Mining of DPCO 2013

1National 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

National Institute of Pharmaceutical Education and Research, (NIPER)2

Flow of Presentation

Introduction

Need of the Study

Research Objective

Research Methodology

Data Analysis & Interpretation

Key Findings

Recommendations

Limitations of the Study


Introduction

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


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.


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.


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.


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


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.


DATA ANALYSIS & INTERPRETATION


Interpretation of Domestic Market with reference to Drug Price Control

Combination Plain Grand Total

Total Number of Plain/Combination 27486 34967 62453

Market Value according to MAT APR'13 (Crores)

29115.2220079999 29583.9416381999 58699.3845355001

5000

15000

25000

35000

45000

55000

65000

Total Domestic Market According to IMS MAT April 2013 data

Num

ber/

Mar

ket V

alue

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

Respi

Pain/Analgesic

Antimalarial

Gynae

Gastro

Antidiabetic

Neuro

AntiTB

Cardio

Antiinfective

94

90

88

86

85

82

82

81

71

63

% 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


Total Number of Plain/Combination

3358 1571 4933


3559.61394649999 1288.4010455 4848.01902650001

50015002500350045005500

Respiratory Category

Num

ber/

Mar

ket V

alue

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




2739.28688819998 2030.9138004 4770.2067309

500150025003500450055006500

Pain/ Analgesics Category

Num

ber/

Mar

ket V

alue

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


Total Number of Plain/Com-bination

126 370 496


115.9475242 340.794357499999 456.741881700001

50150250350450550

Anti Malarial Category

Num

ber/

Mar

ket V

alue

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




1762.1926305 1331.4043744 3093.5970049

250

1250

2250

3250

Gynaecology Category

Num

ber/M

arke

t Vlu

e

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


Total Number of Plain/Com-bination

2213 1559 3772


3643.1917 2605.32829849999 6248.51999850002

500150025003500450055006500

Gastro Intestinal Category

Num

ber/

Mar

ket V

alue

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




2674.15530080001 1562.3923398 4236.5476406

250

1250

2250

3250

4250

Anti Diabetic Category

Num

ber/

Mar

ket V

alue

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




839.9195308 2605.6440101 3445.5635409

500

1500

2500

3500

4500

5500

Neuro/ CNS Category

Num

ber/M

arke

t Val

ue

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




219.8161852 96.6281529 316.4443381

2575

125175225275325375425475

Anti TB Category

Num

ber/M

arke

t Val

ue

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


Total Number of Plain/Combina-tion

2019 3602 5621


2473.58891030001 4394.14941850001 6867.73832880001

500

1500

2500

3500

4500

5500

6500

7500

Cardiac Category

Num

ber/

Mar

ket V

alue

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


Total Number of Plain/Combina-tion

3001 7073 10074


3630.21284979998 6237.4524151 9867.66526489995

1000

3000

5000

7000

9000

11000

Anti Infective Category

Num

ber/

Mar

ket V

alue

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

70% ( Atenolol

)

30% (Atenolol)

50% (Met-formin)

50% (Met-formin)

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:

Cost of Medicines for a month's treatment

Drug Disease Market based pricing(Rs.) Cost based pricing

Metformin Diabetes 35 14Atenolol 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

Combination drugs Single ingredient0

500

1000

1500

2000

2500

2056.97

514.244

80% Market share of the PCM remains outside DPCO 2013

Type of Formulation

Mar

ket

Val

ue

( In

cro

res)

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.


Procurement price comparison of various agencies

Name of the Medicine(10

Tab)Category

Market Leader Used to chargebefore DPCO2013(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 allergic37.50 (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


New Launches & Top Selling Brands out of Price Control

100(Top selling brands)

20 ( Acute Category)

20 ( Chronic Category)

20 ( Newly Launched in last 24 months)

0 10 20 30 40 50 60

55

8

13

18

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)


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)


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.


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.


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.


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.


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.


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.


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.


Thank You

Mining of DPCO 2013

Health & Medicine

Transcript of Mining of DPCO 2013