On January 3, 2019 the Government of India through the Ministry of Chemicals and Fertilizers (Department of Pharmaceuticals) amended the Drugs (Price Control) Order, 2013 (DPCO) to exempt new patented drugs from price control for five years from the date of commencement of its commercial marketing by the manufacturer. The DPCO fixes the prices of scheduled formulations and monitors maximum retail prices of all drugs including the non-scheduled formulations sold in the country. Prior to the recent amendment in DPCO, exemption for five years was available to only those new drugs which were patented in India but were not produced elsewhere and were developed through indigenous research & development. Under the amended provisions of DPCO, any new drug can avail that exemption if it is patented in India under the provisions of Indian Patents Act, 1970 and developed and produced by the patentee anywhere in the world. The amended thus are likely to give impetus to "licensing in" of new drugs amongst the Indian drug manufacturers.

The new amendment in DPCO also exempts drugs for orphan diseases also known as orphan drugs from the price control mechanism. Orphan or rare diseases are uncommon disorders which are now receiving increasing attention of the researchers, the pharmaceutical industry and the government across the world but significant research on such diseases in India is still far behind. The number of orphan diseases however increasing and the list published by the US National Organization for Rare Disorders contains 1230 such diseases. The recent amendments made in the DPCO to exempt orphan drugs from the price control mechanism are aimed to incentives drug research in this field.

Another major change made by the recent amendment in DPCO is a shift from cost-based pricing to market-based pricing for fixing or revising the ceiling price for formulations by the Government. It was observed that the research on cost-based pricing was not robust and hence the market-based pricing was recommended. The recent amendments in DPCO were made on the recommendations of NITI AYOG and after completing the consultation process with the stakeholders.

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