The Department of Pharma (DoP) of the Central Government has prepared a formula to fix the prices of medicines that are out of patent. Under the Patents Act, the retail price of a drug containing any patented molecule, component or material shall be up to 50% of the ceiling price prevailing at the time of expiry of the patent. The ceiling price will be revised again after one year based on market data. This step of DOP is important in the sense that recently the patent period of major diabetes drugs has expired.
A pharma company executive explained the pricing mechanism, “If a combination drug (such as the anti-diabetic molecule sitagliptin, whose patent expired last year, and another drug in the same category, metformin, which is already under price control) ) is being sold in the market, then the price will be fixed in two ways. The ceiling price of sitagliptin will be 50% less than the price of the innovator (Merck in this case).