India's price-setting agency prepares for plant inspections

Pharma manufacturing plants in India can expect a visit from a new set of regulators as the government plans plant visits as a way to enforce drug-pricing policies. The new proposal comes as the country is looking at significantly expanding the number of drugs for which it sets price controls, a move that is very controversial with Big Pharma.

Citing unnamed sources, the Business Standard says new internal guidelines from the National Pharmaceutical Pricing Authority (NPPA) call for plant visits to ensure the accuracy of cost data that drug companies provide as part of pricing requests. The guidelines say, "Plant visits are to be made for verification of data and collection of additional data, understanding product, process, etc., and holding discussions with the officials of the company."

The Indian government currently maintains price controls over 74 bulk drugs and formulations but is moving toward extending cost caps to an additional 348 drugs, worth an estimated $5.42 billion wholesale. Reports have said that amounts to 60% of the domestic market and includes brands sold by domestic and foreign drugmakers. The NPPA has been seeking the power to demand foreign drugmakers' rationale for setting prices on imported drugs. Domestic drugmakers' prices are set by the NPPA based on actual production costs, but foreign drugmakers' prices are based on a capped profit margin, reports have said.

The NPPA says that approach might allow foreign drugmakers to report prices that are "much higher" than the actual cost, so that the fixed-margin approach yields bigger sales. Understandably, multinational companies don't want to deal with cost-based pricing--and they're objecting to the NPPA's request on the grounds that it violates the government's own policies.

The inspectors are intended to evaluate yields, capacity and utilization, plant maintenance, raw material costs, plant expansions, and even research and development costs, the Business Standard reports. "There are often clashes between data sent by companies and what we gather through other sources," an NPPA official tells the publication.

- read the Business Standard story