NPPA to clear hike in drug packaging price by 5.8%

The National Pharmaceutical Pricing Authority (NPPA) is set to approve a 5.8% increase in the packaging cost of drug makers, which will up drug prices by 100 basis points, an official with the regulator said.

Packaging cost was last raised two years ago, the official said.

“The norms for conversion cost, packaging charges and packing material are required to be notified every year. We have not changed them for the last two years. But now, taking note of the rise in input cost pressures for the pharmaceutical industry, we have decided to allow an increase by 5.76%,” the official, familiar with the development, said.

The move is expected to boost drug manufacturers’ margins, as packaging costs have a significant weightage in regulated drugs’ pricing.

The regulator fixes the maximum retail price of medicines by a formula that includes packaging, conversion and material costs and excise duty.

“Prices of medicines may go up sharply if the packaging cost is increased,” an analyst tracking the sector said.

The pricing authority will soon increase the price of Cipla Ltd’s asthma drug Asthalin by 10% and Aventis’ Novalgin injection by 23.5%, the NPPA official said.    

NPPA will also cut prices of several drugs, including that of Novalgin in the tablet form, he said. The price of 500-mg Novalgin tablet is likely to be cut by 3.7% from the current Rs7.28 for a strip of 10 tablets.

Shares of Cipla Ltd today ended at Rs363.70 on the National Stock Exchange, up 1.1% from close Thursday, while Aventis Pharma Ltd ended at Rs1,861.70, up 0.7%.

The authority has already approved the prices in respect of 59 formulations. In addition, the prices of 37 formulation packs based on pro-rata pricing have been fixed,” the official, familiar with the development, said.

The regulator has taken the decisions at a recent meeting this month.

NPPA has also decided to cut prices of 24 imported drugs marketed by companies such as Novartis, Sanofi Aventis, Pfizer, Eli-Lilly, GlaxoSmithKline Pharmaceuticals and Abbott, the official said.

“The price cut in case of imported drugs will be in the range of 1.5-3.7%. All these imported cases included insulin-based formulation, vitamin formulation, methyl predisolone formulation and calcipotriol and betamethasone skin ointment,” he said.

According to the official, domestic drug makers who are likely to be affected by the regulator’s price changes this time include Torrent Pharma Ltd, Cadila Healthcare Ltd, J.B. Chemicals, Aventis Pharma Ltd and Win Medicare.

Among multinationals, Eli-Lilly, Pfizer, GlaxoSmithKline Pharma, Abbott and Novartis are likely to be hit by the upcoming price changes.

The formulations, for which NPPA may revise prices, include pain killers, anti-allergy, vitamins, insulin and drugs used to treat ulcers, etc.

NPPA may also hike the price of aspirin by 5.5% factoring in the rise in market prices of major raw materials such as phenol and acetic anhydride, the official said.

“The impact on increase on the finished formulations containing bulk drug aspirin will be around 2%,” he said.

The NPPA directly fixes prices of 74 bulk drugs used as raw material to make medicines. It also sets prices of all medicines containing one or more of these bulk drugs.

In all other medicines, the regulator allows drug firms to increase prices up to 10% annually.