NPPA fixes price of 15 key drug formulations

  • April 20, 2022
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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NPPA fixes price of 15 key drug formulations

Subject: Science & Tech

Context- The National Pharmaceutical Pricing Authority (NPPA), under the Ministry of Chemicals and Fertilizers, has fixed the price of 15 key drug formulations, used to treat diseases, including diabetes.

Concept-

How does the pricing mechanism work?

  • Prices of Scheduled Drugs are allowed an increase each year by the drug regulator in line with the WPI.
  • All medicines under the NLEM are under price regulation.
  • As per the Drugs (Prices) Control Order 2013, scheduled drugs, about 15% of the pharma market, are allowed an increase by the government as per the WPI while the rest 85% are allowed an automatic increase of 10% every year.

The Drugs (Price Control) Order, 2013:

  • Drug Price Control Orders (DPCO) are issued by the Government in exercise of the powers conferred under the Essential Commodities Act, 1955,for enabling the Government to declare a ceiling price for lifesaving medicines to ensure that these medicines are available at a reasonable price to the general public.
  • Price controls are applicable to “Scheduled drugs” or “Scheduled formulations” e. those medicines which are listed out in the Schedule I of DPCO, also referred to as National List of Essential Medicines (NLEM).
  • As per the price control order, the NPPA is empowered to fix the ceiling price of essential medicines and medical devices — 886 in number currently.
  • The order also provides for a WPI-based price change every year that pharmaceutical companies are allowed to implement.
  • NPPA not only fixes the prices of Essential Medicines, but it also ensures that the prices of the non-scheduled drugs do not increase by more than 10% every year

Which medicines and devices are included in the NLEM?

  • Some of the most common drugs and medical devices, including paracetamol tablets, azithromycin tablets, oral rehydration salts, glucose injections, contraceptives like copper IUDs, condoms, insulin injections, Vitamin C tablets, and multivitamin tablets, are in the NLEM.
  • These drugs constitute around 18% of India’s aggregate domestic pharmaceutical retail market of approximately Rs 1.5 lakh crore.

How are the Prices of Essential medicines fixed?

  • The prices of the medicines are fixed based on Market pricing model.
  • The ceiling price of the Essential drugs is the fixed by calculating the simple average price of all the brands having at least 1% of the market share.
  • Further, under DPCO, the NPPA has been given the following exceptional powers:
    • Fix the prices of even those drugs that are not listed under NLEM. Example: In pursuance of these powers, the NPPA has fixed the ceiling prices of Cardiac Stents and Knee implants.
    • Increase or decrease the prices of the drugs listed under NLEM. In pursuance of these powers, the NPPA has recently increased the prices of the 21 essential medicines by almost 50%.

About NPPA:

  • The NPPA was set up in 1997 to fix/revise prices of controlled bulk drugs and formulations and to enforce price and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995-2013.
  • Its mandate is to implement and enforce the provisions of the Drugs (Prices Control) Order in accordance with the powers delegated to it, to deal with all legal matters arising out of the decisions of the NPPA and to monitor the availability of drugs, identify shortages and to take remedial steps.
  • The ceiling price fixed/revised by the NPPA is notified in the Gazette of India (Extraordinary) from time to time.

Functions of NPPA:

  • To implement and enforce the provisions of the Drugs Price Control Order (DPCO), 1995/2013 in accordance with the powers delegated to it.
  • To undertake and/or sponsor relevant studies in respect of pricing of drugs/formulations.
  • To monitor the availability of drugs, identify shortages, if any, and to take remedial steps.
  • To collect/maintain data on production, exports and imports, market share of individual companies, the profitability of companies etc. for bulk drugs and formulations.
  • To deal with all legal matters arising out of the decisions of the Authority
  • To render advice to the Central Government on changes/revisions in the drug policy.
  • To render assistance to the Central Government in parliamentary matters relating to drug pricing.
NPPA fixes price of 15 key drug formulations Science and tech