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DRUGS (PRICES CONTROL) ORDER, 2013
6.
18. Revision of ceiling price on the basis of moving annual turnover (MAT) 13
18A. Revision of ceiling of scheduled formation after expiry of patent issued under the Patents Act, 1970 (39 of 1970) 14
19. Fixation of ceiling price of a drug under certain circumstances 14
20. Monitoring the prices of non-scheduled formulations 14
21. Monitoring the availability of scheduled formulations 15
22. Recovery of dues accrued under the Drugs (Prices Control) Order, 1979 and to deposit the same into the Drugs Prices Equalisation Account 15
23. Recovery of overcharged amount under Drugs Prices Control Orders 1987 and 1995 15
24. Carrying into effect the price fixed or revised by the Government, its display and proof thereof 16
25. Display of prices of non-scheduled formulations and price list thereof 16
26. Control of sale prices of formulations 17
27. Sale of split quantities of formulations 17
28. Manufacturer, distributor or dealer not to refuse sale of drug 17
29. Maintenance of records and production thereof for inspection 17
30. Power of entry, search and seizure 17
31. Power to review 17
32. Non–application of the provisions of this order in certain cases 18
SCHEDULE I: National List of Essential Medicines (NLEM) 2022 19
SCHEDULE II: Proforma for Application for Price Fixation/Revision of a new Drug Formulation related to NLEM Formulation 70
Drugs (Prices Control) Order, 2013
[ORDER S.O. 1221(E), DATED 15-5-2023]
In exercise of the powers conferred by section 3 of the Essential Commodities Act, 1955, (10 of 1955), and supersession of the Drug (Prices Control) Order, 1995, except as respect to things done or omitted to be done before such supersession, the Central Government hereby makes the following Order, namely:—
Short title and commencement.
1. (1) This Order may be called the Drugs (Prices Control) Order, 2013.
(2) It shall come into force on the date1 of its publication in the Official Gazette. Definitions.
2. (1) In this Order, unless the context otherwise requires,–
(a) “Act” means the Essential Commodity Act, 1955 (10 of 1955);
(b) “active pharmaceutical ingredients or bulk drug” means any pharmaceutical, chemical, biological or plant product including its salts, esters, isomers, analogues and derivatives, conforming to standards specified in the Drugs and Cosmetics Act, 1940 (23 of 1940) and which is used as such or as an ingredient in any formulation;
(
c) “brand” means a name, term, design, symbol, trademark or any other feature that identifies one seller’s drug as distinct from those of other sellers;
(d) “ceiling price” means a price fixed by the Government for Scheduled formulations in accordance with the provisions of this Order;
(e) “dealer” means a person carrying on the business of purchase or sale of drugs, whether as a wholesaler or retailer and includes his agent;
(f) “distributor” means a person engaged in the work of distribution of drugs and includes an agent or a stockist for stocking drugs for sale to a dealer;
(g) “existing manufacturer” means manufacturer existing on the date of publication of this order in the Official Gazette.
(h) “Form” means a form specified in the Second Schedule;
1. Enforced with effect from 15-5-2013.
(i) “formulation” means a medicine processed out of or containing one or more drugs with or without use of any pharmaceutical aids, for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease and, but shall not include –
(i) any medicine included in any bona fide Ayurvedic (including Sidha) or Unani (Tibb) systems of medicines;
(ii) any medicine included in the Homeopathic system of medicine; and
(iii) any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply;
(j) “generic version of a medicine” means a formulation sold in pharmacopeial name or the name of the active pharmaceutical ingredient contained in the formulation, without any brand name;
(k) “Government” means the Central Government;
(l) “import” with its grammatical variations and cognate expressions means bringing a drug into India from a place outside India for its sale;
(
m) “local taxes” means any tax or levy (except excise or import duty included in retail price) paid or payable to the Government or the State Government or any local body under any law for the time being in force by the manufacturer or his agent or dealer;
2[(n) ‘manufacturer” for the purpose of this Order means any person who manufactures or imports or markets drugs for distribution or sale in the country;]
(o) “market share” means the ratio of domestic sales value (on the basis of moving annual turnover) of a brand or a generic version of a medicine and the sum of total domestic sales value of the all brands and generic versions of that medicine sold in the domestic market having same strength and dosage form;
(
(
p) “margin to retailer” for the purposes of this Order shall mean a percentage of price to retailer;
q) “market based data” means the data of sales related to a drug collected or obtained by the Government as deemed fit, from time to time;
(
r) “maximum retail price” means the ceiling price or the retail price plus local taxes and duties as applicable, at which the drug shall be sold to the ultimate consumer and where such price is mentioned on the pack;
(
s) “moving annual turnover” in a particular month means cumulative sales value for twelve months in domestic market, where the sales value of that month is added and the corresponding sales of the same month in the previous year are subtracted;
2. Substituted by Notification No. S.O. 1233(E), dated 8-5-2015. Prior to its substitution, clause (n) read as under:
“(n) “manufacturer” for the purpose of this Order means any person who manufactures, imports and markets drugs for distribution or sale in the country;”
3 DRUGS (PRICES CONTROL) ORDER, 2013 O. 2
(t) “National List of Essential Medicines” means National List of Essential Medicines, 2011 published by the Ministry of Health and Family Welfare as updated or revised from time to time and included in the first schedule of this order by the Government through a notification in the Official Gazette;
(u) “new drug” for the purposes of this Order shall mean a formulation launched by an existing manufacturer of a drug of specified dosages and strengths as listed in the National List of Essential Medicines by combining the drug with another drug either listed or not listed in the National List of Essential Medicines or a formulation launched by changing the strength or dosages or both of the same drug of specified dosages and strengths as listed in the National List of Essential Medicines.
3[(v) “non-scheduled formation” means a formation which is not included in Schedule I;]
(w) “pharmacoeconomics” means a scientific discipline that compares the therapeutic value of one pharmaceutical drug or drug therapy to another;
(x) “price list” means a price list referred to in paragraphs 24 and 25 and includes a supplementary price list;
(y) “price to retailer” means the price of a drug at which it is sold to a retailer which includes duties and does not include local taxes;
(z) “retail price” means the price fixed by the Government for a new drug under paragraph 5;
(za) “retailer” means a dealer carrying on the retail business of sale of drugs to customers;
(zb) “scheduled formulation” means any formulation, included in the First Schedule whether referred to by generic versions or brand name;
(zc) “schedule” means a Schedule appended to this Order;
(zd) “wholesaler” means a dealer or his agent or a stockist engaged in the sale of drugs to a retailer, hospital, dispensary, medical, educational or research institution or any other agency;
(ze) “wholesale price index” means annual wholesale price index of all commodities as announced by the Department of Industrial Policy and Promotion, Government of India, from time to time.
(2) All other words and expressions used herein and not defined but defined in the Act or the Drugs and Cosmetics Act, 1940 (23 of 1940) shall have the meanings respectively assigned to them in the said Acts.
3. Substituted by Notification No. S.O. 686(E), dated 9-3-2015. Prior to its substitution, clause (v) read as under:
“(v) “non-scheduled formulation” means a formulation, the dosage and strengths of which are not specified in the First Schedule;”
COMMENTS
2.1 Definition of “Active Pharmaceutical Ingredients or Bulk Drug” [Section 2(1)(b)]
Active Pharmaceutical Ingredients or Bulk Drug means any pharmaceutical, chemical, biological, or plant product. It includes: Its salts. Esters. Isomers. Analogues. Derivatives.
Conforming to standards specified in the Drugs and Cosmetics Act, 1940 (23 of 1940): Used as such.
Used as an ingredient in any formulation.
2.2 Definition of “Formulation” [Section 2(1)(i)]
A medicine processed out of or containing one or more drugs. Can be with or without the use of any pharmaceutical aids. For internal or external use for or in the: Diagnosis of disease. Treatment of disease. Mitigation of disease. Prevention of disease.
Formulation excludes:
Any medicine included in any bona fide: Ayurvedic system of medicine (including Sidha). Unani (Tibb) system of medicine.
Any medicine included in the Homeopathic system of medicine.
Any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply.
2.3 Definition of “Local Taxes” [Section 2(1)(m)]
Local Tax means any tax or levy paid or payable to the Government or the State Government or any local body under any law for the time being in force.
By the manufacturer or his agent or dealer. It excludes:
Excise or import duty included in retail price.
2.4 Definition of “New Drug” [Section 2(1)(u)]
New Drug means:
Combination Drug Launch:
A formulation launched by an existing manufacturer of a drug of specified dosages and strengths as listed in the National List of Essential Medicines.
This drug is combined with another drug, which can be either listed or not listed in the National List of Essential Medicines.
Strength/Dosage Change Launch:
A formulation launched by changing the strength or dosages or both of the same drug of specified dosages and strengths as listed in the National List of Essential Medicines.
Directions to manufacturers of active pharmaceutical ingredients or bulk drugs or formulations.
3. The Government may,—
(i) with a view to achieve adequate availability and to regulate the distribution of drugs, in case of emergency or in circumstances of urgency or in case of non-commercial use in public interest, direct any manufacturer of any active pharmaceutical ingredient or bulk drug or formulation to increase the production and to sell such active pharmaceutical ingredient or bulk drug to such other manufacturer(s) of formulations and to direct formulators to sell the formulations to institutions, hospitals or any agency as the case may be;
(ii) for the purpose of giving any direction under sub-paragraph (i), call for such information from manufacturers of active pharmaceutical ingredients or bulk drugs or formulations, as it may consider necessary and such manufacturer shall furnish the required information within such time the Government may fix.
Calculation of ceiling price of a scheduled formulation.
4. (1) The ceiling price of a scheduled formulation of specified strengths and dosages as specified under the first schedule shall be calculated as under:
Step 1. First the Average Price to Retailer of the scheduled formulation i.e. P(s) shall be calculated as below:
Average Price to Retailer, P(s) = (Sum of prices to retailer of all the brands and generic versions of the medicine having market share more than or equal to one per cent of the total market turnover on the basis of moving annual turnover of that medicine)/(Total number of such brands and generic versions of the medicine having market share more than or equal to one per cent of total market turnover on the basis of moving annual turnover for that medicine.)
Step 2. Thereafter, the ceiling price of the scheduled formulation i.e. P(c) shall be calculated as below:
P(c) = P(s).(1+M/100), where
P(s) = Average Price to Retailer for the same strength and dosage of the medicine as calculated in step1 above.
M = % Margin to retailer and its value =16
O. 6
DRUGS (PRICES CONTROL) ORDER, 2013 6
(2) The ceiling price calculated as per sub-paragraph (1) and notified by the Government shall be applicable to scheduled imported formulations also.
Calculation of retail price of a new drug for existing manufacturers of scheduled formulations.
5. (1) The retail price of the new drug available in domestic market shall be calculated as provided in sub-paragraph (1) of paragraph 4.
4[Provided that the retail price of a new drug or the new drug that contain molecules or components or ingredients, that have become off-patent or about to become off-patent under the Patents Act 1970 (39 of 1970), shall be fixed as per the provisions of sub-paragraph (3) of this paragraph;]
(2) (i) the price to retailer of a new drug, not available in domestic market, shall be fixed by the Government on the principles of “Pharmacoeconomics” of the new drug, on the recommendation of a Standing Committee of Experts formed under paragraph 15.
(ii) the retail price of such new drug shall be fixed by adding sixteen per cent margin to retailer on the price to retailer as fixed in item (i).
4[(3) (i) the retail price of the new drug shall be arrived at by reducing fifty per cent of the price calculated under sub-paragraph (1) of paragraph 4 and if the new drug is not available in the domestic market, the retail price of the new drug shall be fixed as per the provisions of sub-paragraph (2) of the paragraph.
(ii) after one year from the date on which the retail price was fixed as per item (i) or the date on which “price to retailer” of atleast one company fixed under item (i) is captured in the pharmaceutical market database, whichever is later, the retail price for the subsequent manufacturers shall be fixed as per sub-paragraph (1) of paragraph 4:
Provided that while fixing the retail price under item (ii), the prices to retailer of the brand of the manufacturer having the patent and the manufacturer holding the permission granted by the patentee shall be excluded.]
Ceiling price of a scheduled formulation in case of no reduction in price due to absence of competition.
6. (1) where the average price to retailer of a scheduled formulation, arrived at as per the formula specified in sub-paragraph (1) of paragraph 4, has the effect of,—
(a) no reduction in average price to retailer with respect to the prices to retailer of the schedule formulation; and
(b) there are less than five manufacturers for that formulation having one per cent or more market share, the ceiling price shall be calculated as under:—
(i) in the event of other strengths or dosage forms of the same scheduled formulation is available in the list of scheduled formulation, the average price to retailer shall be calculated as under:
4. Inserted by the Drugs (Prices Control) Amendment Order, 2023, w.e.f. 11-5-2023.
