Dear Readers, we are happy to share the most interesting legal and policy updates concerning health industry that we read today. We hope you enjoy reading it.
1. Due to a recent spike in cases, the Karnataka Government has declared dengue as an “epidemic” and to that effect has issued a notification under the Karnataka Epidemic Diseases Regulations, 2020. As part of the notification, the government has empowered Municipal Corporations across the state to carry out inspections of sites for compliance with mosquito prevention measures.
Source: bit.ly/3ThmkGK
2. Industry associations of manufacturers of Drugs and Medical Devices have called for an amendment of the Drugs (Prices Control) Order, 2013 to make pricing guidelines uniform for both Scheduled and non-scheduled formulations.
Source: bit.ly/3AJuTUn
3. India’s Central food regulator, the Food Safety and Standards Authority of India has issued a notification to re-operationalize The Food Safety Standards (Health Supplements, Nutraceuticals, Food for Special Dietary Use, Food for Special Medical Purpose and Prebiotic and Probiotic Food) Regulations, 2022, in the interim of formulating new regulations.
Source: bit.ly/3ASeVYj
4. It is reported that IT’s upcoming meeting scheduled for 9th September, the Goods and Services Tax Council may take a decision on removing the existing 18% Goods and Services Tax on health insurance policies.
Source: bit.ly/3TjjrWa
5. In pursuance of its larger and long-term project of fighting and reducing anti-microbial resistance, the World Health Organization has issued a guidance directing management of “antibiotic waste” generated by manufacturers, which contributes to rising levels of anti-microbial resistance.
Source: bit.ly/4g922t1
Dear Readers, we are happy to share the most interesting legal and policy updates concerning health industry that we read today. We hope you enjoy reading it.
1. Pharmaceutical companies will have to submit details of their expenditures incurred on sponsoring activities to the medical professionals within two months after the end of each financial year on the Uniform Code for Pharmaceutical Marketing Practices (UCPMP) portal as part of implementation of the UCPMP Code 2024.
Source: bit.ly/47bQOjc
2. India’s Health Ministry has introduced guidelines to improve quality of healthcare services in government hospitals and healthcare institutions. Hospitals will now be required to report adherence to these guidelines and submit proposals for approval, specifically when significant changes or funding is involved.
Source: bit.ly/3XaYSMz
3. Pharmaceutical industry in India has reportedly voiced its concern over the delay in processing and issuance of review orders on the website by Department of Pharmaceuticals (DoP). The consequence of delay in processing of review orders may results in halt of business activities thereby imposing manufacturers to sell the scheduled formulation or a new drug at a ceiling price which is under review.
Source: bit.ly/4cUYrMa
4. India’s Central Drugs Standard Control Organization (CDSCO) is reportedly launching various digital initiatives, such as Online National Drug License System (ONDLS) and Track and Trace System, to transparently, and efficiently manage pharmaceutical regulations.
Source: bit.ly/47ai41s
5. Quality standards for MDMA and Psilocybine, well known psychedelic compounds has been prescribed by Australia’s Therapeutic Goods Administration (TGA).
Source: bit.ly/47a9jVm
Source: bit.ly/478wBLf
Dear Readers, we are happy to share the most interesting legal and policy updates concerning health industry that we read today. We hope you enjoy reading it.
1. Use of artificial yellow food coloring ‘Tartrazine’ in food items like moong dal is not food adulteration as ‘Tartrazine’ is a permitted food coloring under the Prevention of Food Adulteration Rules, 1955; India’s Supreme Court.
Source: bit.ly/4718Tk4
2. Food Safety and Standards Authority of India (FSSAI) has withdrawn the clarification for selling / marketing of milk and milk products in the name of A1 & A2 for further consultation. Previously, FSSAI had clarified that it is misleading to differentiate milk and milk products on whether they are made from A1 milk or A2 milk and had thereby directed to remove such claims from such products including e-commerce websites.
Source: bit.ly/4778axU
3. Retail prices to be reportedly reduced by 50% of anti-diabetic drug Empagliflozin, which is expected to go off patent in March 2025 under Drugs Price Control Order, 2013.
Source: bit.ly/470IFxW
4. Indian Pharmaceutical Industry has urged to amend and delete the term “retailer” from the definition of dealer under Drugs Price Control Order, 2013 (DPCO). Manufacturers and importers are required to furnish price list to dealers. The inclusion of ‘retailer’ within the definition of ‘dealer’ has led to confusion over the extent of this obligation, potentially extending the manufacturer’s and importer’s liability beyond wholesalers to include retailers as well. If approved, Retailers, who typically interact with consumers directly, would be excluded from the manufacturer’s direct regulatory responsibilities, thereby allowing the focus to remain on the wholesale distribution channel.
Source: bit.ly/3ABX4Vs
5. QR Codes / Bar Codes may reportedly be made mandatory for vaccines, cancer drugs and antibiotics to validate the authenticity of drugs and prevent the supply of counterfeits.
Source: bit.ly/475pDGH
Dear Readers, we are happy to share the most interesting legal and policy updates concerning health industry that we read today. We hope you enjoy reading it.
1. Indian pharmaceutical manufacturers will have to prove compliance with revised Good Manufacturing Practices at the time of renewal of manufacturing license, as per media reports.
Source: bit.ly/3MAGjg9
2. A woman who has filed for divorce should be treated as a divorced woman for the purposes of medical termination of pregnancy, and therefore will have the right to terminate her pregnancy: High Court
Source: bit.ly/4fNDhT7
3. The Multidisciplinary Committee of Experts (MDC), which advises the National Pharmaceutical Pricing Authority (NPPA), will invite an officer not below the rank of Deputy Controller of Patents and Designs, to evaluate eligibility for exemption of patented drug from application of price control law.
Source: bit.ly/46Ya8jY
4. A new scheme to boost domestic medical device industry in India is under works and will reportedly be launched in a month.
Source: bit.ly/4fUqrSU
5. A new portal for reporting adverse events of drugs, vaccines and medical devices has been launched by Indian Pharmacopoeia Commission. The adverse event may be reported by consumers and medical practitioners.
Source: bit.ly/4dxeUXY
Dear Reader, we are happy to share the most interesting legal and policy updates concerning health industry that we read today. We hope you enjoy reading it.
1. A leading pharmaceutical association reportedly has urged the Indian government to implement a predictable drug pricing policy by refraining from using Para 19 of the Drug Pricing Control Order, which gives power to the Government to cap prices of non-essential drugs and medical devices in public interest without advance notice.
Source: bit.ly/4dw7a8j
2. The National Consumer Disputes Redressal Commission (NCDRC) has held that doctors who have qualification of M.B.B.S, M.D. (medicine) are sufficiently qualified to treat ICU patients without requiring additional specialized intensive care training since no such training has been prescribed by National Medical Commission.
Source: bit.ly/3Yts4kh
3. Australia has approved the medical use of MDMA (Methylene Dioxy Methyl Amphetamine) and psilocybin for treating PTSD and depression. The drugs will be available under strict regulations, with treatments costing between A$15,000 and A$30,000, and with no current insurance coverage.
Source: bit.ly/46CttHg
4. India’s Central Food regulator, (FSSAI) has reintroduced restriction on re-using cooking oil that has developed total polar compounds (TPC) of more than 25% by adding fresh oil. Any cooking oil that has 25% or more content of TPC is not permitted to be used.
Source: bit.ly/4d8pvIT
5. India’s Department of Consumer Affairs has extended the last date for receiving public comments on the proposed amendment of rule 3 of the Legal Metrology (Packaged Commodity) Rules, 2011 to 30th August 2024. The proposed amendment aims to close loopholes and ensure that all bulk packages are labelled clearly and consistently, just like retail products.
Source: bit.ly/4dgRE0n
1. The Supreme Court has issued its decision in a matter concerning the legality of exercise of powers by the National Pharmaceutical Pricing Authority (NPPA) in levying overcharging fees against an entity that claimed not to be a “distributor” or a “dealer” as defined under the Drugs (Prices Control) Order, 1995, since it had a dual role. The Court held that there is no mutual exclusivity between a dealer and a distributor, and dismissed the appeal.
Source: bit.ly/3xPkgP1
2. The National Medical Commission, has mandated the presence and maintenance of a Tobacco Cessation Centre at all hospitals attached to Medical Colleges across the country.
Source: bit.ly/3WdIjzk
3. To curb rise in misleading advertisements, the Central Government may soon introduce regulation to restrict the advertisement of Diabetes, Sex Hormone and Oncology medication, and may require approval and permission to make claims of efficacy for these Drugs.
Source: bit.ly/46nCjst
4. The Ministry of Health and Family Welfare has published Draft Drugs (Amendment) Rules, 2024 whereby it intends to amend Rule 96 requiring inclusion of details of Drug excipients on retail labels of Drugs.
Source: bit.ly/463YZO9
5. The European Commission has published and adopted the Artificial Intelligence Act, which will regulate the inclusion and integration of AI into Medical Devices and In-Vitro Devices. This Act is set to come into force on the 2nd August 2024.
Source: bit.ly/3Y5qCUV
In this article, we have discussed rounding-off principles that manufacturers and importers of drugs and medical devices should follow while determining the maximum retail price (MRP) of their products.
What is rounding-off? Rounding-off refers to adjusting a fractional price of a drug or medical device to the nearest rupee, or the nearest paisa, depending on the context.
Why is rounding-off relevant for drugs and medical devices? The MRP of drugs and medical devices is regulated by a law called the Drugs (Prices Control) Order, 2013 (“DPCO”). If a manufacturer or importer decides to round-off the MRP of a drug or medical device for any reason, for example, pursuant to an increase or decrease in applicable taxes, and the rounding-off is not acceptable as per provisions of DPCO, then it may result in recovery of the overcharged amount from the manufacturer or importer.
What are the principles of rounding-off prescribed under DPCO? The DPCO itself is, as such, silent on the rounding-off of MRP. However, the authority responsible for enforcement of the DPCO, the National Pharmaceutical Pricing Authority (NPPA), has recognized the fact that rounding-off of MRP is an acceptable market practice [NPPA Minutes, 2016]. It is acceptable to NPPA that rounding-off of MRP is done as per ‘general mathematical practice’.
What is the general mathematical practice of rounding-off? The general mathematical practice is to round-off the second decimal place of the MRP, depending on the number present at the third decimal. If the number present at the third decimal place is 5 or bigger than 5, then the number present at the second decimal place may be increased by 1. If the number present at the third decimal is less than 5, then the number present at the second decimal place will not change. Some illustrations:
S No.
Actual Figure
Rounded-off Figure
1.
Rs. 123.45/-
Rs. 123.45/-
2.
Rs. 123.455/-
Rs. 123.46/-
3.
Rs. 123.456/-
Rs. 123.46/-
4.
Rs. 123.991/-
Rs. 123.99/-
5.
Rs. 123.999/-
Rs. 124.00/-
6.
Rs. 123.001/-
Rs. 123.00/-
7.
Rs. 123.111/-
Rs. 123.11/-
The above understanding was validated by the Delhi High Court in the case of Union of India v Bharat Serums.
Whether rounding-off is permitted for medical devices under Legal Metrology (Packaged Commodities) Rules, 2011? The MRP of medical devices is regulated by DPCO as well as Legal Metrology (Packaged Commodities) Rules, 2011 (“LMPC Rules”). Until 23.6.2017, the LMPC Rules had a provision to round off the fractional MRP to the nearest rupee. In other words, medical devices were permitted to round-off the fraction of less than fifty paise to the preceding rupees and a fraction of above 50 paise and up to 95 paise to the rounded off to fifty paise. However, the above provision was omitted from LMPC Rules with effect from 1.1.2018. Therefore, the MRP of medical devices today cannot be rounded off, except in the case of the second decimal place, as described earlier.
Can a manufacturer or importer of medical devices round-off MRP of medical devices to the nearest rupee or 50 paise? The simple answer is no, especially not after 2018. Before this, it was at least arguable that manufacturers and importers of medical devices could rely on the provisions of LMPC to take a position that they had the flexibility to round-off the MRP to the nearest rupee or 50 paise. The price regulator, NPPA, however, has not accepted this position. Post 2018, there is no basis for manufacturers and importers of medical devices to take such a position since the supporting LMPC provisions are now omitted. Please note that manufacturers and importers of drugs could never take benefit of the flexibility of rounding-off under LMPC Rules for fixing MRP because LMPC Rules do not apply to drugs.
Conclusion The flexibility to round-off MRP in the case of drugs and medical devices is available up to the second decimal place only, as per general mathematical practice. Any error in rounding-off for drugs and medical devices can result in significant recovery from manufacturers and importers under the provisions of the Drugs (Prices Control) Order, 2013.
The Division Bench of the High Court of Delhi, in the case of Union of India v Bharat Serums, has laid down how the overcharged amount should be calculated by India’s drug price control regulator, National Pharmaceutical Pricing Authority (“NPPA”). The judgement will have a significant impact on existing as well as future demands for overcharging which are raised on pharmaceutical and medical device companies in India.
Background
Under Para 20 of India’s drug price control law, the Drug (Prices Control) Order, 2013 [“DPCO”], all non-scheduled formulations are allowed to increase their price by 10% in 12 months. Non-scheduled formulations are non-essential drugs or medical devices that are not listed in the schedule of DPCO. Most pharmaceutical and medical device companies do not use the 10% price increase opportunity in the 12-month period and elect to increase the price after a number of years.
When the opportunity does arise to increase prices, the question that always arises is whether the company can increase the price by the ‘aggregate’ of permitted percentage increase, or by a maximum of 10% from its last published Maximum Retail Price (MRP). For instance, if the MRP of a drug or medical device was Rs. 100, and the company selling the product decides to increase the price of the drug or medical device after a period of 5 years, would it be entitled to increase the price of the product by Rs. 50 (10% increase allowed every 12 months period), or by Rs. 10 (10% increase from last MRP irrespective of the time gap).
The other question that arises is if a pharmaceutical or medical device company increases the MRP of its product by more than 10% in a 12-month period, then how should NPPA recover the overcharged amount? For instance, if the MRP of a drug or medical device was Rs. 100 earlier, and if the company revises the MRP of the product to Rs. 200 after 5 years, how should NPPA calculate the overcharged amount? Should NPPA assume that the company was only allowed to increase MRP by 10% and recover the remainder amount as an overcharged amount? In other words, should NPPA give a concession of Rs. 10 to the company and proceed to recover Rs. 90, or should NPPA ‘assume’ that the company would have increased its price by 10% each year, and proceed to recover only the balance amount, in this case Rs. 50 (or more accurately Rs. 39 since a 10% increase every year for 5 years would have resulted in MRP of Rs. 161).
The above questions were conclusively answered by the Delhi High Court and are discussed below.
Interpretation of 10% permissible price increase in 12-month period
The Delhi High Court has interpreted the 10% allowance to increase MRP as follows: the MRP of non-scheduled formulations can only be increased by 10% in a period of 12 months, at a time, but in case of overcharging, the NPPA will have to assume that the company would have taken the 10% MRP increase and will be permitted to recover the ‘net’ amount.
The above interpretation is explained using examples in the paragraphs below.
Examples
What is permissible MRP increase for a pharmaceutical or medical device company?
If the MRP of a non-scheduled drug or medical device was Rs. 100 in 2014, the permissible price increase on yearly basis would be as follows:
Years
01.01.2014
01.01.2015
01.01.2016
01.01.2017
01.01.2018
01.01.2019
01.01.2020
Actual MRP
100
110
121
133.1
146.41
161.05
177.15
If a pharmaceutical or medical device company wishes to take 10% increase after 5 years, how much can that be?
If the MRP of a non-scheduled drug or medical device was Rs. 100 in 2014, and the company decided to take a price increase in 2019, the maximum permissible price increase would be Rs. 110.
Years
01.01.2014
01.01.2015
01.01.2016
01.01.2017
01.01.2018
01.01.2019
01.01.2020
Actual MRP
100
100
100
100
100
110
121
How should the overcharged amount be calculated, in the event of default by a pharmaceutical or medical device company?
In a hypothetical scenario, where the MRP of a non-scheduled drug or medical device was Rs. 100 in 2014, and the company decided to increase it to Rs. 161.05 in 2015 and later to 177.15 in 2020, the overcharged amount will have to be calculated as follows:
Years
01.01.2014
01.01.2015
01.01.2016
01.01.2017
01.01.2018
01.01.2019
01.01.2020
Total ovecharged amount
Actual MRP
100/-
161.05
161.05
161.05
161.05
161.05
177.15
–
Permissible MRP (with 10% increase)
Not applicable
110
121
133.1
146.41
161.05
177.15
–
How NPPA calculated overcharging amount ? (Not legal)
Not applicable
51.05
51.05
51.05
51.05
0
0
204.2
Overcharged amount as per Delhi High Court
Not applicable
51.05
40.05
27.95
14.64
0
0
133.69
The above table is instructive because it illustrates the incorrect methodology applied by NPPA to calculate the overcharged amount that has been routinely demanded and recovered by NPPA so far from pharmaceutical and medical device companies.
Until the Delhi High Court judgement, the NPPA demanded an amount which was excessive and incorrectly calculated (Rs. 204.2). However, after the Delhi High Court judgement, irrespective of the amount that has been calculated by the NPPA, the actual payable amount will be significantly lower than the amount demanded by NPPA (Rs. 133.69).
Impact
This particular Delhi High Court judgement on permissible price increase of drugs and medical devices will have a far-reaching impact on existing overcharging demands which have been raised by NPPA, and the demands that NPPA will raise in the future. All existing demands for overcharging raised by NPPA, which have been calculated using incorrect methodology due to incorrect interpretation of overcharging provisions of DPCO by NPPA, should be rolled back by the NPPA. A pharmaceutical or medical device company that has currently received such a demand should strongly object to the NPPA’s demand on the strength of the Delhi High Court judgement.
Pharmaceutical and medical device companies should also be careful in taking price increases for non-scheduled formulations in the future, and should not assume that they will be able to take an ‘aggregate’ price increase after a certain number of years if they haven’t availed the option to increase the price every 12 months.
India’s medical device price regulator has issued a direction to importers and manufacturers of 24 categories of medical device to submit price-related information, including the price at which they sell medical devices to distributors and hospitals in India, by March 10, 2021.
Background
In India, medical devices are regulated not just for quality, but also for price. The Drug (Price Control) Order 2013 (“DPCO”) regulates prices of all medical devices that are marketed in India. Some medical devices such as coronary stents, drug eluting stents, condoms and intra-uterine devices that are listed in the schedule of DPCO have their ceiling price fixed by the National Pharmaceutical Pricing Authority (“NPPA”), while all other medical devices (i.e. the non-scheduled medical devices) have to abide by a restriction whereby their maximum retail price cannot increase by more than 10 per cent in any given 12-month period.
Direction
In order to ensure that medical device manufacturers and importers are complying with the requirements of DPCO, the NPPA has been given powers under DPCO to issue directions to manufacturers and importers to submit price related information. It is in furtherance of this power that NPPA has directed that the following information be submitted to it:
Medical device category as per risk classification published by DCGI
Product name or specifications
Brand name or description
Date of launch in India
Minimal unit of sale/retail pack size
Price per unit to distributor / stockist
Price per unit to hospital
Price per unit to retailer
Applicable GST percentage
Moving Annual Turnover
Maximum retail price for unit as on January 1 of the years 2018, 2019, 2020 and 2021 (for a few categories, only the MRP as on January 1, 2021 needs to be submitted)
A copy of the said direction is available at this link.
24 Categories of Medical Devices covered by the Direction
Disposable Hypodermic Syringes
Disposable Hypodermic Needles
Disposable Perfusion Sets
IVD devices of HIV, HBsAg and HCV
Catheters
Intra Ocular Lenses
I.V. Cannulae
Bone Cements
Heart Valves
Scalp Vein Set
Orthopedic Implants
Internal Prosthetic Replacements
Ablation Devices
Organ Preservative Solution
Blood Grouping Sera
Ligatures, Sutures and Staplers
Tubal Rings
Surgical Dressings
Umbilical tapes
Blood/Blood Component Bags
Nebulizer
Blood Pressure Monitoring Device
Digital Thermometer
Glucometer
Challenges with submitting price for retailer
There may be certain fields for which information has been requested by NPPA, but the information may not be available with the importers or manufacturers. For example, the details of price to retailer sought by NPPA may not be available since importers and manufactures typically sell to a distributor or hospital, and not directly to a retailer. In such cases where the information is not available due to the nature of the manufacturer’s or importer’s business model, the importer or manufacturer may simply submit to NPPA that the information is not available with them. The importer or manufacturer is not expected to retrieve this information from its supply chain and submit to NPPA. Being in possession of such information may in fact result in breach of anti-trust laws, as an attempt to undertake resale price maintenance.
Sale of imported medical devices marketed by marketer
Some importers import and sell directly to a marketer in India. In that case, it is the marketer who is supposed to provide this information as price related information is not available with the importer. However, the importer should ideally endorse and countersign the information submitted by marketer because the primary obligation to submit this information is with the importer. Alternatively, the importer may submit whatever information that it has and give a written undertaking along with the submission that the remainder of the information will be submitted by the marketer because the remaining information is unavailable with the importer.
Requirement of license
The direction also contains a note which states that manufacturers and importers must attach a copy of the licence obtained from the DCGI for each medical device. It may be difficult to furnish the manufacturing licence for Class A and Class B medical devices (such as Glucometer). The said licence is actually issued by State Licencing Authority of the state where the medical device is manufactured. In order to comply with the requirement of the direction, a copy of the licence issued by State Licencing Authority should be annexed in place of copy of license from DCGI.
Format for submission
All the above information has to be certified by a qualified chartered accountant or cost accountant in a physical format, and the same information is also required to be sent in form of an Excel Sheet to the NPPA at the following email ID medicaldevices-nppa@gov.in
What should manufacturers and importers of medical device take this direction very seriously?
Any non-compliance with the direction of NPPA to submit price information may result in criminal prosecution under provisions of Essential Commodities Act of 1955.
The information will also be used to ascertain whether any manufacturer, importer or marketer has fixed the MRP of the medical device in excess of ceiling price or has increased the MRP over the permissible 10 per cent limit in a 12-month period. In both these cases, the NPPA has the power to recover the excess price paid by the end-consumer from the importer or manufacturer, and to levy a penalty for overcharging in certain cases.
That apart, the information will most likely be used by NPPA to track or validate the market share of various medical devices and medical device manufacturers in terms of moving annual turnover (MAT) of said medical device under the submitted medical device category. If, at any time in future, a medical device is inserted in the schedule of DPCO on the grounds of essentiality to the Indian population, then the market share in terms of MAT will become an important consideration before NPPA in fixing the ceiling price that medical device.
Therefore, manufacturers and importers of the 24 categories of medical devices listed above must take this exercise seriously and submit the requisite data to the NPPA in prescribed form within timelines, both in physical and electronic format.
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