India: New Drugs Patented Under The Indian Patent Act, 1970 Are Outside The Price Control For The First 5 Years From Their Commercial Marketing

On January 03, 2019 the Central Government in exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955 (10 of 1955), vide order S.O.39(E) ("Amendment 2019") has amended Para 32 of Drugs (Prices Control) Order, 2013 ("DPCO 2013") which enlists the cases for which the provisions of the DPCO 2013 are not applicable. In addition, the provision of reference data and source data for fixing or revising the ceiling price of scheduled formulations under Para 9 of DPCO 2013 have also been amended by Amendment 20191.

The below table depicts standing of Para 32 and Para 9 of the DPCO 2013 after introduction of Amendment 2019:

DPCO 2013 provisions prior to Amendment 2019 DPCO 2013 provisions after Amendment 2019
Paragraph-32: Non–application of the provisions of this order in certain cases. – The provisions of this order shall not apply to, -
  1. a manufacturer producing a new drug patented under the Indian Patent Act, 1970 (39 of 1970) (product patent) and not produced elsewhere, if developed through indigenous Research and Development for a period of five years from the date of commencement of its commercial production by the manufacturer in the country.
  2. a manufacturer producing a new drug in the country by a new process developed through indigenous Research and Development and patented under the Indian Patent Act, 1970 (39 of 1970) (process patent) for a period of five years from the date of the commencement of its commercial production in the country.
  3. a manufacturer producing a new drug involving a new delivery system developed through indigenous Research and Development for a period of five years from the date of its market approval in India...
Paragraph-32: Non–application of the provisions of this order in certain cases. – The provisions of this order shall not apply to, -
  1. a manufacturer producing a new drug patented under the Indian Patent Act, 1970 (39 of 1970) (product patent) and not produced elsewhere, if developed through indigenous Research and Development for a period of five years from the date of commencement of its commercial production marketing by the manufacturer in the country.
  2. a manufacturer producing a new drug in the country by a new process developed through indigenous Research and Development and patented under the Indian Patent Act, 1970 (39 of 1970) (process patent) for a period of five years from the date of the commencement of its commercial production in the country.
  3. a manufacturer producing a new drug involving a new delivery system developed through indigenous Research and Development for a period of five years from the date of its market approval in India.
  4. Drugs for treating orphan diseases as decided by the Ministry of Health and Family Welfare, Government of India.]
[Paragraph-9: Reference data and source of market based data;
  1. The source of market based data shall be the data available with the pharmaceutical market data specializing company IMS Health (IMS), and if the Government deems it necessary, it may validate such data by appropriate survey or evaluation.
  2. The Government may in the due course of time come out with other appropriate mechanism of collecting or obtaining the market based data related to drugs and the decision of Government with respect to collection or obtaining of data shall be final.
  3. The market based data, for fixing the ceiling price of scheduled formulations for the first time after the notification of this order, shall be the data of May, 2012.
  4. The market based data for fixing the retail price of new drugs available in the market, shall be the data available for the month ending immediately before six months of receipt of application for fixing the price of the new drug.
  5. The market based data for fixing the ceiling price of a scheduled formulation due to a revision in the first schedule shall be the data available for the month ending immediately before six month of notification of revision in the first schedule.
  6. Notwithstanding anything contained in this order, the reference date for the formulations which are part of the Drugs (Prices Control) Order, 1995 shall be as per the provisions of paragraph 10 of this Order.
[Paragraph-9: Reference data and source of market based data;
  1. The source of market based data shall be the data available with the pharmaceutical market data specializing company IMS Health (IMS), as decided by the Government and if the Government deems it necessary, it may validate such data by appropriate survey or evaluation.
  2. The Government may in the due course of time come out with other appropriate mechanism of collecting or obtaining the market based data related to drugs and the decision of Government with respect to collection or obtaining of data shall be final.
  3. The market based data, for fixing the ceiling price of scheduled formulations for the first time after the notification of this order, shall be the data of May, 2012.
  4. The market based data for fixing the retail price of new drugs available in the market, shall be the data available for the month ending immediately before six months of receipt of application for fixing the price of the new drug.
  5. The market based data for fixing the ceiling price of a scheduled formulation due to a revision in the first schedule shall be the data available for the month ending immediately before six month of notification of revision in the first schedule.
  6. Notwithstanding anything contained in this order, the reference date for the formulations which are part of the Drugs (Prices Control) Order, 1995 shall be as per the provisions of paragraph 10 of this Order.
  7. Notwithstanding anything contained in this paragraph, for fixing or revising the ceiling price for formulations, the Government may, if it is necessary so to do, consider market based data available for any month, as deemed fit.]

Implication of Para 32 of DPCO after Amendment 2019:

Prior to the Amendment 2019, only those new drugs were outside the price control which were patented in India (product patent) but were not produced elsewhere and were developed through indigenous research & development. After Amendment 2019, irrespective of the fact that a new drug is developed and produced by a manufacturer outside India, all new drugs (which are patented under the Indian Patent Act, 1970) are outside the price control under the DPCO for five years from their commercial marketing in India. The Amendment 2019 would surely benefit new drugs manufacturers who were unable to reap the advantages of price control exemption provided under the DPCO only due to the fact that they developed and produced new drugs outside India.

In addition, drugs for treating orphan diseases (as decided by the Ministry of Health and Family Welfare, Government of India) are also kept outside the price control by Amendment 2019. This would encourage multinational pharmaceutical companies to introduce their drugs in India for treating orphan diseases without price control.

Implication of Para 9 after Amendment 2019:

The amendment broadens the scope of selecting source data/reference data for fixing or revising the ceiling price of formulations and the same is not only limited to IMS health data. However, it is to be seen in the coming times which are the pharmaceutical market data specializing companies whose data will be decided by the Government for ascertaining market based data.

Footnote

1 http://www.egazette.nic.in/WriteReadData/2019/194703.pdf

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