AKUMS DRUGS & PHARMACEUTICALS LTD.

D. C . JAINdcj@akums.net

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WHAT IS COVERED UNDERDPCO - 2013

1. SCHEDULED DRUGS : Strength & Dosage Forms of 348 drugs in Schedule 1

Those selling at higher MRP shall bring downtheir MRP as notified by NPPA.

Those selling at lower MRP shall not increasetheir MRP as per notified price; but willContinue to sell at their existing price.

Covered under DPCO

2. NEW DRUGS as defined under 2(u) ; Applicable to Existing Manufacturers for launch of New Drug and will require price approval.

3. IMPORTED DRUGS: ceiling price shall be as applicable on indigenous drugs

Covered under DPCO

4. Monitoring of MRP of NON – SCHEDULED DRUGS (only 10% price increase per Annum allowed)

5. Control over BULK DRUGS MANUFACTURERFor bulk drug availability in case of emergency, urgency, non-commercial use, public interest.

6. Control over FORMULATION MANUFACTURER Directing for supply of formulations to sell to institutions, hospitals or agencies.

Covered under DPCO

7. Control over FORMULATION MANUFACTURER

Directing not to stop manufacturing or reduce manufacturing of required quantities of formulation covered under NLEM.

Covered under DPCO

8. Pricing of formulations covered under DPCO 1995 - shall remain valid upto 31.05.2013 or 1 year from date of issue and thereafter prices can be increased as per annual whole sale price index for previous calendar year (2012) and thereafter formula as per para 4(1) shall be applied.

Covered under DPCO

10. Profit margin to retailers fixed 16% on retail price on scheduled formulations and New Drugs.

11. Ceiling Price / Retail Price will be notified on the basis of dosage unit – Per Tab / Per Cap / Per Vial.

12. Deposit of over charged amount with interest and penalty.

13. Power of entry, search and seizure by any Gazetted officer.

Covered under DPCO

WHAT IS NOT COVERED UNDER DPCO - 2013

1. Ayurvedic, Siddha, Unani Medicines.

2. Homoeopathic Medicines.

3. Any Substance not covered under Drugs & Cosmetics Act.

4. Non-Scheduled Drugs.

5. Non-Scheduled Drug combined with non- schedule drug.

NOT Covered under DPCO

6. Non-Scheduled Drugs – when combined with a Schedule Drug with different strength.

7. Non-Scheduled Drugs – when combined with a Schedule Drug with different dosage form.

8. New Drugs Manufactured by a New Manufacturer, New Drug already being manufactured by an existing Manufacturer.

NOT Covered under DPCO

9. A formulation defined as New Drug involving NDDS under rule 122E of D&C Act and for which DCGI has granted its approval for five years from the date of its approval.

10. Patented Drug (Product Patent or process patent or new drug delivery system) for five Years.

NOT Covered under DPCO

11. All innovations in dosage as SR, ER, etc., unless already specified in Schedule; a separate manufacturing licence has been granted as such.

NOT Covered under DPCO

WHAT IS SCHEDULED DRUG / FORMULATIONS

“Scheduled Drug/Formulation” consisting of 348 drugs / 652 formulations

Under 27 therapeuticsmentioned in First Schedule appended to

DPCO 2013 With same strength and

With same dosage forms, Whether referred to by generic version or

By brand name.

Scheduled Drugs

As per NPPA clarification Paracetamol Syrup and Paracetamol

Suspension are same DOSGAE FORMS

And therefore same ceiling price is applicable

Scheduled Drugs

2. If Strength of a scheduled formulation is changed, it ceases to be a Scheduled drugs e.g. –

Amoxicillin capsules 250mg and 500mg are covered under schedule:

Amoxicillin capsules 125mg shall not be called a Scheduled Drug

Scheduled Drugs

3. If Dosage Form of a scheduled formulation is changed, it ceases to be a Scheduled Drugs e.g. ---

Amoxicillin Capsules 250mg is covered under schedule:

Amoxicillin Tablet 250mg shall not be called a Scheduled Drug

Scheduled Drugs

4. If Dosage Form & Strength of a scheduled formulation are changed, it ceases to be a Scheduled Drugs e.g. ---

Amoxicillin Capsules 250mg is covered under schedule

Amoxicillin Tablet 125mg shall not be called a Scheduled Drug

Scheduled Drugs

5. Scheduled Drug shall mean Formulation with Same strength and Same dosage form as in the schedule and nothing else.

Scheduled Drugs

WHAT IS NON-SCHEDULED DRUG / FORMULATIONS

1. What is not a Scheduled Drug is a NON- SCHEDULED DRUG

2. Under para 2(v), “Non-Scheduled Formulation” means a formulation, containing the molecule, the dosage and strengths of which are not specified in the First Schedule; (Non-NLEM Drug / Formulation)

For Example: Aceclofenac, Nimusulide, Sildenafil Citrate, Norfloxocin, Rabeprazole

Non - Scheduled Drugs

WHAT IS NEW DRUG

Under para 2(u) of DPCO 2013, New Drug has been defined as under:“New Drug” for the purposes of this Order shall mean a formulation launched by an Existing manufacturer of a drug of specified dosages and strengths as listed in the National List of Essential Medicines (NLEM Formulation) by combining the drug with another drug either listed or not listed in the National List of Essential Medicines or a formulation launched by changing the strength or dosages or both of the same drug of specified dosages and strengths as listed in the NLEM List.

New Drug / New Formulation

New Drug / New Formulation concept is applicable to

“Existing Manufacturer” and Not to a “New Manufacturer”

Concept is applicable at the launch of new drug and

Not for existing formulations under production, even if covered under the definition of New

Drug.

New Drug / New Formulation, in simple words covers -

a. NLEM Formulations with same specifieddosage and strength as combined with another NLEM Formulations with same specified dosage and strength.

New Drug

Example 1:

Paracetamol 500mg Tablet is Scheduled Formulation

Diclofenac 50mg Tablet is Scheduled Formulation

Paracetamol 500mg + Diclofenac 50mg Tablet is New Drug/Formulation

New Drug

Example 2:

Omaprazole 20mg Tablet is Scheduled Drug

Domperadone 10mg Tablet is Scheduled Drug

Omaprazole 20mg + Domperadone 10mg Tablet is New Drug

New Drug

Example 3:

Cefixime 100mg Tablet is Scheduled Drug

Ofloxacin 100mg Tablet is Scheduled Drug

Cefixime 100mg + Ofloxacin 100mg Tablet is New Drug

New Drug

Example 4:

Vitamin A 5000IU Capsule is Scheduled Formulation.

Vitamin D 0.25mg Capsule is Scheduled Formulation.

Vitamin A 5000IU + Vitamin D 0.25mg Capsule is New Drug.

New Drug

b. NLEM Formulations with same specified dosage and strength as combined with another

Non - NLEM Formulations

New Drug

Example 1:

Paracetamol 500mg Tablet is Scheduled Formulation

Aceclofenac 100mg Tablet is Non - Scheduled Formulation

Paracetamol 500mg + Aceclofenac 100mg Tablet is New Drug

New Drug

Example 2:

Diclofenac Sodium 50mg Tablet is a Scheduled Formulation

Serratiopeptidase 10mg Tablet is Non-Scheduled Drugs

Diclofenac Sodium 50mg + Serratiopeptidase 10mg Tablet is New Drug

New Drug

Example 3:

Clopidogrel 75 mg Tablet is a Scheduled Formulation

Aspirin 75 mg is Non-Scheduled Drugs

Clopidogrel 75 mg + Aspirin 75 mg Tablet is New Drug

New Drug

c. NLEM Formulations by changing its strength

Example 1: Paracetamole 500mg Tablet is a Scheduled DrugParacetamole 325mg Tablet is a New Drug

Example 2: Clopidogrel 75 mg Tablet is a Scheduled DrugClopidogrel 150 mg Tablet is a New Drug

New Drug

d. NLEM Formulations by changing its dosage form --

Example 1: Diclofenac 50mg Tablet is a Scheduled Drug.Diclofenac 50mg Ointment is a New Drug.

Example 2: Clopidogrel 75 mg Tablet is a Scheduled Drug.Clopidogrel 75 mg Capsule is a New Drug.

New Drug

e. NLEM Formulations by changing its strength and dosage form

Example 1:

Diclofenac 50mg Tablet is a Scheduled Drug.Diclofenac 30mg Ointment is a New Drug.(Strength and Dosage Form Both Changed)

New Drug

Example 2: Tramadol 50 mg / ml Injection is a Scheduled Drug.

Tramadol 37.5 mg tablets is a New Drug(Strength and Dosage Form Both Changed)

However if New Drug using NDDS and has approval from DCGI then DPCO is not applicable for 5 years.

New Drug

Example 3:

Metformin Tab 500mg is a Schedule Drug

Metformin Tab 500mg SR is a New Drug and will be exempted under DPCO for 5 yrs after DCGI approval.

New Drug

New Drug

Example 4:

Tramadol SR or ER Tab

Paracetamol SR or ER Tab

Are not covered under DPCO

WHAT IS NOT A NEW DRUG

Example 1:

Paracetamole 500mg is Scheduled DrugAceclofenac 100mg is not Scheduled Drug

Paracetamole 325mg + Aceclofenac 100mg is not Scheduled Drug and is not a New Drug under DPCO for price approval

Not a New Drug

Example 2:

Paracetamole 500mg is Scheduled DrugNimusulide 100mg is not Scheduled Drug

Paracetamole 325mg + Nimusulide 100mg is not Scheduled Drug and is not a New Drug under DPCO for price approval

Not a New Drug

DEFINITION OF MANUFACTURER & EXISTING MANUFACTURER

Under Para 2 (g) of DPCO 2013, “Existing Manufacturer” means Manufacturer Existing on the Date of Publication of DPCO 2013 in the official gazette.

WHO IS EXISTING MANUFACTURER?

Under para 2(o) Drug Price Control order 2013 Manufacturer has been defined as under: “Manufacturer” for the purpose of this order means any person who manufactures, imports and markets drugs for distribution or sale in the country.

Manufacturer

For the purpose of DPCO, following persons shall be manufacturers in India:

i) A manufacturer, who himself markets drugs for distribution or saleii) An Importer, who markets drugs for distribution or saleiii) A marketer who markets drugs for distribution or sale after getting drugs mfd. By a contract manufacture.

Manufacturer

A Contract Manufacturer who is not a marketer, is not manufacturer under DPCO 2013.

Manufacturer

PRICES DEFINED

Price to Retailer mean price of a drug at which it is sold to a retailer which includes duties and does not include local taxes.

Price to Retailer is retail price fixed by Govt. As divided by 1.16 or say 86.2069% of Retail Price.

1. PRICE TO RETAILER

Ceiling Price means price fixed by Govt.Under DPCO.

Ceiling Price shall include Retailers Markup / profit margin of 16% over purchase price of retailer

2. CEILING PRICE

Maximum Retail Price means ceiling price or retail price + local taxes & duties as applicable at which drug shall be sold to the ultimate consumer and where such price is mentioned on the pack.

3. MAXIMUM RETAIL PRICE

PRICES CALCULATIONS

Discussion of DPCO Price Fixation was confined to NLEM Formulations with specified dosage and specified strength only.Now a parallel DPCO has been created to cover new drugs, for taking price approval in case of new launch by an existing manufacturer.

CALCULATION OF PRICE

a. Average Price to Retailer P(s)

(Sum of prices to retailer of all the brands and generic versions of the medicine having market share more than or equal to one percent of the total market turnover on the basis of moving annual turnover of that medicine) / (Total number of such brands and generic versions of the medicine)

Calculation of Ceiling Price of a Scheduled Formulation

For working out the average price, all marketed brands of a company having market share more than 1% taken considered together – Alembic case

b. It must be noted that Govt. has not taken Retail Price Base, but has taken Price to Retailer Base, which would mean that average MRP would come down.

c. Retailers would get a markup of 16% on their purchase price and they will not get 16% on Retail Price.

Calculation of Ceiling Price of a Scheduled Formulation

Ceiling Prices are calculated and notified by Govt. as per formula above shall also be applicable to Scheduled Imported Formulations

Calculation of Ceiling Price of a Scheduled Imported Formulation

If such new drug is available in domestic market, the retail price shall be calculated in the same manner i.e. as per Scheduled Formulations.

Calculation of retail price of a new drug for existing manufacturers of

scheduled formulations:-

If such new drugs are not available in domestic market, the price to retailer shall be fixed based on principals of Pharmacoeconomics by Govt. on the recommendation of standing committee of experts. 16% margin of retailer shall be added thereon for the purpose of fixing retail price.

Calculation of retail price of a new drug for existing manufacturers of

scheduled formulations:-

Ceiling Prices in such case shall be fixed as per para 6 of the order

Calculation of Ceiling price of a scheduled formulation in case of no reduction in price due to absence of

competition

Under rule 13(2) such manufacturers shall maintain their existing maximum retail price

Calculation of ceiling price by existing manufacturer selling the products at a price lower than the ceiling price +

taxes

Formulations covered in Schedule –I of DPCO 2013 and also under DPCO 1995, prices of which were fixed up to 31.05.2012; such prices shall be applicable up to 31.05.2013. Thereafter i.e. from 01.06.2013 such prices will be increased in tandem with whole sale price Index of previous calendar year i.e. 2012.

Calculation of Ceiling Price of Drugs Covered Under DPCO 1995

Formulations covered in Schedule –I of DPCO 2013 and also under DPCO 1995, prices of which were fixed after 31.05.2012; such prices shall remain applicable for 1 year from the date of such notification(s). Thereafter these prices will be increased from respective dates in tandem with whole sale price Index of previous calendar year.

Calculation of Ceiling Price of Drugs Covered Under DPCO 1995

Formulations not covered in Schedule –I of DPCO 2013, but covered under DPCO 1995, prices of which were fixed up to 31.05.2012; such prices shall remain applicable up to 31.05.2013. Thereafter i.e. from 01.06.2013; such formulations will because Non-Schedule Drugs and prices can be increased by 10%.

Calculation of Ceiling Price of Drugs Covered Under DPCO 1995

Formulations not covered in Schedule –I of DPCO 2013, but covered under DPCO 1995, prices of which were fixed after 31.05.2012; such prices shall remain applicable for 1 year from the date of such notification; and thereafter such formulations will become NSD and prices can be increased by 10% from the respective dates.

Calculation of Ceiling Price of Drugs Covered Under DPCO 1995

MISCELLANEOUS PROVISIONS

Average Price to retailer shall be calculated on the dosage bases i.e. per tablet, per capsule, per injection or per ml in volume as listed in first schedule.

1. Calculation of Retail Price of a Pack (Rule 11)

2. Therefore, bigger the pack, more will be the gain.

Manufacturer – YES

Retailers / Wholesalers - NO

3. Who has to maintain records for inspection under DPCO

•Powers to be sparing used•But any place; by any authorised person

4. Power of Search & Seizer

How much overcharging is possible for formulations produced before New Price notifications

To the extent seized and not what was produced

1. Power given to Gazetted Officers of Central & State Government to enter and seize drugs.

2. Overcharging + Interest + Penalties provided. Earlier penalties were not there.

3. Controlled price will be revised every five years or when NLEM is updated or revised or when there is a significant change in market structure.

5. Govt. Power under DPCO

If Drugs Inspectors are given power as Gazetted officers under DPCO – Concerned D.I. can inspect the records of manufacturer and not of Retailer

6. Power of drug inspectors

Presently overcharging + Interest + Penalty are recoverable

a.From Manufacturerb.Only on stocks held and sold by manufacturer only

7. Quantum of current overcharging

Applicability of New Drug price approval is for Existing Manufacturer only.

There is no applicability of price approval of ‘New Drug’ by new manufacturer.

It is observed that under Section 12.3 Anti-hypertensive Medicines against Atnelol 50mg tablet is only specified but in the Schedule 1 under DPCO, 2013 both 50mg and 100mg tablets are specified. 100mg tablet as such be omitted from Schedule 1 of DPCO, 2013 as there was no mandate to include it.

There may be other such examples; which requires further examination.

9. DPCO going beyond its scope

Vide S.O 2534 (E) Fixed the price of Cefexime 100 + Ofloxacin Tablet Rs 5.73 per tab

While combination is not a Scheduled Drug. Ceiling Price Fixed for Cefexime 100 mg is Rs.7.69 per tab and Ofloxacin 100 mg is Rs. 3.30

New Drug

PRICE REVISION

i) In case of Scheduled Drugs and New Drugs – Increase or Decrease is allowed as per whole sale price index of previous calendar year and such increase shall be applicable from 1st April each year. Govt. will issue such ceiling price also.

PRICE REVISIONS

ii) In case of Non-Scheduled drugs – upto 10% increase every 12 calendar months is allowed.

iii) In case of Scheduled Drugs so being sold by existing manufacturers at a price lower than the ceiling price fixed, increase in the existing price shall be allowed annually as per whole sale price index.

PRICE REVISIONS

SCHEDULE – II FORMS

FORM-I Application for Fixation / Revision of a New Drug para 2(u), 5,7,8,9,15

FORM-II Submission of Revised Prices for Scheduled Formulations (Para16)

FORM-III Quarterly Return for production import & sale of NLEM Drugs para 21(1)

FORM-IV Application for Discontinuation / Import of Scheduled Formulations para 21 (2)

FORM-V Performa for Price List (para 2(x), 24, 25, 26)

D.C. JAINAKUMS DRUGS &

PHARMACEUTICALS LTD.