‘Companies are very reluctant to part with their data’

The National Pharmaceutical Pricing Authority (NPPA), under the Department of Chemicals & Petrochemicals is about to enter a phase in which it will have to chart out strategies for addressing the challenges in the upcoming WTO regime. Faced with tough task while implementing price control measures, the regulator is now looking at sorting out issues through discussions with and co-operation from industry. Arun Kshetrapal, chairman, NPPA, tells Jayashree Padmini that stringent legal measures may not succeed. Excerpts:

Now that we are moving to liberalisation rather than control, and keeping in view the emerging WTO regime where patented products with inflated price tags set to flood the market, how does NPPA plan to position itself to address the unique issues?

We are yet to undertake an in-depth analysis of the post 2005 era. However, I think that we need to alter its role accordingly to address the situation arising with the regime change. May be a complete restructure would be required. The ministry could possibly strengthen the authority with additional officers at senior and middle level. May be additional powers for implementation and a few joint secretaries to handle different portfolios to effectively monitor price fluctuations would help.

It is also quite possible that the ministry may feel that it can do without the authority and dissolve it. The staff will be adjusted in different sections in the health/ chemicals ministry. So, now time is not ripe to predict the upcoming changes. If you see the price movement in the last few years it is evident that market competition has been highly influential in bringing down the prices of drugs drastically in many instances. So rather than regulatory measures or controls it is the market forces that be let to play its course.

What are the initiatives taken by the NPPA for monitoring drug prices?

We will now start reviewing the bulk production data and NPPA will update the data annually. The exercise will also see NPPA taking data from industry players/ associations on turnover of all bulk drugs for 2003-04. This is the first time that NPPA is doing a periodical review that will be repeated on yearly basis. The data collated will be analysed to see whether any drug should be included or excluded in Schedule 1. To ensure the probity we are seeking data with batch numbers certified by chartered accountant. NPPA is already monitoring price fluctuations in the nonscheduled market based on IMS and ORG reports. When we note an appreciation moving above 20 per cent NPPA will intervene. The approach again is to first talk to the concerned players and seek their co-operation. This year we have noticed price variations in about 20 formulations. When NPPA has brought this to the notice of the companies involved, they have voluntarily agreed to mitigate price hikes. Then there can be genuine cases where imported bulk prices shot up.

Data on bulk is neither reflecting in the annual report of companies nor it is available in reports like the ORG or IMS Health. How do you think the data could be obtained?

We intend to approach the companies concerned and seek their co-operation. The issue is that we face resistance from industry when it comes to giving data on drugs. We will ask associations to tell the companies to comply with the requirements. Annual report of companies will have only aggregate data, not separate production/ turnover data of different bulks. Other option is to go to the registrar of companies who will have detailed data of production/ turnover, as companies are required to file the same with the authority. However, now we will be first talking to the industry.

So how can data submission be made a legal obligation?

The fact is that companies are very reluctant to part with the data. Perhaps, we should have in-built mechanisms in the policy/ DPCO on submitting the data on drugs to NPPA.

Coming to the recent issue of overcharging by companies on the seven bulk drugs under price control, has the NPPA been able to bring about successful conviction of the offenders?

Offenders is not the right word. In fact, what would have happened is that the companies would have used the surplus for productive purposes. May be they would have invested in a manufacturing plant or in other activities that lead to growth. Therefore, it will take some time to redirect the money and pay back. We would like to seek their co-operation and sort out the problem amicably rather than fight with them.

But the companies do not appear to be enthused. At least the legal steps they have taken indicate a scuffle.

It is true that Ranbaxy, Cipla, all have approached one court or the other to stall the proceedings. But the Supreme Court verdict is very clear and companies will have to repay the overcharged amount. So far we have recovered about Rs 23 crore and we expect to recover the amount. In fact the procedure is very long. We write to the concerned companies citing a date line. They reply with their views and at times they require additional clarification. The interaction continues. Court stays come in between. More time will be required now to really recover the whole amount.

Don’t you think that fast-track courts could sort out the problem?

Not really. In fact, we thought of bunching all the related cases. But this again turned out to be unviable proposition. Moreover, had legal measures effectively tackled such problems we would have been able to sort out the same with the Supreme Court directive itself.