1. Introduction:

The National Pharmaceutical Pricing Authority (NPPA), constituted vide Gazette notification dated 29.08.1997 [Resolution No.159 (No.33/7/97-PI.I)]. has been entrusted with the task of (i) price fixation/ revision of scheduled formulations [as listed in Schedule I of the Drugs (Price Control) Order DPCO] as revised by the Government from time to time, (ii) monitoring and enforcement of the notified prices, (iii) providing inputs to the Government for policy formulation and on other specific issues concerning affordable medicines to the consumers. In addition to the above, the NPPA also fixes individual retail prices of new drugs.

1.2     NPPA requires constant liaison with the State Drug Control Administration in carrying out its mandate. The support of the State Drug Controllers is required for (i) supply of information regarding shortages of medicines; (ii) ensuring the pharma companies fully comply with the various notices issued by NPPA; (iii) verification of documents supplied by the pharma companies; (iv) conducting field inquiry/ investigation; and (v) collection of test samples of medicines with a view to have a wider geographical coverage. Presently NPPA does not have any field unit to forge linkages with the State Drug Controllers and State Drug Inspectors. Therefore, there is an urgent need for setting up Price Monitoring and Resource Units (PMRUs) at the States/UTs which would render necessary technical assistance to the State Drug Controllers and NPPA towards monitoring the notified prices of medicines, price movement of scheduled and non-scheduled formulations, detection of violation of the provisions of DPCO, pricing compliance; collection and compilation of market based data of scheduled as well as non-scheduled formulations, collecting test samples of medicines; conducting training, seminars and workshops at the State and District levels for consumer awareness and publicity covering aspects relating to the role and functions of NPPA, availability of scheduled and non-scheduled medicines at reasonable prices and care to be taken while purchasing the medicines from the chemists/ retailers and availability of alternative cheaper medicines.

1.3     The Parliamentary Standing Committee on Chemicals and Fertilizers has also time and again recommended for strengthening the existing monitoring and enforcement system as well creation of NPPA Cells at the States/UTs level as this would be an effective institutional mechanism to carry out the mandate of NPPA in an effective manner. The Committee in its 38^th Report has specifically stated that the relevance of strengthening the existing monitoring and enforcement system as well creation of NPPA Cells at the States/UTs level should be examined against the backdrop of the new Drugs Price Control Order (DPCO), 2013.

1.4     A Task Force to Explore Options other than Price Control for Achieving the Objective of Making Available Life-saving Drugs at Reasonable Prices constituted under the Chairmanship of Shri Pronab Sen, the then Principal Adviser (PP), Planning Commission in its Report 2005 has also strongly recommended for establishment of a live linkage of NPPA with the State Drug Controllers through a dedicated Drug Price Monitoring Cell in each of the major States. The full cost of these Cells should be funded by Central Government for a period of at least five years.

1.5     It may also be mentioned that with the announcement of the new National Pharmaceutical Pricing Policy (NPPP), 2012 and the DPCO, 2013, there has been a shift of regulation of prices from economic criteria and cost based to essentiality criteria and market based; introduction of ceiling prices; need for monitoring the prices, availability and production of medicines; introducing recovery provisions based on monitoring of non-scheduled formulations and price fixation of non-scheduled medicines in public interest and exemption of scheduled medicines from price control.

1.6     The new NPPP, 2012 has identified the NPPA as the implementing authority for the implementation of various provisions of the NPPP, 2012 as well as the DPCO, 2013. The new Policy, inter-alia, provides that NPPA would be provided required organizational and financial support so as to enable it to implement the various provisions of the NPPP 2012 as well as the DPCO, 2013 in an effective, speedy and transparent manner. For the purpose, the Policy has prescribed the following course of action to be undertaken by the NPPA:

Ø      Check the IMS Health data by appropriate survey/ evaluation, whenever required;

Ø      collect data for those drugs not available in the IMS data;

Ø      Monitor the implementation of the notified price on a continuous basis through a proper methodology and system;

Ø      Monitor the compliance of annual increase in prices of scheduled drug formulations based on WPI and take appropriate action in case any company has fixed the prices not inconsistent with the WPI or the revised notified price of NPPA; and

Ø      Monitor the compliance of permissible increase in prices of non-scheduled drugs on a regular basis and take appropriate action in case any company has fixed the prices not inconsistent with the permissible level.

Ø      Monitor the availability of scheduled drug formulations.

Ø      Monitor the trends of NLEM vis-à-vis Non-NLEM MAT value/ volume.

1.7     The DPCO, 2013 also provides for monitoring the production and availability of scheduled formulations, active pharmaceutical ingredients contained in the scheduled formulation and the manufacturer of scheduled formulations.

1.8     Such jobs, particularly relating to collection, compilation/ creation and analysis of “market based data” were hitherto not undertaken by NPPA but have now become an integral part of the working of the NPPA under the NPPP, 2012 and DPCO, 2013 regime on a continual basis. The attainment of such task by NPPA alone would not be possible unless necessary support is provided for setting up PMRUs at the States/ UTs.

1.9     Accordingly, it is proposed to initiate a Central Sector Scheme of Assistance for setting up Price Monitoring and Resource Units (PMRUs) at the States/ UTs which would provide all necessary support to the State Drug Controllers and NPPA. Each Unit will function under the direct supervision of the concerned State Drug Controller. PMRUs will be key collaborating partners of NPPA with information gathering mechanism at the grassroots level. PMRUs will also ensure that the benefits of the DPCO (revised from time to time) trickles down at the grassroots level. The Central funding will be for an initial period of 5 (five) years subject to a mid-term review after 12^th Plan period.

2. Objective of setting up thePMRUs:

2.1     The objectives of setting up the PMRUs are to provide necessary technical assistance to the State Drug Controllers and NPPA towards:

Ø      Monitoring the notified prices of medicines, detection of violation of the provisions of DPCO (revised from time to time), pricing compliance and ensuring availability of medicines;

Ø      Monitoring the price movement of scheduled and non-scheduled formulations based on periodical returns filed by the industry, revision of price of scheduled formulations by the manufacturer based on the annual increase in Wholesale Price Index (WPI) as per provisions contained in the DPCO, oversee the price of non-scheduled formulations so that the prices of such formulations are not increased beyond 10% annually;

Ø      Collection and compilation of market based data of scheduled as well as non-scheduled formulations (proforma at Annexure-I) and analyse them.

Ø      Collect test samples of medicines at the retailed market whenever required;

Ø      Conduct training, seminars and workshops at the State and District levels for consumer awareness and publicity covering aspects relating to the role and functions of NPPA, availability of scheduled and non-scheduled medicines at reasonable prices and care to be taken while purchasing the medicines from the chemists/ retailers and availability of alternative cheaper medicines (proforma at Annexure-II). The resource persons for the training will be provided by the State Drug Controller and by the NPPA, whenever required; and

Ø      Any other related works as assigned to them by the NPPA from time to time.

2.2     The above task requires constant interaction with various stakeholders viz. concerned State Government Departments, State Drug Controllers, consumer groups, etc. for forging linkages. Thus, the PMRUs will be key collaborating partners of NPPA at the State/UT level for forging linkages with various stakeholders. While the PMRUs will render necessary technical assistance to the State Drug Controllers and NPPA, the Units will, however, have no authority to reach out, communicate and interact with any of the pharma industry.

2.3     Each PMRU will have to submit a quarterly return to NPPA and Principal Secretary/ Secretary (Health) of the State on the targets and other pre-determined parameters in the prescribed proforma (Annexure-III) both in hard and soft copy (preferably through online system) which would form technical inputs to the government for effective policy formulation and implementation. Each PMRU will have online systems compatible with centralised online systems installed in NPPA to facilitate online linkage with the NPPA.

3. Categories of States/UTsfor setting up the PMRU:

3.1     For the purpose of staffing and providing the required infrastructure to the PMRU, States/ UTs have been proposed to be categorised into the following three categories:

Ø      Category I – States/ UTs having population of more than 3% of total population;

Ø      Category II – States/ UTs having population of less than 3% but more than 1% of total population; and

Ø      Category III – States/ UTs having population of less than 1% of total population.

3.3     The above categorisation has been made for the purpose of staffing and infrastructure as detailed in para 4 and 5 below.

4. Administrative Structure of PMRUs:

4.1     The PMRUs will function under the direct supervision of the concerned State Drug Controller as per the duties assigned to it. The strength of the PMRUs and its structure will be as under:

5. Proposed Expenditure per PMRU:

1. One-time Non-Recurring Expenditure:

5.1     The scale of expenditure under the Non-Recurring grants would be as under:

5.2     Any expenditure over and above the grant provided for under the non-recurring expenditure will have to be borne by the respective State/ UT.

1. Recurring Expenditure:

5.3     The provisioning for recurring grants per PMRU has been worked out as under:

(i) Salary/ Honorarium of Staff

(ii) Market Based Data collection, compilation, analysing and management of scheduled/ non-scheduled formulations; Monitoring of price movement of scheduled/ non-scheduled formulations; Collection/ purchase of test samples of medicines; Advertisement and Publication of Newsletter, etc.

(iii) Conducting Training, Seminars and Workshops at the State and District levels for Consumer Awareness and Publicity

5.4     Any expenditure over and above the grant provided for under the recurring expenditure will have to be borne by the respective State/ UT.

6. Estimated Expenditure for setting up PMRUs at the States/ UTs:

7. Method for Releasing Funds:

7.1     In the first year, 90% of the non-recurring expenses and six months advance for recurring expenses would be released as first instalment to those States/ UTs who desire to set up the PMRU. The remaining non-recurring expenses and the next six months recurring expenses will be released as second instalment on the basis of actual expenditure of first six months and availability of utilisation certificate of funds (duly signed by SDC in the format prescribed by Government of India for this purpose) received as first instalment.

7.2     Release of further grants will depend upon the performance, actual expenditure and production of utilisation certificate of funds received (duly signed by SDC in the format prescribed by Government of India for this purpose) in the previous year.

7.3     From the second year onwards, recurring grants will be released in two instalments. 50% recurring grants would be released as first instalment at the beginning of the year after going through the performance, actual expenditure and availability of utilisation certificate of funds received (duly signed by SDC in the format prescribed by Government of India for this purpose) in the previous year. Second instalment will be released on receipt of the actual expenditure and production of utilisation certificate of funds (duly signed by SDC in the format prescribed by Government of India for this purpose) received as first instalment.

7.4     50% of the amount will be released as first instalment at the time of setting up the Unit and the balance amount will be released on the basis of actual expenditure of first six months and production of utilisation certificate (duly signed by SDC in the format prescribed by Government of India for this purpose) of the first instalment.

8. Year-wise Phasing of Estimated Expenditure:

8.1     The Scheme is proposed to be implemented during the 12^th Five Year Plan period and commencing from the financial year 2015-16 onwards. The continuation of the Scheme in the succeeding Five Year Plans would depend upon the mid-term evaluation.

8.2     It is proposed to release the entire Non-Recurring and Recurring grants i.e. Rs. 2073.00 lakh in the first year of its implementation i.e. during the financial year 2015-16. From the second year onwards, only the recurring grants would be released.

8.3     The year-wise phasing of expenditure for implementation of the Scheme for five years i.e. from 2015-16 to 2019-20 is as under:

Year-wise Phasing of Expenditure

Notes: * Non-Recurring + Recurring Expenditure

             # Only Recurring Expenditure

8.4     Thus, the total outlay required for five years i.e. from 2015-16 to 2019-20 work out at Rs. 96.85 crore.

9. Method of Recruitment of Staff:

9.1     The project staff i.e. Project Coordinator, Field Investigator and Data Entry Operator will be recruited through an outsourcing agency on a contract basis as per the prevailing practice followed by the concerned State Government. The Recruitment Committee will comprise of the following:

10. Educational Qualifications:

10.1   The educational qualifications and experience requirement for the various project staff will be as under:

1. Project Coordinator: Bachelor degree in Pharma with at least 2 years experience in the pharma sector. Candidates who possess Master Degree in Pharma shall be given preference.
2. Field Investigator: Bachelor degree in Pharma. Candidates who have practical experience in pharma sector shall be given preference.
3. Data Entry Operator: Graduate or equivalent having good knowledge of computer viz. windows, MS office, internet, etc.
4. Orientation programme for the Staff of the PMRU:

11.1   The project staff of each PMRU will have to undergo orientation training programme in NPPA at least twice every year in order to abreast and update themselves on the recent development on various issues assigned to them. An online web-enabled training programme will also be made available to them on a regular basis.

12. Office Space for the PMRUs:

12.1   The concerned State Government/ UT Administration will have to provide the required office space for the PMRU free of cost. All other expenses (both non-recurring and recurring expenses) will be met under the Scheme. Any expenditure incurred over and above the grant provided for under the recurring and non-recurring expenditure will have to be borne by the respective State/ UT.

13. Review of Performance of PMRUs:

13.1   Each PMRU will regularly submit their performance on a quarterly basis to the NPPA and State Level Committee. The performance of the PMRUsas assigned to them will be periodically reviewed by the State Level Committee (on a quarterly basis) comprising of the following:

1. Principal Secretary/ Commissioner/ Secretary (Health) – Chairman
2. State Drug Controller – Convenor
3. Representative of the PMRU
4. Any other State Govt. Officer concerned with Health & Drug Administration and co-opted by the Committee

13.2   In the absence of the Principal Secretary/ Commissioner/ Secretary (Health), the Committee shall be chaired by a representative nominated for that specific meeting, not below the rank of Special Secretary/ Additional Secretary (Health).

13.3   The State Level Committee will send a Quarterly Performance Report of the PMRU to NPPA clearly indicating the targets and other pre-determined parameters vis-à-vis achievements by the following month of every quarter.

14. Auditing of the PMRUs:

14.1   Each PMRU will be required to get the audit done annually. Release of further grants will depend upon the performance, actual expenditure and production of utilisation certificate of funds received (duly signed by SDC in the format prescribed by Government of India for this purpose) in the previous year.

15. Impact assessment and further release of grant to the PMRUs:

15.1   Based on the quarterly performance furnished by the State Level Committee, the NPPA would then make an impact assessment. The impact assessment along with the utilization certificate for funds (duly signed by SDC in the format prescribed by Government of India for this purpose) would form the basis for further release of funds.

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