Prices of drugs going off patent to be reduced by 50 percent

The Gazette notification rolled out in this regard appeared to give generics a margin to increase their prices. The usual pattern for drugs going off patent is that their price erodes by about 90 per cent.

The Department of Pharmaceutical (DoP) held several meetings with the stakeholders including the industry representatives before it came out with the notification.

Issued by Awadhesh Kumar Choudhary, Senior Economic Advisor, Department of Pharmaceuticals (DoP), the notification dated May 11, laid out the mechanism to arrive at a ceiling price for drugs that are going off patent, or which contain components that are going off patent.

In exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955 (10 of 1955), the Central Government amended the Drugs (Prices Control) Order, 2013, and called it the Drugs (Prices Control) Amendment Order, 2023.

The policy change in the Drugs (Prices Control) Order, 2013 will reflect in the Drug (Prices Control) Amendment 2023 as;

(a) in paragraph 5, -

(i) in sub-paragraph (1), the following proviso shall be inserted, namely:—

“Provided that the retail price of a new drug or the new drug that contain molecules or components or ingredients, that have become off-patent or about to become off-patent under the Patents Act 1970 (39 of 1970), shall be fixed as per he provisions of sub-paragraph (3) of this paragraph.”;

(ii) after sub-paragraph (2), the following sub-paragraph shall be inserted, namely:—

“(3) (i) the retail price of the new drug shall be arrived at by reducing fifty per cent. of the price calculated under sub-paragraph (1) of paragraph 4, and if the new drug is not available in the domestic market, the retail price of the new drug shall be fixed as per the provisions of sub-paragraph (2) of this paragraph.

(ii) after one year from the date on which the retail price was fixed as per item (i) or the date on which “price to retailer” of atleast one company fixed under item (i) 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:

Provided that while fixing the retail price under item (ii), the prices to retailer of the brand of the manufacturer having the patent and the manufacturer holding the permission granted by the patentee shall be excluded.”;

(b) after paragraph 18, the following paragraph shall be inserted, namely:—

“18A. Revision of ceiling price of scheduled formulation after expiry of patent issued under the Patents Act 1970 (39 of 1970). —

In the case of scheduled formulation or its molecules or components or ingredients, which are patented under the Patents Act 1970 (39 of 1970), the ceiling price, on expiry of the patent, shall be revised by reducing the present ceiling price by fifty per cent., and after one year, the ceiling price shall be revised again as per the provisions of subparagraph (1) of paragraph 4, based on the market data of the preceding month.”.