Government brings 44 more essential drugs under price cap

August 30, 2023
Posted by: OptimizeIAS Team
Category: DPN Topics

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Government brings 44 more essential drugs under price cap

Subject: Schemes

Section: Health

Context: National Pharmaceutical Pricing Authority (NPPA) has brought 44 new drugs under price control.

Key Points:

The National Pharmaceutical Pricing Authority (NPPA) has brought 44 new drugs under price control. These drugs are commonly used for pain management, depression, anxiety, gastro- related ailments, hypertension and several auto-immune diseases.
The move is set to make these drugs cheaper. Manufacturers failing to comply with the price cap have to return the overcharged amount to the government.
Drug makers have been asked to mandatorily issue a price list of the drugs to the drug regulator through the Integrated Pharmaceutical Database Management System (IPDMS) and submit a copy to state drug controllers and dealers.
As per the order, the manufacturers not complying with the regulations shall be liable to deposit the overcharged amount as per the provisions of the Drugs (Prices Control) Order, 2013 and Essential Commodities Act 1955.
NPPA and DPCO 2013:
- The mandate of NPPA is to ensure availability of essential medicines at reasonable prices. The authority has directed every retailer and dealer to display the prices at their business premises so that they are easily accessible to consumers.
- DPCO, 2013 is a market-based pricing regime unlike the Drug Price Control Order, 1995, which was based on costs.
- Under the DPCO, 2013 pricing regime, ceiling prices of essential medicines are calculated as per the marker price basis (see box).
Criticism of ceiling price?
- By giving unviable ceiling prices, it discourages the production of essential medicines
- As manufacturing medicines like this becomes less profitable, pharma companies are pushed to come up with versions of the medicines that are not covered under the NELM, such as different strengths of medicines or fixed-dose combinations.

What is the “Drugs (Prices Control) Order (DPCO)” ?

The Drugs Prices Control Order, 1995 is an order issued by the Government of India under Sec. 3 of Essential Commodities Act, 1955 to regulate the prices of drugs.
It provides the list of price controlled drugs, procedures for fixation of prices of drugs, method of implementation of prices fixed by Govt., penalties for contravention of provisions etc.
For the purpose of implementing provisions of DPCO, powers of Govt. have been vested in National Pharmaceutical Pricing Authority (NPPA). Later, the Drugs (Prices Control) Order (DPCO) 2013 was notified.

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 “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.