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Within healthcare, the cost of medicine is the major cost driver which
constitutes nearly 60-70 percent of the total healthcare cost
Department of Pharmaceuticals was established on 1st July 2008 as
nodal Department for ensuring the availability of medicines at reasonable prices in the country. Availability of good quality drugs at
affordable prices with specific focus on the
been the constant endeavour of the Government. The Government is administering Drug
Price Control through the Drug Price Control Orders issued from time to
Drug Policy 1994, DPCO 1995 was framed with the following salient features:-
- 74 Bulk Drugs and theirformulations
under price control
- Cost based pricing of bulk drugs
- Pricing of indigenously manufactured scheduled formulations under specified formula i.e Cost + MAPE (Maximum allowable Post- Manufacturing Expenses) not exceeding-
For imported formulations : Landed Cost plus margin not exceeding 50 percent
Control of price of any non-scheduled formulation in public interest.
Drugs (Price control) Order, 1995 (DPCO,95) was promulgated by the Government of
India on 6th January, 1995 in exercise of the powers conferred by Section 3 of
the Essential Commodities Act . Under DPCO,1995, seventy six bulk drugs (subsequently
reduced to 74) are included in its First Schedule. These bulk drugs are scheduled
bulk drugs. The Government of India is empowered to fix and notify the price of
scheduled bulk drugs and their related formulations. NPPA has been effectively performing its role of a regulator of the prices of specified drugs.
National Pharmaceutical Pricing Authority (NPPA), an independent body of
experts in the Ministry of Chemicals & Fertilizers was formed by the
Government of India. The functions of NPPA, inter-alia, relates to fixation/revision
of prices of scheduled bulk drugs/ formulations under DPCO’1995 monitoring and enforcement of the prices. The Authority
has been entrusted with the task of price
and other related matters such as updating the list of drugs under price
control by inclusion and exclusion on the basis of these established criteria/ guidelines. The Authority is empowered to
take final decisions, which is subjected to review by the Central
Government as and when considered
necessary. The Authority is also required to monitor the prices of decontrolled
drugs and formulation and oversee the implementation of the provisions of the
Drugs (Price Control) Order. NPPA also monitors the availability of drugs
throughout the country and take corrective action if any shortage of medicines
An overview of the Indian
Pharma Industry is given here under:
NPPA while implementing DPCO,95 undertakes Pricing
(Price Fixation, Review of Prices, Intervention, Check & Correction,
Enforcement) , Overcharging (Detect, Demand, Deposit), Monitoring
(Monitor Prices, Monitor Availability, Market-Surveillance, Market-intervention, Maintain Price Line) of
Pharmaceutical Drugs. The progress made in this regard is stated below:
Monitoring of Non
With a view to keep a close watch on price changes, monitoring mechanism is in place. The
monitoring of prices of non-scheduled formulations is currently done on the
basis of data from IMS Health. The ceiling for annual price increase has been reduced to 10 percent from 20 percent since 01.04.2007.
Action and Price
fixation under Para 10(b) of DPCO,1995
Prices of 30 non-scheduled medicines have been fixed under para
10(b) till August, 2012, the details of
which are available on NPPA’s website.
As a result of action under this provision, 33
manufacturers have voluntarily reduced prices of 65 packs and prices of 30 packs
has seen fixed by NPPA. In this way prices of 95 non-scheduled packs have been reduced
Availability of Drugs NPPA monitors the availability of
drugs and identifies shortage, if any, to take remedial
steps to make the drugs available. NPPA is carrying out this responsibility mainly
through monthly field reports from the State Drugs Controllers and other
available information. As and when thereports of shortage of particular drug(s), in any part of the country are
received, the concerned company is asked to rush the stocks and to make the
drugs available. Generally, shortages reported are brand
specific where alternate brands are
of provisions of DPCO, 1995.
A separate enforcement division was created
during the Year 2007-08 to facilitate detection
of violation of DPCO 1995 with the following objectives:
Market Surveillance of
prices of scheduled drugs
(i) Purchase of samples by NPPA officers all over India to ensure compliance;
(ii) Examine complaints byndividuals / NGOs/VIP references.
Based on an analysis,
specific cases are identified
(i) Recovery of
(ii) Fixation of prices, where ever required.
of overcharging cases
Demand notices for overcharging have been
issued from inception of NPPA.
India has some of the poorest health
indicators in the world and highest disease burden. This makes all the more
important that the medicines need special priority from Government, Trade Associations, Industry and
Consumer Organizations. Within healthcare, the cost of medicine is the major
cost driver which constitutes nearly 60-70 percent of the total healthcare cost.
80- 90 percent of health care in India is out of pocket without intermediation
and risk buffer of health insurance. The
scenario underscores the criticality of containing drug costs for affordable
healthcare. India is recognised worldwide as a low cost producer of quality
Indian Pharma Industry is making all out
efforts to ensure availability of medicines and taking India to a leadership
position in Global Pharmaceutical Arena. Government is taking all necessary steps
in supporting the Indian Pharma Industry by ensuring adequate availability of
highly skilled and trained manpower, rationalising taxes, providing various
fiscal and non-fiscal incentives for R & D and minimal price control.
NPPA with the assigned mandate endeavours to
maintain a balance in the conflicting interests
of the consumers and producers. An effort is made to
make the consumers vigilant of his rights in respect of quality of the
medicines and prices charged overtime. At the same time while fixing the prices
of Bulk Drugs/ Formulations it is ensured that justice is being done with all rationality and objectivity in
Information system relating to how medicine
prices change in a country reported by a
national medicine price monitoring system can be a valuable tool for governments,
policy makers,health professionals, civil society and other
interested local or international parties for decision making, evaluation and advocacy purposes.
NPPA has increased its focus on the monitoring prices more and has made
appropriate interventions. While significant ground has been traversed, much more
endeavours to be covered within the mandate of DPCO, 1995.
By : C P Singh , Chairman, National Pharmaceutical Pricing