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Over 99% of SKUs adhere to norms under drug price control

A recent exercise carried out by National Pharmaceutical Pricing Authority (NPPA) to monitor price movements of medicines under Drugs Prices Control Order (DPCO), 2013 shows 99.6% of stock keeping units (SKUs) to be compliant.

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A recent exercise carried out by National Pharmaceutical Pricing Authority (NPPA) to monitor price movements of medicines under Drugs Prices Control Order (DPCO), 2013 shows 99.6% of stock keeping units (SKUs) to be compliant.

In a notification, NPPA said it has carried out an internal exercise to observe price movement of medicines during the month of October, 2014 based on available database in respect of the both scheduled and non-scheduled category of formulations for appropriate action under provisions of DPCO, 2013.

The total market (moving annual total) value is Rs 81,103 crore with total number of SKUs is 95,815. The number of schedules and non-scheduled SKUs are 11,744 and 84,071, respectively. In the field of inventory management, a stock-keeping unit or SKU refers to a specific item stored to a specific location.

In a brief summary of prima facie evidence showing increase, decrease and no change in prices of numbers of SKUs, it shows a total of 3183 SKUs (1180 scheduled and 2003 non-scheduled) reported decline in price change, while 74,453 SKUs registered no change in price (8941 scheduled and 65,512 non-scheduled). Price change within permissible limit as per DPCO, 2013 was visible in case of 17,849 SKUs (1528 scheduled and 16,321 non-scheduled). However, 330 SKUs have changed prices beyond permissible limit as per DPCO, 2013 (95 scheduled and 235 non-scheduled).

In an earlier notification in February, the regulator had said that monitoring of price compliance in respect of scheduled drugs by NPPA alone was a humongous task given the number of SKUs falling under National List of Essential Medicines (NLEM), which is incorporated in the first schedule of DPCO, 2013 for the purpose of price control. Typically for every drug formulation of mass consumption there are scores of brands, which makes it all the more difficult for NPPA to monitor price compliance through random checks.

As per the available database, there are around 12,000 SKUs related to NLEM or Scheduled Drugs under DPCO, 2013. Non-Scheduled drugs SKUs are well over 150,000. Given the numerous brands of medicines available for each drug formulation it becomes extremely difficult for the drug price regulator to effectively monitor price compliance by manufacturers, marketers, distributors, dealers and retailers.

"The above exercise shows compliance of the DPCO, 2013 from pricing perspective in respect of 99.6% of SKUs," NPPA said in its recent notification on Thursday. However, the drug price regulator further said that after ascertaining status in respect of the cases observed for price violation from the manufacturers concerned, NPPA shall take necessary action in such cases where price violation has been established under provisions of DPCO, 2013.

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