New Delhi: The National Pharmaceutical Pricing Authority (NPPA) has clarified that the manufacturers and importers of orthopedic knee implants can avail an increase of 10 per cent in maximum retail price (MRP) with effect from September 16, 2023 for the preceding 12 months.

The clarification is on a notification by the Authority on September 15, 2023 extending the ceiling price fixed for orthopedic knee implants for knee replacement system for one more year from September 16, 2023 till September 15, 2024.

Following the notification, various stakeholders approached the Authority for clarity regarding increase in price for these products.

Considering the requests, the Authority clarified that with effect from September 16, 2023, the manufacturers and importers of knee implants can avail an increase in MRP up to 10 per cent of MRP during preceding 12 months.

The previous MRP may be considered as price in compliance with notifications related to ceiling price fixation, from August 16, 2017, August 13, 2018 and 2019, August 14, 2020, September 15, 2020, September 10, 2021 and September 15, 2022, plus applicable taxes, said the Authority in clarification.

The drug price regulator in its recent meeting deliberated upon the matter in detail and examined the requests made by various industry associations and companies highlighting various factors such as fluctuations in foreign exchange; increase in manpower costs, freight cost, Wholesale Price Index (WPI); supply chain problems, etc.

The authority observed that the annual WPI in four years from April 1, 2020 to April 1, 2023 was 1.88468 per cent, 0.53638 per cent, 10.76607 per cent, and 12.1218 per cent, respectively.

The Union Ministry of Health and Family Welfare through its S.O. 1468 dated October 6, 2005, notified the orthopaedic implants as ‘drugs’, and the DPCO, 2013, is applicable to all notified drugs (including notified devices).

Extending the ceiling price fixation for one year, that is September 15, 2024 or till further order, whichever is earlier, the Authority said that the ceiling prices shall be monitored as per the provisions of paragraph 20(1) of DPCO, 2013.

The non-scheduled medical devices and drugs are monitored under para 20(1) of Drugs (Prices Control) Order, 2013 and the knee implants are non-scheduled devices/drugs.

Under the Para 20(1) of the DPCO, 2013, the Government shall monitor the maximum retail prices (MRP) of all the drugs, including the non-scheduled formulations and ensure that no manufacturer increases the maximum retail price of a drug more than ten percent of maximum retail price during preceding
twelve months and where the increase is beyond ten percent of maximum retail price, it shall reduce the same to the level of ten percent of maximum retail price for next twelve months.

“Further, the ceiling price of orthopaedics knee implants will be reviewed after a period of one year,” it decided in the 116th meeting of the Authority held on September 6, 2023.

In its order on August 16, 2020, NPPA said that it has “noticed that orthopaedic   knee implants are having unjustified, unreasonable and irrational high trade margins leading to their exorbitant prices which affects the out of pocket expenses of patients and lakhs of patients are not able to pay for arthroplasty procedures because of these exorbitant prices and suffering in pain…”.

The estimates of such patients requiring arthroplasty intervention, both diagnosed and undiagnosed, is about 1.5 to 2 crore out of which only about 1 lakh plus well off patients are in a position to pay for it every year. It has also noted that osteoarthritis is likely to become the fourth leading cause of disability by year 2020, as per the World Health Organisation and India is likely to be one of the leading countries of such immobilized citizens in terms of numbers. Preventing such a scenario is essential in individual as well as national interest, it said.

In this context, the NPPA carried out an exhaustive stakeholder’s consultation on the issue of exorbitant cost of orthopaedic knee implants and excessive trade margins and analysis of   ‘trade margins’ in the market of knee implants was uploaded in public domain for the sake of transparency and in the spirit of people’s right to information following which it decided that it is necessary to control the excessive trade margins for fixing ceiling price of orthopaedic knee implants which is fair and reasonable based on its intrinsic value of the implants with rational margins to protect public interest.