The ceiling price of the drugs going off patent will be reduced to 50%, the National Pharmaceutical Pricing Authority (NPPA) notified on Thursday, in a bid to curb profiteering by the pharmaceutical companies.

After one year, the drug pricing regulator will take the market data and fix a new price, the notification further said.

The move is expected to hit the companies hard as NPPA has taken away the option from them to reduce the prices on their own, a company executive said requesting anonymity.

“It will now be mandatory for the company to reduce the price to 50% once the patent expires. Earlier the company had an option to continue with the same price till generic products hit the market,” he said.

In case of Fixed dose combinations (FDC) where one component is going off patent the ceiling price will be revised by reducing the present ceiling price by 50%, it further said.

According to the notification, “the retail price of the new drug shall be arrived at by reducing fifty percent,” it said.

The Centre and the pharma industry had been working on a pricing mechanism for drugs that are going off patent for a year now.The Department of Pharmaceutical (DoP) held several meetings with the stakeholders including the industry representatives before it came out with the notification.

Pharma major Johnson and Johnson’s anti TB drug-Bedaquiline who’s patent is set to expire in July is likely to be the first one to get affected with the move.

The move gains significance as many drugs in the recent past have gone off patent like the diabetes drugs, making room for cheaper generics, the executive said.

“A lot of companies in the past have capitalised on the brand value as the patients will continue to be willing to pay a premium as long as the company wants. With this move, this practice will end as the moment the patent expires the prices will be slashed to 50%. This way the NPPA will supervise the price drop benefitting the patients,” said another company executive.

The move will significantly reduce the prices of those patented drugs which are a part of the National List of Essential Medicines (NLEM). For the first time, patented drugs like anti-TB bedaquiline and delamanid, anti-HIV Dolutegravir and anti-hepatitis C daclatasvir have been included in NLEM.

“They are set to get significantly cheaper,” a member of a pharma lobby group said.