The drug prices in India are controlled using what is called the Drugs (Prices Control) Order (DPCO).
- The DPCO is an order issued by the government under Section 3 of the Essential Commodities Act, 1955 empowering it to fix and regulate the prices of essential bulk drugs and their formulations.
- NPPA (National Pharmaceutical Pricing Authority), Controls and regulates the prices of Pharmaceutical drugs in India, it has limited authority to fix, review and justify pharmaceutical prices under the Drug Prices Control Order (DPCO), 1995.
The current DPCO 2013 has three primary aims: expanding the National List of Essential Medicines (NLEM), authorizing the National Pharmaceutical Pricing Authority(NPPA) to regulate prices of India’s NLEM, and authorizing the NPPA to regulate price increases of non-essential medicines.
Every few years, the Health Ministry in consultation with experts, draws up a National List of Essential Medicines (NLEM).
- These medicines are deemed essential for the treatment of common conditions, automatically come under price control.
- Also, the government has the power to bring any item of medical necessity under price control under Paragraph 19 of Drug Price Control Order 2013. The same provision was used to regulate the prices of cardiac stents and knee implants.
Are all the drugs marketed in the country under price control ?
- No. The National List of Essential Medicines (NLEM) 2011 is adopted as the primary basis for determining essentiality, which constitutes the list of scheduled medicines for the purpose of price control.
- The DPCO 2013 contains 680 scheduled drug formulations spread across 27 therapeutic groups. However, the prices of other drugs can be regulated, if warranted in public interest.
What is NPPA and its role ?
- National Pharmaceutical Pricing Authority (NPPA), was established on 29th August 1997 as an independent body of experts as per the decision taken by the Cabinet committee in September 1994 while reviewing Drug Policy.
- The Authority, interalia, has been entrusted with the task of fixation/revision of prices of pharmaceutical products (bulk drugs and formulations), enforcement of provisions of the Drugs (Prices Control) Order and monitoring of the prices of controlled and decontrolled drugs in the country.
How are the prices of drugs in the controlled category regulated ?
- As per the provisions of DPCO, NPPA fixes the Ceiling price for medicines in the controlled category.
What is "Ceiling Price" ?
- Ceiling price means a price fixed by the Government for Scheduled formulations in accordance with the provisions of DPCO 2013.
- The ceiling price of a scheduled drug is determined by first working out the simple average of price to retailer (PTR) in respect of all branded-generic and generic versions of that particular drug formulation having a market share of 1 percent and above, and then adding a notional retailer margin of 16 percent to it.
- The ceiling price fixed/revised by NPPA are notified in the Gazette of India (Extraordinary) from time to time. The ceiling prices are usually notified as exclusive of excise duty, local tax, etc.
Whether NPPA has any role to regulate prices of non-scheduled drugs ?
- The manufacturer of a non-scheduled drugs (drugs not under direct price control) is not required to take price approvals from NPPA for such drugs. However, NPPA is required to monitor the prices of such drugs and take corrective measures where warranted and their includes the power to fix and regulate such prices.
National level, state level and district level authorities that are responsible for enforcement of fixed prices:
- The National Pharmaceutical Pricing Authority, the FDA/ Drugs Controller of the State, and Drugs Inspector of the District are the enforcing authorities at National/State/ District Levels.