Mining of DPCO 2013

1
National Institute of Pharmaceutical Education and Research, (NIPER)
MINING OF DPCO :
A CAPTIOUS STUDY IN SEARCH OF BETTERMENT
MAJOR RESEARCH PROJECT (MRP)
PRESENTED BY
Dhwni Sheth
GUIDED BY
Dr. Anil Kumar Angrish
(Assistant Professor)
DEPARTMENT OF PHARMACEUTICAL MANAGEMENT
National Institute of Pharmaceutical Education and Research

Flow of Presentation
 Introduction
 Need of the Study
 Research Objective
 Research Methodology
 Data Analysis & Interpretation
 Key Findings
 Recommendations
 Limitations of the Study
2

Introduction
3
India is considered as pharmacy of world.
Globally, India ranks 3rd in terms of volume and 13th in terms of value. The lower value is due to the
fact that Indian medicines are amongst the lowest priced in the world.
The drug prices in China is said to be almost 7 times that of comparable molecules in India. The prices
of brands in India on-average are lower than countries such as Indonesia, Thailand, China, Malaysia,
Philippines and Pakistan. However, despite this medicine costs continue to be an important component in
the overall Medicare expenditure in the country.
Still 70% of citizens do not have access to essential medicine. Even though Government distributes
free generic drugs in public facilities there is still a large portion of non-essential drugs out of price
control that require regulation.
Indians are living longer than before, but illness and disability of a very high order & early death
remain severe health care challenges.

Introduction : History of Price Regulation in India
4

Getting into the Scene : DPCO 2013
 The government has notified the DPCO 2013 under the Essential Commodities Act, 1955, which
will give power to the NPPP 2012 to regulate prices of 348 essential drugs along with their specified
strengths and dosages under NLEM 2011.
 Main Features of the DPCO 2013
1) The new order will bring 348 drugs & their 652 formulations under price control.
2) The new policy uses a market-based pricing mechanism against the earlier proposed cost-plus
method. The ceiling price would be calculated by taking the simple average of prices of all brands of
a drug with a market share of 1% or more.
3) Margins of wholesalers & retailers have been cut down to 8% & 16% respectively.
4) Companies selling medicines above the government-mandated ceiling rated would have to slash
prices to meet the demands of new rules, but those selling drugs below the ceiling price wouldn’t be
allowed to raise prices.
5) Firms that launch new medicines can sell them at or below government-set price caps.
6) Existing firms will not be allowed to stop production of any drug without permission from the
government.
7) Drug producers will be permitted an annual increase in the retail price in sync with the wholesale
price index.
5

Need of the Study
 About 38 million people in India fall below the poverty line every year due to healthcare expenses,
of which 70% is on purchase of drugs. Yet, the much-awaited drug price control order DPCO
2013,over a decade after, does not cover over 80% of the medicines in the market.
 Many life saving drugs including anti-cancer drugs, expensive antibiotics and drugs needed for
organ transplantation drugs, crucial for India's disease profile have been left out, which means
people are unlikely to see any significant reduction in expenditure on medicines.
 In addition, companies have been provided a convenient escape route.
(a) Fixed Dose Combinations (FDCs) out of price control. The combinations not covered under NLEM
account for Rs 31,866 crore or almost 45% of the total Pharma market of Rs 71,246 crore in 2013.
(b) Permission of price increment of roughly 10% on 1st April year after year
(c) Patented drugs not covered which will lead to domestic manufacturers suffering and MNCs
benefitting.
 The Ministry of Health, Government of India revised the NLEM in June 2011, eight years after the
last revision. It was prepared over one and a half years by 87 experts but still in its present form, the
NLEMI 2011 did not align with the Indian Pharmacopoeia and the National Health Programs as well
as the National Formulary of India 2010.
6

Need of the Study
 Improper medicine selection like the inclusion of a nearly obsolete medicine such as ether, an
anesthetic agent; non-inclusion of pediatric formulations; spelling errors; and errors in the strengths
of formulations diminishes the significance of the NLEMI 2011. The government merely lifted the
entire NLEM 2011, comprising 348 medicines, and placed it under price control. The literal
translation of the NLEM into DPCO 2103 has been done without a thought of its implications
 Moreover, to show how effective DPCO has been, the government has compared the price
reductions due to DPCO with the highest price of a drug. It makes more sense to use the price
charged by the company with the highest market share for comparison.
 Out of the 390 formulations for which prices have been notified, in 212 the company with the
highest sales does not have the highest price. So, the price reduction achieved by DPCO is nowhere
as dramatic as claimed by the government.
 Effective average price reduction would be just 11% and the impact on the Pharma market as a
whole would be a mere 1.8%. This undermines the entire objective of making essential medicines
more affordable to Indians.
 Having idea about an ambiguity or inadequacy in the Drug Price Control Order 2013, to uncover the
loopholes of Government heath care system & to put forward some points for consideration for
betterment of healthcare system study was conducted.
7

Research Objective
Primary Objective:
 To study the impact of Drug Price Control Order 2013 on Healthcare system in India and to
find out problems and proper solutions for them.
Secondary Objective:
 To study the impact of DPCO on Indian Healthcare system as a whole & determine the
success ratio of the same
 To find out escape route for pharmaceutical companies in pricing of medicines
 To find out the ambiguity and inadequacy of current National List of Essential Medicines &
National Pharmaceutical Pricing Policy
 To suggest efficient method for preparation of National List of Essential Medicines
8

Nature & Source of data
 Type of research – Exploratory & Conclusive research
 The study is based on secondary data which is collected from various websites e.g.
www.nppaindia.nic.in
– www.dfda.gov.in,
– www.janaushadhi.com
– www.telegraphindia.com
– www.businessworld.in
various newspaper articles & blogs i.e. drjayashreegupta.blogspot.in etc.
 Moreover some doctors were also consulted to get the overview of doctors mentality
regarding DPCO. It helped to just get an idea about what do healthcare professionals think
about DPCO.
 Major Source of Data collection & Data Analysis was IMS data of MAT April’2013. Data
Analysis has been shown in form of Graphs prepared in Microsoft Excel to create better
understanding of data.
9

10
DATA ANALYSIS & INTERPRETATION

Interpretation of Domestic Market with reference to Drug Price Control
11
Combination Plain Grand Total
Total Number of Plain/Combination 27486 34967 62453
Market Value according to MAT APR'13
(Crores)
29115.22 29583.94 58699.38
0
10000
20000
30000
40000
50000
60000
70000
Number/MarketValue
Total Domestic Market According to IMS MAT April 2013 data
Discussion:
Nearly 50% of the domestic market is covered by combinations in various therapeutic areas, this way
majority chunk automatically falls out of control. Amongst remaining plain molecules certain top brands
are there which are having different strength, so this way they fall out of control. Thus, it proves that there
is there is urgent need for improvement in National List of Essential Medicines.

80% market is outside purview of DPCO 2013
12
94
90
88
86
85
82
82
81
71
63
Respi
Pain/Analgesic
Antimalarial
Gynae
Gastro
Antidiabetic
Neuro
AntiTB
Cardio
Antiinfective
% Market Share of
Therapeutic segment out of reach
( Source: Times of India, December 1,2013)
Discussion:
Total 80% market in terms of sales from various therapeutic categories fall outside price control due to
different reasons.

Respiratory Category: 94% market is outside price control
Market Value according to MAT
APR'13 (Crores)
3559.61 1288.40 4848.02
0
1000
2000
3000
4000
5000
6000
Number/MarketValue
Respiratory Category
13
Discussion:
According to IMS MAT 2013 1st brand in terms of sales is a combination by ABBOTT ~ PHENSEDYL
which is worthy 225 crores which is out of price control.
 Other top selling 11 Brands in this category are also combinations which are not included under NLEM.
 As we can see in graph 70% market is of combination which has nearly worth Rs. 3300 out of 4900 crore
market.

Analgesics Category: 90% market is outside price control
14
APR'13 (Crores)
2739.29 2030.91 4770.21
0
1000
2000
3000
4000
5000
6000
7000
Number/MarketValue
Pain/ Analgesics Category
Discussion:
Out of total market of 4770 crores top selling brand 1st brand is covering 87 crore market that is a combination by
SANOFI ~ COMBIFLAM 400 mg tablet.
2nd brand is single molecule formulation, but as it falls outside the dosage strength is fixed for NLEM medicines,
another major brand VOVERAN by NOVARTIS (100mg) falls automatically falls out of DPCO2013. (63.2 crore
market )
3rd brand is also single molecule formulation (DOLONEX - Piroxicam molecule) by PFIZER which has not been
included under DPCO .(57 crore market )

Anti Malarial Category: 88% market is outside price control
15
APR'13 (Crores)
115.95 340.79 456.74
0
100
200
300
400
500
600
Number/MarketValue
Anti Malarial Category
Discussion:
Top 15 brands are made up of major molecules such as Artemotil which has not been included & Artesunate which
has condition to be combined with other two molecules so that also falls out of DPCO.
Rest is Chloroquine & Primaquine phosphate which has different concentrations other than mentioned under
NLEM. Entire category is of 456 crores of which these 15 brands only grab 239 crore. So, this way half of the market
falls out of the purview of DPCO.
Thus, like other therapeutic divisions it has not many combinations but still 88% market is out of DPCO due to
some or the other reason.

Gynaecology Category: 86% market is outside price control
16
Total Number of
Plain/Combination
1186 1236 2422
APR'13 (Crores)
1762.19 1331.40 3093.60
0
500
1000
1500
2000
2500
3000
3500
Number/MarketVlue
Gynaecology Category
Discussion:
Though combinations have 50% market in terms of numbers but in terms of valuation it has much more market
share compare to plain molecules.
Out of top 10 brands of this category 8 are combination & rests of 2 are plain molecules ~ all of them have not
been added under price control.
1st brand is DEXORANGE which is multi vitamin liquid Iron syrup by FRANCO INDIAN -142 Crore brand
which means huge chunk is cherished by such kind of companies which hardly noticed by pricing authorities.
Iron formulations covered under DPCO are only 1%..

Gastro Intestinal Category: 85% market is outside price control
17
APR'13 (Crores)
3643.19 2605.33 6248.52
0
1000
2000
3000
4000
5000
6000
7000
Number/MarketValue
Gastro Intestinal Category
Discussion:
1st Brand is by WOKHARDT - SPASMO-PROXYVON (135 crore brand) which is combination, so out of price
control.
Most surprising matter is that after 8 years what NPPA have included is Ranitidine Injection (25mg/ml). We all
know that with high dose of all antibiotics usually doctors prescribe Ranitidine to avoid acidity & ulcers. But they are
in oral solid forms. And out of total market of single molecule worthy Rs.2600 crore nearly 360 crore is covered by
Ranitidine Oral Solids.
Other natural molecules such as Sennoside, Atropine, Itoposide which are non allopathy , has also potential market
but no consideration for Price Control.

Anti Diabetic Category: 82% market is outside price control
18
APR'13 (Crores)
2674.16 1562.39 4236.55
0
500
1000
1500
2000
2500
3000
3500
4000
4500
Number/MarketValue
Anti Diabetic Category
Discussion:
1st brand HUMAN MIXTARD 30:70 INECTION by ABBOTT (212 crore brand) which is a combination.
So out of DPCO.
 Well known brands such as Glycomet by USV, Januvia & Janumet by MSD are also not covered.
 Top25 brands and nearly 60% formulations are also combinations.
 Not a single molecule from GLIPTIN category molecule has been included.

CNS Category: 82% market is outside price control
19
APR'13 (Crores)
839.92 2605.64 3445.56
0
1000
2000
3000
4000
5000
6000
Number/MarketValue
Neuro/ CNS Category
Discussion:
In this therapeutic category, combinations have less market compare to plain molecule market but still
82% market is out control. The reason behind is out of first 20 plain molecule formulations, 10 have not
been included in DPCO.
Common molecules which any person associated with pharmacological field must be aware of such as
Pregabalin, Clobazam, Beta Histidine, Levetiracetam, Clobazepam, Valproic Acid have not been include in
NLEM.

Anti TB Category: 82% market is outside price control
20
APR'13 (Crores)
219.82 96.63 316.44
0
50
100
150
200
250
300
350
400
450
500
Number/MarketValue
Anti TB Category
Discussion:
Out of top 10 Brands 8 are combinations so, they are out of DPCO. In that 8 combinations,6 are of LUPIN.
So Lupin is the leading Company. That too, out of 6, that 4 are of same combination but of different
packaging size & delivery system (Film & Coated tablets). So, it becomes mandatory for pricing authorities
to check different tactics of different companies.
India has highest number of MDR TB. NPPA talks about affordability & accessibility. When they are aware
about monthly cost of medication for any MDR TB patient is Rs.8000 , still they haven’t considered any
single molecule for price control in their 348 essential medicines list.

Cardiac Category: 71% market is outside price control
21
Market Value according to MAT APR'13
(Crores)
2473.59 4394.15 6867.74
0
1000
2000
3000
4000
5000
6000
7000
8000
Number/MarketValue
Cardiac Category
Discussion:
1st brand is top selling brand by UNICHEM _LOSAR H Film which is a combination so falls out of
control.
Though combinations have less market share compare to plain molecules, still 71% market is not
covered. Major reason behind is, molecules such as Prazosin, Ramipril, Telmisartan, Nicorandil which
are very common molecules for cardiac treatment are not covered under NLEM.

Anti Infective Category: 63% market is outside price control
22
APR'13 (Crores)
3630.21 6237.45 9867.67
0
2000
4000
6000
8000
10000
12000
Number/MarketValue
Anti Infective Category
Discussion:
As per latest 13th edition of DPCO price list announced on 27th march, 2014 many anti infective
combinations such as AUGMENTIN & other such have been added under price control still many
loopholes are there.
There are 7 new vaccines which have been added in WHO list of essential medicines but there is no
single vaccine which has been added in NLEM. Market is full of combinations of different concentrations
so, 63% market in terms of value is outside price control.

Scenario of Cardio Diabetic Market with reference to DPCO 2013
23
70% (
Atenolol)
30%
(Atenolol)
50%
(Metformin)
50%
(Metformin)
Combinations
Singles
70% of Anti-diabetic market out of DPCO 2013
Drugs(Category) Combination Singles Total Combination
Atenolol(Hypertension) 443 186 629 70%
Metformin(Diabetes) 2251 2251 4502 50%
Discussion:
In anti hypertensive market of Atenolol 70% market is made up of combinations which is shown as
the inner shell in the graph.
While in anti diabetic market of Metformin 50% market is made up of combinations which is
shown by outer shell.

Issue related to pricing methodology:
24
Cost of Medicines for a month's treatment
Drug Disease Market based pricing(Rs.) Cost based pricing
Metformin Diabetes 35 14
Atenolol High blood pressure 38.5 8
Atorvastatin High blood pressure 127 17
On Doctors part: What do they prescribe?
Category Branded Generic Generic
Anti hyperlipidemic Strovas - 127/10 tablet Atorvastatin - 8.20/10 tablet
Ant diabetic Amaryl - 117.4/10 tablet Glimepiride (2 mg) - 11.81/10 tablet
Discussion:
The real issue that even when doctors are having enough awareness about difference of prices of various
medicines, still they usually don’t prescribe it. So, no matter how much improvement government will bring in
NLEM, until unless they bring mandate for doctors to prescribe NLEM medicines there will be no improvement.
This way, output heavily relies on the implementation by doctors.

Scenario of Paracetamol Market with reference to DPCO 2013
25
2056.97
514.244
0
500
1000
1500
2000
2500
Combination drugs Single ingredient
MarketValue(Incrores)
Type of Formulation
80% Market share of the PCM remains outside DPCO
2013
Discussion:
Paracetamol is the basic analgesic which is being used by nearly 90% of population of India. But, majority
of available medicines are in combination with one or other peer molecule, so they fall outside price control.
According to IMS data total market value of PCM formulations is Rs. 2571 crores, out of which nearly Rs.
2056 crore is covered by combinations.
So, Control is essential at this basic level.

26
Procurement price comparison of various agencies
Name of the
Medicine(10
Tab)
Category
Market Leader
Used to charge
before DPCO
2013(compare
to current
ceiling price)
Ceiling price
under DPCO
2013
(compare to
JA price)
Jan
Aushadhi
prices
LOCOST
price(Cost
of Man+
Retail
Margin)
TNMSC procured
prices
Cetrizine Anti allergic
37.50 (GSK) 14
times higher
profit
18.1 (15
times more)
2.75 1.20
0.9(2011% lower
than DPCO2013)
Albendazole
Worm
infection
140 (GSK)
91(10 fold
mark up)
8.50(')
Amlodipin 5 mg
Anti
hypertensive
30.6 (3060%
of cost price)
4 1
Atorvastatin (10
mg)
Anti
hypertensive
75.30 (Strovas) 59.1 7
2.10 (2814% lower
than DPCO2013)
Paracetamol(500
mg)
Analgesic
13.65 (GSK
Crocin/Calpol) 6
times higher
2.45

27
New Launches & Top Selling Brands out of Price Control
55
8
13
18
0 10 20 30 40 50 60
100(Top selling brands)
20 ( Acute Category)
20 ( Chronic Category)
20 ( Newly Launched in last 24
months)
Out of Control
Discussion:
Out of 100, 55 top brands are outside DPCO.
Out to 20, in the Acute category 8 brands are outside & in Chronic category 13 brands are not covered
under price control.
Out of 20 new launches in past 24 months, 18 are outside price control. Moreover, they are allowed to
increase retail price in sync with the wholesale price index.
Thus, there must a robust model which is structured enough to control all this issues.
(Source: www.pharmabiz.com)

28
Top brands out of control in Chronic Category
No of top 20 Chronic brands that are not covered under price
control
Rank Brand Company
2 Glycomet USV
4 Foracort Cipla
5 Seroflow Cipla
6 Galvus Met Novartis
7 Skinlite Zydus
8 Cardace Sanofi
9 Telma Glenmark
10 Betnovate GSK
12 Januvia MSD
13 Janumet MSD
16 Telma H Glenmark
17 Budecort Cipla
18 Aerocort Cipla
(Source: Rank based on MAT June 2013; AIOCD-AWACS Market Intelligence Report 2013)

29
Way forward with compulsory licensing
Benefit of Compulsory licensing Price Reduction of 97%
Medicine (cancer) Price
Branded Nexavar(BAYER) 284428
Generic Nexavar (NATCO) 8800
Discussion:
Government should make use of Compulsory license for making cheaper drugs available even if they are
under patent. This tool, though available since 1995 under WTO’s agreement on intellectual property rights
called TRIPS but was used for the first time in India recently (March 2012), and has helped reduce the price
of cancer drug ‘Nexavar’ by 97%.
Government should look forward to make patent law consumer friendly so that patent holders are not able
to perpetuate their patents on flimsy grounds. Recent judgment of Supreme Court (2013) in the case of anti-
cancer drug Glivec has demonstrated how the cost of treatment can be reduced from Rs 1,20,000 per month
to Rs 8500 per month.

30
KEY FINDINGS & RECOMMENDATIONS

Key Findings
1. The policy is incomplete since it covers just off-patent medicines being marketed in the country. Any
National Pricing Policy should be comprehensive and consolidated covering all medicines being sold
in India irrespective of their patent status or source.
2. Irrespective of mechanism used, the end result should be availability of medicines at affordable and
fair prices
3. NPPA currently was brought for price control overall but it just covered 17% market and rest market
is with increased prices.
4. The price regulation is supposed to cover only those molecules that are included in the NLEM. But if
we think no medicine is unessential.
5. NLEM has a limited, narrow context. Under severe budgetary constraints, it is simply not possible
for the state to buy and distribute all medicines for all disorders to all patients. Most PHCs have a
10% and hospitals 20% additional allocation of funds to buy non-NLEM drugs.
6. Drugs included in the NLEM are generally restricted to reference molecules.
31

Key Findings
7. Drugs listed in NLEM on their own are not adequate to meet clinical needs in many disorders. For
example, for the treatment of migraine, not a single globally used “Triptan” is included.
8. The state sector currently caters to the medical treatment of less than 20% of the population. Thus
more than 80% people of India are dependant on private medical care. Private practitioners do not
and can not be made to prescribe only reference medicines listed in NLEM. Thus about 80% of the
people will not benefit from price regulation.
9. The suggested methodology of price regulation itself is fundamentally flawed and heavily tilted in
favor of industry. The price of every consumer item is based on “cost plus expenses plus profits”
called Cost Based Pricing (CBP).
10. Market Based Pricing (also called competition based pricing) is applicable to only those items (such
as TV set, shoes, clothes etc.) where the consumer is the decision maker capable of assessing the
relative merits of various brands on sale and voluntarily decides to buy one or the other product in
his best interest suiting his pocket.
11. There are many products where there is just one brand (example: Revital). In such cases, the
producers will be free to charge at will and immensely benefit from a faulty policy.
32

Key Findings
12. Among multi-ingredient formulations, many top selling brands are not identical. Even if two or even
more brands are similar, a slight change will make them different and not only take them out of price
regulation but in the process make them the only brand with no equivalents. The only solution is
uniformity in composition based on scientific rationality and prohibition on all other fixed Dose
Combinations. Till the time this happens the proposed policy can not be effectively applied to multi-
ingredient products.
13. Under the proposal, all drugs being sold for Rs. 3 or less per unit (tablet, capsule) will be exempted
from price regulation in addition to being automatically eligible for hike in pricing based on WPI for
manufactured goods year after year. One out of every three medicines sold in India is priced below
Rs. 3 per unit.
14. The arbitrary exemption from price regulation given to drugs costing up to Rs. 3 per unit is
inherently irrational. E.g. Cosavil, Crosin, Avil
15. No pharmaceutical pricing policy, worth its name, can exclude the pricing of patented medicines
being marketed in the country.
16. In all there are just over 1,700 molecules being used as medicines in various countries. In
India just over 900 are being marketed. NLEM that has 348 drugs is supposed to be updated once
every 5 years.
33

Recommendations
 The current spending on medicines by the government (both Centre and state) is a meager 0.1
per cent of the GDP. This needs to be scaled up to at least 0.5 per cent of the GDP in the next
five years
 The National List of Essential Medicines should be revised to omit outdated drugs and
include newer, more effective ones. It should also address need of different essential
medicines of different states
 The current market-based formula is not expected to reduce the prices of medicines
significantly; it is strongly recommended that cost-based formula be reinstated. It’s desired to
adopt Jan Aushadhi based pricing (JABP) for determining the price of medicines covered
under DPCO-2013.
 Government needs to tighten logistics, warehousing etc.
 Improvement of access to drugs for specialized treatment (anti- cancer, anti-HIV etc) through
special assistance scheme for subsidizing the prices of such drugs, especially for BPL and
APL families.
34

Recommendations
 Education of the public in general as well as Medical fraternity, and making it obligatory
for Doctors to also prescribe non-branded generics along with branded generics.
 Promotion of non-branded generic drugs and low cost drugs by creating a well spread out
low-cost pharmacy chain through the Jan Aushadhi Program, so that the last mile reach of
essential drugs are accessible and affordable to every village/town in the country.
 Setting up the drug banks.
 Strengthening of Pharmaceutical Central Public Sector Enterprises is essential to play a
major role in benchmarking the prices and play a role in stabilizing the market forces and
enable access to medicines. The CPSUs need to be strengthened by bringing them under the
Drug Procurement System. Further, the CPSUs may be mandated for producing such essential
medicines as determined by the Government as per the requirement from time to time.
 The department of pharmaceuticals should be transferred from Union Ministry of Chemicals
and Fertilizers to the Union Ministry of Health and Family Welfare.
35

Limitations of the Study
 All the numerical terms of data are completely based upon IMS Data _2013 & data analysis is
manual without using any statistical tool. Available time and resources were limited so data
comparison of all medicines of widespread therapeutic categories was not possible.
 Constant up gradation of NPPP & NLEM list may show some changes with respect to bulk
drugs, their combinations & prices mentioned in study with the currently updated data.
 Due to limitation of time study couldn’t cover up the correlation between other related
features E.g. Drug Procurement system at various Institutional & Government Hospitals and
integration of various Government initiated health care systems which can be useful for
increasing accessibility & affordability.
36

37
Thank You

Mining of DPCO 2013

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