Plea in court against drug pricing regulator’s move to cap trade margin for cancer medicines

  1. The National Pharmaceutical Pricing Authority (NPPA) decision to cap the maximum trade margin for cancer medicine has been challenged in the Karnataka High Court by a private hospital group.
  2. Earlier,National Pharmaceutical Pricing Authority (NPPA) had invoked powers under Drugs (Prices Control) Order, 2013 and brought 42 non-scheduled anti-cancer drugs under price control by capping trade margin at 30%.
  3. The trade margin is the difference between the price at which manufacturers sell drugs to stockists (and distributors) and maximum retail price (MRP) to patients.
  4. The petitioner has asked the court to set aside the NPPA order on two grounds which are (a)lack of jurisdiction which means that Drugs (Prices Control) Order,2013 does not allow the regulator to cap the trade margins of non-scheduled drugs as they are not considered essential and (b)lack of extraordinary circumstances which means that NPPA has failed to differentiate between the issue of costs of hospitalisation and other incidental measures in the treatment of cancer.
  5. NPPA is an independent body set up in 1997 under Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers.Its mandate is to fix/revise controlled bulk drugs prices and formulations, enforce prices and availability of medicines under Drug(Price Control) order, 2013.
  6. Functions of NPPA are:(a) To implement and enforce the provisions of the Drugs (Prices Control) Order (b)Deal with all legal matters arising out of the decisions of the Authority (C) To monitor the availability of drugs, identify shortages and (d)To collect/ maintain data on production, exports and imports, profitability of companies etc, for bulk drugs and formulation.