Right to Information Act,2005

            The Right to Information Act is aimed to promote openness, transparency and accountability in Administration.  The details about NPPA are as follows :-

1. National Pharmaceutical Pricing Authority its functions & Duties

The National Pharmaceutical Pricing Authority (NPPA), an independent body of experts in the Ministry of Chemicals and Fertilizers was formed by the Govt. of India vide Govt. of India Resolution published in the Gazette of India No.159 dated 29.08.97. The functions of NPPA, inter-alia, relates to fixation/revision of prices of scheduled bulk drugs/ formulations under DPCO’1995, monitoring and enforcement of the prices.  Powers were delegated to the NPPA by the Govt. of India vide Gazette Notification No. 637(E) dated 4^th September, 1997.

            The Resolution mentioned that the Government had been experiencing that the present mechanism for the fixation and revision of prices of bulk drugs and formulations was cumbersome, complicated and time consuming.  Therefore, in order to streamline and simplify the procedure and to bring about a greater degree of transparency as well as objectivity, an expert body should be constituted with the powers, inter alia, to fix prices and notify the changes therein, if any, of bulk drugs and formulations from time to time, under the Drugs (Price Control) Order.

            The Government decided to establish an independent body of experts to be called as the National Pharmaceutical Pricing Authority, consisting of a Chairperson in the status of the Secretary to the Government of India, Members having expertise in the field of pharmaceuticals, economics and cost accountancy and Member Secretary in the status of Joint Secretary / Additional Secretary to the Government of India.  The Authority was entrusted with the task of price fixation / revision and other related matters such as updating the list of drugs under price control by inclusion and exclusion on the basis of the established criteria / guidelines.  The Authority is empowered to take final decisions, which is subjected to review by the Central Government as and when considered necessary.  The Authority is also required to monitor the prices of decontrolled drugs and formulations and oversee the implementation of the provisions of the Drugs (Price Control) Order.  In addition to the above mentioned functions, the Authority is entrusted with certain other functions which are as follows :-

·        To implement and enforce the provisions of the Drugs (Price Control) Order in accordance with the powers delegated to it;

·        To deal with all legal matters arising out of the decisions of the Authority;

·        To monitor the availability of drugs, identify shortages, if any, and to take remedial steps;

·        To collect/ maintain data on production, exports and imports, market share of individual companies, profitability of companies etc. for bulk drugs and formulations;

·        To undertake and / or sponsor relevant studies in respect of pricing of drugs / pharmaceuticals;

·        To recruit / appoint the officers and other staff members of the Authority, as per rules and procedures laid down by the Government;

·        To render advice to the Central Government on changes / revisions in the drug policy;

·        To render assistance to the Central Government in the parliamentary matters relating to the drug pricing.

2.         Powers and Duties of Officers & Employees of NPPA

a)         The general powers & duties of officers are as follows :-

To implement and enforce the provisions of Drug(Price Control) Order in accordance with the powers delegated by Department of Chemicals & Petrochemicals.

To collect, maintain data on production, exports, imports, market share of individual companies, profitability of companies etc. for bulk drugs & formulations.

To deal with all legal matters arising out of the decisions of the Authority.

To monitor the availability of drugs, identify shortages, if any, and to take remedial steps.

To render assistance to the Central Government in the parliamentary matters relating to the drug pricing.

b)         Specific division wise duties and powers of officers are as follows :-

Bulk Drugs Division :   Bulk Drugs division handles the work relating to collection and compilation of data relating to bulk drug and fixation / revision of bulk drug prices.

Formulation Division : Formulation Division handles the work relating to collection and compilation of data relating to formulation and fixation / revision of formulation prices.

Monitoring & Enforcement Division (M&E) : M&E division handles the work relating to collection and compilation of data relating to Monitoring of schedule and non schedule formulations based on ORG IMS retail store audit report and based on price list in form V.  This division also examine overcharging cases based on reference received from State Drug Controllers, NGOs or complaint received from VIPs.

Legal & Overcharging Division : Legal division handles the work relating to court cases, legal matters arising out of decisions of NPPA.  The recovery of overcharged amount alongwith interest as per the provisions of Drug Price Control Order 1995 and Essential Commodities Act 1955.

Administration Division : Administration division handles the work relating to Establishment, Administrative and other matters like Sanctions of HBA, GPF Advance, GPF Withdrawal, maintaining CR dossiers, court cases, promotions, increments, monthly D.O. letter, Parliament Questions, Preparation of salary bills, work related to Income Tax calculation, preparation of NPPA budget, and also look into matter of R&I i.e. central registry, delivery of daks etc.

3.         The Procedure followed in decision making process

All the decisions relating to fixation / revision of prices of Bulk Drugs and Formulations are taken in the meeting of the Authority.  The procedure followed are as follows :-

1. I)PROCEDURE FOR PRICE FIXATION / REVISION OF BULK DRUGS

As per par 3 of DPCO, 1995 prices of scheduled bulk drugs are fixed by the NPPA to make them available at a fair price from different manufacturers. These prices are fixed from time to time by notification in official gazette. Following steps are involved in fixation/revision of bulk drug prices :-

Step 1 : Identification of bulk drugs :

Bulk Drugs are taken up for study on following basis :-

• Whose validity period is due to expire.
• Request from the concerned manufacturer/company.
• Drug produced in the country for which no price has been notified under DPCO, 1995.

Step 2 : Collection of data :

Data is collected by issuing questionnaire/Form I of DPCO, 1995/cost-audit report etc. and verification by plant visits, if required.

Step 3 : Preparation of actual cost statement :

Actual cost for the year for which data is submitted is prepared based on data submitted / collected & verified during plant visit.

Step 4 : Preparation of Technical Parameters :

Technical parameters are prepared based on data submitted, collected and verified during plant visits. Plant capacity is assessed considering 330 working days for normal operation of plant leaving 35 days for scheduled maintenance of plant. The achievable production level is considered at 90% utilisation of assessed capacity allowing 10% production loss on account of unforseen break down and non-scheduled maintenance.

Step 5 : Preparation of Estimated Cost :

The estimated cost for the pricing period are then prepared based on actual cost & the technical parameters. While projecting the future cost, an increment is recognised at 5% per annum in respect of salaries & wages. Wage agreement, if any, which has been finalised and signed is also recognised while preparing the estimates. In respect of other overheads of fixed/semi variable nature, increase at 2.5% per annum is made to cover the normal incremental effects. The customs duty and other taxes as per the current budget are considered.

Step 6 : Calculation of Fair price of bulk drug :

Fair price is calculated by providing returns as specified in sub para (2), para 3 of DPCO, 1995.  While fixing the maximum sale price of the bulk drug, a post tax return of 14% on networth or a return of 22% of capital employed or in respect of a new plant an internal rate of return of 12% based on long term marginal costing is considered depending upon the option exercised by the manufacturer of the bulk drug. In case, the production is from basic stage, additional 4% return is considered on net worth/capital employed.

Step 7 : Fixation of maximum sale price of the drug :

When the number of manufacturers of the said drug is more than one, the maximum sale price is fixed at 2/3rd cut off level or weighted average price, depending upon the situation.

Step 8 : Notification of bulk drug price in official Gazette.

Note : The fair price may be further revised, if asked for by the manufacturers, based on escalation formula for change in major raw materials and utilities rates.

1. II)PROCEDURE FOR PRICING OF FORMULATIONS

Prices of formulations based on scheduled bulk drugs are fixed in two ways viz.

(i) based on applications of the manufacturers and
(ii) on suo-motu basis.

As per para 8 (2) of Drug (Prices Control) Order (DPCO), 1995, a manufacturer using scheduled bulk drug in his formulation is required to apply for fixation of price of formulation within 30 days of fixation of price of such bulk drug (s).   Applications received in NPPA from manufacturers in Form III and importers in Form IV of DPCO are considered for price fixation. As per para 8(4), the time frame for granting price approval on formulation is 2 months from the date of receipt of the complete information from the company.

Procedure :

A.(a) Examination of Technical Parameters : Checking the Quantity of Bulk Drug as per label claim. The overage claim is allowed as per batch production record or norms fixed by Govt.

(b) Examination of Prices of Bulk Drug : When notified price of bulk drug exists, the notified price or actual price is considered. In the case of imported bulk drug used in the formulation, weighted average import price is considered vis-à-vis the price submitted by the applicant. For non-scheduled bulk drug used, the available information on prices are applied.

(c) Examination of Excipient claims : Excipient claims given in the application are examined and allowed after referring to information available in NPPA.

(d) Examination of PL, CC, PC and PM cost : The process loss (PL), conversion cost (CC) and packing charges (PC) are considered as per the norms notified in the Gazette vide S.O. 578(E) dated 13.07.99. The packaging material cost (PM) cost is allowed as per the actual claim supported by invoices and after referring to information available with NPPA.

(e) Application of MAPE : Maximum allowable post manufacturing expenses (MAPE) is given at 100% on the ex-factory cost for indigenous formulation, while MAPE upto 50% of the landed cost is allowed for imported formulation.

(f) Working out the retail price : The retail price of formulations are worked out as per the formula given in para 7 of DPCO, 1995 viz.

“R.P. = [M.C. +C.C.+P.M.+P.C.] x [1+MAPE/100] +E.D.”,

where –
R.P., M.C., E.D. respectively denote retail price, material cost, excise duty and the other symbols as denoted earlier.

(g) Treatment of Taxes : For bulk drugs used in formulation, all the statutory taxes are considered at the actuals and net of MODVAT. Allowance upto 8% on the notified price of scheduled bulk drugs is considered on this account. The excise duty element is worked out in NPPA based on companies claim. Allowance is made for 16% margin on price to retailer (as per DPCO, 1995) and 8% margin to wholesaler as per practice, both on the ex-factory price, which is the assessable value. The prevailing excise duty rate is applied to the said assessable value. For ceiling packs, notified prices are exclusive of excise duty. Manufacturers are required to work out the excise duty.

1. Suo – Motu Cases :If the manufacturers or companies do not apply for revision of formulation prices as required under Para 8(2) of DPCO, 1995 within a period of 30 days of price reduction of bulk drug or fall in other statutory levies, steps are taken for suo-motu revision. Broadly the procedure given above is followed.
2. Notification of ceiling prices in the Gazette of India :Ceiling prices are fixed or revised under Para 9 of DPCO, 1995 for commonly marketed standard pack sizes of price control formulations. It is obligatory for all, including small scale units, to follow the ceiling prices which are notified in the Gazette of India (Extraordinary). The ceiling prices are usually notified as exclusive of excise duty, local tax etc. but maximum retail price (MRP) printed includes excise duty.
3. Pro-rata price :NPPA has issued notification no. S.O.83 (E) on 27.01.98.on pro-rata pricing. As per this notification, the manufactures of all the scheduled formulation pack sizes different from the notified pack sizes under sub-paragraph (1) and (2) of the paragraph 9 of the DPCO, 1995, shall have to work out the price for such pack sizes, in respect of tablets and capsules of the same strength or composition packed in different strips or blisters, on pro-rata basis of the latest ceiling price fixed for such formulations.

E. Non-ceiling Price Order : Non-ceiling Prices are fixed under Para 8 (1), (2) and (4) and Para 11 of the DPCO, 1995. They are specific to particular pack size and dosage form of scheduled formulation of a particular company. Hence they are pack specific and company specific. The prices fixed for non-ceiling packs are communicated to the respective firms by issuing office orders. In such order, usually excise duty element is shown separately. However, local taxes are not included in Non-ceiling price.  These orders are available on the web-site www.nppaindia.nic.in to the public

4. The norms for the discharge of its functions

            The NPPA is governed by the provisions of Drug Policy, 1994 and DPCO, 1995.  In order to bring transparency and avoid arbitratariness, norms have been fixed in respect of conversion cost (CC), packing charges (PC), packing material (PM), process loss (PL) and same have been notified in the official gazette.  These norms are placed at the web site of NPPA and are used by NPPA while fixing / revising the prices of formulations.

5. Constitution of the Authority

            Chairman, NPPA

            Member Secretary, NPPA

            Ex-officio Members

• Drug Controller General of India
• Chief Adviser (Cost)
• Adviser, Deptt. of Economic Affairs

All decisions relating to price fixation / price revision of bulk drugs and formulations are taken in the meeting of Authority.

6. Directory of Officers & Employees

National Pharmaceutical Pricing Authority ( As on 26.07.2006)

(EPBAX : 23345116, 23345118, 23345122, 23360265, 23747741, 23747748)

7. Monthly remuneration received of Officers & Employees

            The scale of pay in respect of various officers are as follows :-

8          Budget Allocation

Head wise Break-up of NPPA

9          Concessions, permits for Authorization granted

            NPPA do not administer any scheme where grants, concessions, permit etc. are given.

10         Publication

            NPPA have published a compendium containing prices of Scheduled Bulk Drugs & Ceiling and Non-ceiling prices of Scheduled Formulation Packs, under Drug (Price Control) Order, 1995, is now available on Reception Counter of NPPA on payment of Rs.100/- per copy.

11         Facilities available to citizens for obtaining information

            All information relating to working of NPPA are available on the web site www.nppaindia.nic.in .  The details of the information are as follows :-

Message from Chairman

From the Member Secretary’s Desk

Resolution of NPPA

Functions of NPPA

Drug Policy 1986

Modifications in Drug Policy 1986

Drugs(Price Control) Order 1995

List of Controlled Bulk Drugs

Exemption Order

Norms for CC/PC/PL

Production Data

What’s New – Latest price fixation / revision or other matter

Archive – notification issued by NPPA relating to Price Fixation / revision

Frequently Asked Questions

List of Officers

Notified Prices

Pharmaceutical Policy – 2002

Procedure for Price Fixation

Study on Drugs Prices

Questionnaire / Proforma

Prorata Price – Notifications

Issues for your Comments

Feedback

12. Name, Designation and other particulars of Public Information Officer

Name               :           A.K. Singhal

Designation      :           Adviser (Pricing)

Address           :           5^th Floor, YMCA Cultural Centre Building

                                    1, Jai Singh Road, New Delhi – 110 001

Tel Nos.           :           23746933

                                    23345116/117/122 (EPBAX)

Assistant Public Information Officer

Name               :           M.R. Sankla

Designation      :           Section Officer

Address           :           5^th Floor, YMCA Cultural Centre Building

                                    1, Jai Singh Road, New Delhi – 110 001

Tel Nos.           :           23746643, 23345116/117/122 (EPBAX)