pakistan drug pricing policy

Pakistan Drug Pricing Policy-2015-DRAP

Pakistan Drug Pricing Policy-DRAPMay 16, 2015 1

BY:RASHID MUREED(LLB-PHARM-D & MBA)

PRICE REVISION HISTORY BASIS OF PRICING & DRUGS CLASSIFICATIONS PHARMEVO SCHEDULED DRUGS INDIA DRUG POLICY FROMULA BANGLADESH PRICING FORMULA OF CONTROLLED DRUGS PRICE FIXATION OF NCES PRICES OF GENERICS OF NCES PRICES OF NEW STRENGTHS OR NEW PACK SIZES REDUCTION IN PRICE OF ORIGINATOR BRAND ANNUAL INCREASE IN PRICES OF DRUGS PRICE FIXATION OF NEW ENTRANTS HARDSHIP CASES COMPONENTS OF MARK UP LOWER PRICED DRUGS MISCELLANEOUS CRITICAL ANALYSIS OF THE NEW DRUGS PRICING POLICY


CONTENTS

May 16, 2015 Pakistan Drug Pricing Policy-DRAP

Price Revision History

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Date of Price Increase Controlled drugs (%) Decontrolled drugs (%)

30-06-181 (S.R.O. 1109(I)/81)

06-06-1982 (SRO 537(I)/82)

26-05-1991 (SRO 475(I)/91)

12-06-1993 (S.R.O. 471(I)/93)

11-11-1994 (SRO 1038/94) 7.5 -

01-07-1995 - 15.0

01-01-1996 (SRO 7(I)/96 6.5 -

01-11-1996 (SRO 1231(I)/96 6.0 12.0

19-06-2000 (F. 9-4/99-price) 8.0 10.0

10-12-2001 (F.9-11/2001-price 3.0 4.0

Total 31.0 41.

Cumulative Impact 35.12 47.34

Scheduled drugs (318 Molecules-52% Market Share) Biological, infusions and drugs used for the treatment of Cancer/T.B/Hepatitis HIV/Thalassamia

and Organ Transplant. 160 molecules of public health significance from the Essential Drug List Top 50 molecules in unit terms as per IMS Data (2Q-2014) New Chemical Entities (NCEs)

Non-scheduled drugs (48% Market Share)

List of drugs in the Schedule may be revised after three years or earlier as deemed appropriate by the Policy Board


Basis of pricing & drugs classifications


INDIA DRUG POLICY FROMULA(348 Molecule-July-13)

Retail Price(MC+CC+PM+PC) × (1+MAPE/100) + EDWhere: MC: Material Cost CC: Conversion CostPM: Packaging Material Cost PC: Packaging CostMAPE: Maximum allowable post manufacturing expenses which shell not exceed 100% of manufacturing costED: Excise Duty

Imported Drug Cost: Retail priceLanded cost Margin not exceeding 50% of landed cost

If price of non-controlled drugs is increase more than 10% of maximum retail price during preceding 12 months, it is reduced to the level of 10% for next 12 months

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MRP (without VAT)=(RM+PM)×MarkupRM: Raw Material cost PM: Packaging Material

Mark Up

All oral Preparations & Topical preparation (without Antibiotics & Hormones)= 2.25

Antibiotics=2.3

All Sterile, Hormones & Contraceptives= 2.80

All Aseptic preparations (Injectable)=3.40

BANGLADESH PRICING FORMULA OF CONTROLLED DRUGS (2005)

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1. Price fixation of originator brand of NCE shall be based on average price of the same brand in India and Bangladesh.

2. If originator brand of NCE has not been marketed in India or Bangladesh: retail price in developing countries which regulate drug prices whole sale price UK MIMS or BNF or Australian PBS or New Zealand PMA; Price calculated on the basis of landed cost plus 35% makeup to calculate trade price. Demanded price.

3. Through Respective country Embassy Price Available on Official Website of Respective Country Pakistani chartered accountants of MNc’s operating in Pakistan through their member firms

in the respective countries.


Price Fixation of NCEs

Generic substitutes of the NCE shall be fixed @ 30% less than the originator brand price

If originator brand of an NCE is not marketed in Pakistan then generic substitute price shall be fixed at 30% less than the originator brand price available in India/Bangladesh

NCEs shall be deemed to be listed in the Schedule for four years or till the time of entry of at least three generic brands in the market, whichever is earlier.

At that time, maximum retail price of the originator brand of NCE shall be reduced by 30% and then NCE shall be considered as non-scheduled

Maximum retail price of any generic of originator brand of NCE shall not exceed the maximum retail price.


Prices of Generics of NCEs

Calculation of price of lower stregnth (new strength is of half of the existing strength) MRP = Price of higher strength - 40%

Calculation of price of higher stregnth (new strength is double of the existing strength) MRP = (Price of lower strength x100) /60

Prices of new pack sizes of existing packs of drugs shall be fixed on the basis of pro-rata of already fixed price of the existing pack size of the respective brand.

If new pack size is more than 1.5 times of the existing pack size, price of new pack size reduced by 2%

Reduced by 5% if the new pack size is double of the existing pack size

Reduced by 8% if new pack size is larger than double of the existing pack size.


Prices of new Strengths or new Pack Sizes

MRP of drugs listed in Schedule and for those having at least 3 generics in the market shall be reduced by 10% per annum for 3 consecutive years (cumulative reduction of 30%)of the MRP fixed by the Government except those originator brands which are justified

If MRP of any originator brand has already been reduced by the Government or the manufacturer or importer itself, shall be adjusted while calculating 30% reduction.

The maximum retail price of any generic of any originator brand of a drug shall not exceed the maximum retail price


Reduction in Price of Originator Brand

Effective 1st July 2016 annual increase shall be linked with CPI of the immediately preceding financial year

Manufacturers/importers may increase their existing MRP of scheduled drugs upto 50% of CPI (with a cap of 4%)

MRP of non-scheduled drugs up to 70% of CPI (with a cap of 6%) once in any financial year and calculation of revised maximum retail price shall be intimated to the Authority at least 15 days prior to affecting the increase


Annual Increase in Prices of Drugs

MRP of new entrants of the drugs already available in the market which have not been fixed so far by Government shall be fixed at the time of registration according to the following parameters:

In case of first generic, uniform price shall be fixed at 30% less than the originator brand. In case of lower priced drugs, price of generics shall be fixed at par with the originator brand

If Generics are present in market then uniform price shall be fixed on the basis of average price of brands of the same drug already available in the market.


Price Fixation of New Entrants

For locally manufactured drugs:Trade Price = Manufacturing cost + mark-up @ 70%

For imported drugs:Trade Price = Landed cost + mark-up @ 35%

For imported drugs in finished form and local labelling & cartooningTrade Price = (Landed cost + packaging cost) + mark-up @ 35%


Hardship Cases

Policy Board shall constitute a committee to decide the hardship cases and fix maximum limit for increase in prices of intravenous infusions

Hardship cases of scheduled molecules shall be processed on priority and decided on the basis of first come first serve basis but not later than 9 months from the date of notification of this Policy

Maximum increase on hardship cases shall be 8% per annum of the existing approved price of the respective drug. In case of lower priced drugs, increase shall not exceed 25 paisa per tablet / capsule / caplet / patch / 5ml of syrup, suspension and elixirs

After disposal of the existing pending hardship cases, new hardship cases shall be decided within 90 days of submission of the hardship case. If DRAP didn’t response then applicant may increase its price up to maximum of 8% on the existing approved price and inform the DRAP


Hardship Cases


Components Of Mark Up

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S.No Description Local Import

1 Product development and Stability Studies 03 - 2 Product Expiry 02 023 Warehouse and cold chain 02 024 Salesmen salaries and travel 10 105 Sales Promotion 03 026 Samples 03 -7 General Administration 04 028 Financial Charges 03 02 9 WPPF and CRF 01 -

10 Income Tax 08 -11 Distribution expenses and discount 16 1012 Manufacturer profit 15 -13 Importer Profit - 05

Total 70% 35%


Lower Priced Drugs

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The drugs whose prices are less than the following threshold shall be deemed to be non-scheduled drugs even otherwise falling under the scheduled category to encourage their production:

Rs.3/- per tablet / capsule / caplet Rs.3/- 5ml of syrup /suspension/elixir Rs.3/- per patch Rs.6/- per sachet Rs.15/- per injection Rs.3/- per 1 gm of cream/ ointment/ gel (non sterile) subject to maximum pack size

of 20gm. Rs.4/- per 1 gm of cream/ ointment/ gel (sterile) subject to maximum pack size of

20gm. Rs.4/- per ml of eye/ ear /nasal drops /nasal spray / inhalation solution (sterile)

subject to maximum pack size of 10ml.

Threshold limit of lower priced drugs shall increase by 50% of CPI every year.

May 16, 2015 Pakistan Drug Pricing Policy-DRAP 18

Annual increase in price of scheduled drugs will be linked with 50% of CPI (with a cap of 4%)

For non-scheduled drugs, it will upto 70% of CPI (with a cap of 6%)

Product which manufactured locally and export to developed countries like USA/EU/UK/Japan/Australia and WHO will be exempted from price control

The Authority may include non-scheduled drug in the Schedule or vice versa by stating the reasons thereof.

Maximum retail prices fixed under this Policy for locally manufactured drugs shall also be applicable to imported drugs.

Manufacturer or importer may adjust the price of its registered drug any time subject to the maximum retail price & intimate to government accordingly

Miscellaneous


Merits/Advantages

The Main positive point that in history of Pakistan, in 2015, DRAP introduce drug pricing policy

318 "scheduled" drugs, including cancer and HIV medicines will come under the preview of the pricing policy.

Play significant role in making the drugs available to public i.e. the market player of drugs

Consider the Hardship cases with timeline

The WAP mechanism to control price of essential medicines across the board will help in both public health sectors and industrial growth


Demerits/Des-advantages

The new drug pricing policy would have adversely impact on the profitability of Pakistani pharmaceutical companies

Under the current cost-base formula of determining the price of the drugs, the expenditure on Research & Development was not being considered at all

Not determined the timeline of finalization of new NCE’s and New Generic Product Prices

It might result that the multinational Companies may lose interest from investing or expanding production capacity in Pakistan who are the leading supplier of many essential drugs

Never address the medical devices and Sutures prices in the policy


THANKS

pakistan drug pricing policy

Healthcare