Non-Patent Drug Cost Control Mechanism [UPSC Notes]

The Department of Pharmaceuticals (DoP) has come up with a new formula to set the prices of drugs that are no longer under patent. The new formula will set the retail price of a drug at 50% of the current ceiling price, after the patent has expired. The ceiling price will be reviewed again after one year, based on market data. This is an important topic for  the IAS exam.

Non-Patent Drug Cost Control Mechanism:

  • Recently, the Department of Pharmaceuticals released a notification that outlines the new mechanism for setting ceiling prices for off-patent drugs. 
  • The innovator brand or any of its licensee partner brands will not be included in the calculation of the ceiling price.

Significance:

  • This move assumes significance in the backdrop of the recent patent expiries of key diabetes drugs. 
  • Stakeholders’ meetings were held between the industry representatives and the Department of Pharmaceuticals.

Pricing mechanism and creation of predictable pricing regime:

  • According to experts, the highest price of a combination drug, like sitagliptin and metformin for diabetes, will be half of the price of sitagliptin. 
  • And the price of metformin in combination will be 20% lower than the current highest price. 
  • After one year, the highest price will be reviewed again. 
  • This will make the drug prices more predictable for both the people who buy them and the companies that make them.

Benefits of pricing mechanism for off-patent drugs:

  • According to sources in the pharmaceutical industry, this new pricing mechanism for off-patent drugs would be useful for all types of therapies, not just anti-diabetes medicines. 
  • It would be a significant advantage for consumers.

National Pharmaceutical Pricing Authority (NPPA) caps prices of off-patent anti-diabetes drugs:

  • Last year, the National Pharmaceutical Pricing Authority (NPPA) limited the prices of anti-diabetes drugs after Sitagliptin lost its patent in July. 
  • In August, the NPPA limited the prices of these two drugs to be between Rs 16-25 per tablet. 
  • Linagliptin, a drug manufactured by Boehringer Ingelheim, is going to lose its patent next year.
About Indian Patents Act, 1970:
  • The Indian Patents Act is a law passed by the Indian Parliament in 1970 that governs the patent system in India. 
  • The Act provides for the grant of patents for inventions and regulates their term, use, and revocation. 
  • It also lays down the requirements and conditions for granting patents, such as novelty, non-obviousness, and industrial application. 
  • The Act provides for compulsory licensing of patents in certain circumstances to ensure that the public has access to essential medicines and other important inventions.

Non-Patent Drug Cost Control Mechanism [UPSC Notes]:- Download PDF Here

Related Links
Counterfeit Drugs Drug Price Control Order
Medical Devices Under Drugs Law Active Pharmaceutical Ingredients (APIs)
Patent Act 1970 Intellectual Property Rights

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