Polity & Governance Prelims cum Mains

How are drug prices regulated?

Details :

The News

  • At its meeting scheduled for today, India’s drug pricing regulator will take up the case of a lifesaving drug for children which has almost disappeared from the market after its price was slashed by over 90%.



  • In February 2017, the National Pharmaceutical Pricing Authority (NPPA), to regulate the prices of drugs and medical devices have included a order to dramatically cut the prices of cardiac stents.
  • However, a price cap that threatens to drive a crucial drug out of the market presents a different set of problems.Since then supplies have come down by about 40%.
  • The drug named furoped or furosemide, often sold under the brand name Lasix is a diuretic prescribed to babies with heart ailments to drain the body of fluids to reduce the load on the heart.
  • Last November, NPPA had cut its price from Rs 100-110 to Rs 10 per pack. Supplies have been hit, and over the last couple of months a serious shortage has emerged, with parents of very sick babies, some of them newborns, left running from pillar to post.
  • Earlier in month of June 2018, the NPPA wrote to the drug maker to “rush supplies”; however, the pharmaceutical company argues that although it is a responsible corporate citizen, it can’t provide “vast quantities” of the drug for less than its manufacturing cost.


Which drugs are under price control?

  • Every few years, the Health Ministry, in consultation with experts, draws up a National List of Essential Medicines (NLEM).
  • These medicines, deemed essential for the treatment of common conditions, automatically come under price control.
  • Under NLEM 2015, a total 376 drugs are under price control.
  • In addition, the government has the power to bring any item of medical necessity under price control. (Para 19 of the Drug Price Control Order, 2013) This provision was used to regulate the prices of cardiac stents and knee implants.


How are ceiling prices calculated?

  • The ceiling price is the average of prices of all brands of a medicine with more than 1% market share.
  • NPPA is constantly in the process of fixing ceiling prices.


About National Pharmaceutical Pricing Authority (NPPA)

  • The National Pharmaceutical Pricing Authority (NPPA) is a government regulatory agency that controls the prices of pharmaceutical drugs in India.
  • NPPA is an organization of the Government of India which was established to fix/ revise the prices of controlled bulk drugs and formulations and to enforce prices and availability of the medicines in the country, under the Drugs (Prices Control) Order.
  • The organization is also entrusted with the task of recovering amounts overcharged by manufacturers for the controlled drugs from the consumers.
  • It also monitors the prices of decontrolled drugs in order to keep them at reasonable levels.
  • Its parent organisation is Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers.


Drug Price Control Orders

  • The NPPA regularly publishes lists of medicines and their maximum ceiling prices.
  • Drug Price Control Orders (DPCO) are issued by the Government, in exercise of the powers conferred under section 3 of the Essential Commodities Act, 1955, for enabling the Government to declare a ceiling price for essential and life saving medicines (as per a prescribed formula) so as to ensure that these medicines are available at a reasonable price to the general public.


Functions of NPPA

  • 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 Authority.
  • 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, profitability of companies etc, for bulk drugs and formulations.
  • To undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals.
  • To recruit/ appoint the officers and other staff members of the Authority, as per rules and procedures laid down by the Government.
  • To render advice to the Central Government on changes/ revisions in the drug policy.
  • To render assistance to the Central Government in the parliamentary matters relating to the drug pricing.

Leave a Reply

Please log in using one of these methods to post your comment:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: