Controversial new powers which have allowed India’s drug pricing authority to set the prices of non-essential drugs have now been withdrawn.

Internal guidelines issued by the National Pharmaceutical Pricing Authority (NPPA) on May 29 this year allowed the agency, in July, to cap the prices of 108 products which are not included on the National List of Essential Medicines (NLEM). 

The NPPA had said it would regulate the prices of these products, which are mainly used in the treatment of diabetes and cardiovascular conditions, because the significant price differences between brands for the same drug were “indicative of a severe market failure.”

However this week, a notice on the NPPA website states simply that the May 29 internal guidelines, issued under Paragraph 19 of the 2013 Drug Price Control Order, “are hereby withdrawn with immediate effect.” The July price ceilings are not affected by the guidelines’ withdrawal, it is reported.

The NPPA is empowered to set the prices of essential medicines, but a special provision under Paragraph 19 also permits it to fix the price of any medicine “in extraordinary circumstances, if it considers necessary to do so in the public interest.”

The imposition of price caps on non-essential drugs had come as a shock to the industry, and industry groups commenced legal challenges to them in the Delhi and Mumbai High Courts.

The Indian Pharma Alliance, a domestic drugmakers group, noted that inter-brand price differences have always existed and would be found “in every single formulation which is manufactured by more than one formulator.” By that logic, every drug which has more than one manufacturer would come under price control, the group added. 

And the Organisation of Pharmaceutical Producers of India (OPPI), which represents the research-based companies in the country, pointed out that NPPA’s notification had extended beyond the mandate of DPCO 2013, which “clearly states the ‘intention of the policy is to bring the essential medicines under price control and not to control the Indian pharmaceutical industry’.” 

OPPI had urged the government to rethink the decision, which it said would be “detrimental to the investment climate for market expansion, brand-building and employment generation in the future.”

- In mid-September, the NPPA added another 36 products to the 348 already included on the NLEM, which covers around 30% of medicines sold on the market.

These newly-listed products included the antibiotic ciprofloxacin, metformin for the treatment of diabetes and the antipsychotic Thorazine (chlorpromazine). Earlier in the month, the NPPA also said that it would be auditing the manufacture of price-capped antimalarials, rabies vaccine and snake anti-venom, to ensure that production remained at normal levels following recent supply shortages.