent, so as to pass on the benefit of price reduction to the consumers. As per the provisions of DPCO 2013, the lower of claimed price and calculated price based on market data, would be allowed.

This clearly highlights that the self-designed and self-invoked pricing mechanism adopted by NPPA is with a single objective of pushing down or lowering of the proposed retail prices even at the cost of going outside the mandate offered as per the provisions of DPCO 2013, it said. The company alleged that the NPPA has erred in determining the retail price of the drug and hence the DoP may direct the Authority to revise the retail price of their formulation on various grounds.

The methodology is outside the scope of DPCO, 2013 as it does not permit to apply Para 15 if the formulation in question is available in the domestic market and relevant database is available. It also underestimates the initiative of indigenous generic manufacturers of off patented/going to be off patented formulations being offered to consumers at drastically lower maximum retail prices, it argued. Besides, the reduction of 50 per cent price of the patented molecule followed by NPPA is purely hypothetical and without any authentic database, it added.

“If the public or consumer Interest is of such a paramount importance in the matter of off patented formulations or those formulations which are going to be off patented soon and where market dynamics is not believed to do justice to the public interest/patient interest, invoking Para 19 may be considered by the Authority,” Zydus argued DoP according to the review order.

Para 19 of the DPCO,2013 allows the government to fix the ceiling price or retail price of a drug in case of extra-ordinary circumstances, if it considers necessary so to do in public interest for such period, as it may deem fit. If the ceiling or retail price of the drug is already fixed and notified, the government may allow an increase or decrease in the price as the case may, irrespective of annual wholesale price index for that year.

The company also argued that recommendations by the MultiDisciplinary Committee (MDC) are also not legally tenable on account of incomplete quorum, as there were no members authorised by DoP present in these meetings.

NPPA argued that the contentions in the review petitions are not tenable since the methodology related to fixing price of drugs with molecules which has become or going to become off patent has been upheld by the DoP in a previous petition by Zydus Health for the formulation dapagliflozin+metformin tablet.

It also quoted the MDC’s decision in multiple meetings held in 2022, which noted that if the retail price is calculated based on six-month prior market data, the price of patented period would be taken into consideration and benefit of price reduction due to medicines which has become or on the verge of becoming off-patent would not pass on to the consumers.

However, where the calculated retail prices of FDC of formulation based on six-month prior market data is as per the provisions of DPCO, 2013 is lower than claimed price and the calculated price, the Committee recommended that the same would be allowed, it added.

DoP, in its order said that it has addressed the concerns of the company in seven different review orders, all dated July 19, 2022 including that the price fixation is as per market-based pricing as prescribed by National Pharmaceutical Pricing Policy, 2012, though not strictly as per letter of DPCO, 2013, but is based on actual market prices of the formulations launched by other manufacturers. Responding to the company’s allegation that the DoP’s order in 2018 constituting the MDC by name and not by designation, the Review Order said that the said Committee was established with the approval of the minister of chemicals and fertilisers and based on relevant orders.

As reported earlier, the DoP has also amended the Drugs (Prices Control) Order, 2013 recently to include provisions by which the retail price of new drugs with ingredients that have become off-patent or about to become off-patent will be arrived at by reducing fifty percent of the price calculated as per the provisions of the price control order. Similar provision has also been notified by the DoP for the revision of ceiling price of scheduled formulation after expiry of patent issued under the Patents Act, 1970.

After one year from the date on which the retail price was fixed as per the Order or the date on which price to retailer of at least one company fixed under the regulation is captured in the pharmaceutical market database, whichever is later, the retail price for the subsequent manufacturers shall be fixed as per sub-paragraph (1) of Paragraph 4.

This is provided that while fixing the retail prices under this, the prices of the brand of the manufacturer having the patent and the manufacturer holding the permission granted by the patentee shall be excluded.

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