INDIA Law and Practice Contributed by: Malathi Lakshmikumaran, Vindhya S Mani, Pallaash Shankhdhar and Khushi Lokwani, Lakshmikumaran & Sridharan Attorneys
FTDR Act. Anyone importing these products must have an Importer-Exporter Code for customs clearance. Non-tariff regulations on drugs and medical devices in India are imposed as follows (see 7.1 Governing Law and Relevant Enforcement Bodies and 7.2 Importer of Record of Pharmaceuticals and Medical Devices ): • to import drugs, companies must obtain a Regis- tration Certificate and an import licence under the DCA and the DCR; and • to import medical devices, the foreign manufac- turer’s Authorised Indian Agent (or Indian subsidi- ary) must obtain an import licence under the MDR issued only by the CLA/SLA as the case may be. 7.5 Trade Blocs and Free Trade Agreements As a member of the WTO, India participates in sev- eral regional and bilateral trade arrangements, such as SAARC, ASEAN-India FTA, APTA and the India MER- COSUR PTA. Notably, the India–UAE CEPA includes a dedicated pharmaceutical annex providing for regula- tory co-operation and fast-track approvals for certain approved pharmaceutical and biologic products, to ease market access. Recent Free Trade Agreements India’s new free trade agreements (India–EU and India–US) could have improved market access for pharmaceuticals and medical devices. 8. Pharmaceutical and Medical Device Pricing and Reimbursement 8.1 Price Control for Pharmaceuticals and Medical Devices India exercises significant statutory control over the pricing of pharmaceuticals and, to a more limited and product‑specific extent, medical devices. The princi- pal legislation governing price regulation is the DPCO, issued under the ECA. The DPCO is administered and enforced by the NPPA. While the DPCO was originally intended for pharma- ceuticals, its scope has been extended to certain noti- fied medical devices, particularly those included in the
National List of Essential Medicines (NLEM) or sepa- rately notified by the government for price regulation. Products Included in the NLEM Pharmaceutical formulations and notified medical devices included in the NLEM are subject to govern- ment‑fixed ceiling prices determined by the NPPA. The ceiling price represents the maximum retail price (MRP) at which the product may legally be sold to distributors and retailers. The MRP is calculated as the ceiling price plus applicable local taxes, and no manu- facturer, importer, wholesaler, distributor or pharmacy may charge above the MRP. This mechanism effec- tively controls: • the manufacturer’s ex‑factory price; and • the final selling price to the consumer, thereby indi- rectly regulating the margins available to wholesal- ers and retailers. Products Outside the NLEM For drugs and medical devices not included in the NLEM, the NPPA does not ordinarily fix ceiling prices. However, manufacturers and importers are subject to price‑increase restrictions and may not increase the MRP beyond 10% in any rolling 12‑month period. Where the increase is beyond 10% of the MRP, it shall reduce the same to the level of 10% of the MRP for The NPPA factors a defined retailer margin, typically around 16%, into the calculation of ceiling prices for price‑controlled products. In addition, it increasingly applies Trade Margin Rationalisation, which caps the total margin between the manufacturer’s price and the MRP. 8.2 Price Levels of Pharmaceuticals or Medical Devices Under India’s regulatory framework, international pric- es are not an official determinant for price fixation, and India does not follow an external reference pric- ing mechanism, unlike certain other jurisdictions that benchmark domestic prices to foreign markets. Pric- ing rules for medicines and medical devices in India fall under the DPCO, with the NPPA being responsible for implementing and overseeing those controls. next 12 months. Trade Margins
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