Drug Price Control Order with latest amendments (2019)

1. DPCO AND NPPA

2. NATIONAL PHARMACEUTICAL PRICING
AUTHORITY(NPPA)
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.

3. FUNCTIONS OF NPPA
• Implement and enforce the provisions of the Drugs (Prices Control) Order.
• Deal with all legal matters arising out of the decisions of the Authority.
• Monitor the availability of drugs, identify shortages, if any, and to take
remedial steps.
• Collect/ maintain data on production, exports and imports, market share of
individual companies, profitability of companies etc, for bulk drugs and
formulations.

4. DRUG PRICE CONTROL ORDER (DPCO)
The drug price control order (DPCO) is an order issued
by the government under the “Essential Commodities
Act” which enables it to fix the prices of some essential
bulk drugs and their formulations.

5. OBJECTIVES OF DPCO
• To make sure that the essential drugs are available to all at a
reasonable price.
• To ensure that quality of the drugs does not go down with the
fixation of prices
• To promote rational use of prescribed drugs in a cost-effective
manner.
• To curb exorbitant profiteering in drug manufacturing and
distribution.

6. SCHEDULES
• Schedule I : It contains the National List of Essential
Medicines divided into 27 sections.
• Schedule II : It contains various forms for approval or
revision of prices of Scheduled Formulations.

7. ESSENTIAL MEDICINES
• ESSENTIAL MEDICINES- Those medicines that satisfy the
priority health care needs of the population.
• Such medicines are intended to be available in adequate
amounts, in appropriate dosage forms and strengths with
assured quality.

8. NATIONAL LIST OF ESSENTIAL
MEDICINES
• The WHO EML is a model list.
• The decision about which medicines are essential remains a national
responsibility.
• NLEM guides safe and effective treatment of priority disease conditions of
a population
• It also promotes the rationale use of medicines.

9. CRITERIA FOR INCLUSION OF MEDICINE
IN NLEM 2015
• Essentiality
• Changing disease burden
• Efficacy and Safety
• Comparatives cost effectiveness
• Fixed dose combinations
• Hierarchy of health care structure

10. HISTORY
• In 1966, parliament members felt that manufacturers charging high rate
on drugs. To control on high drug rates, DPCO 1966 was passed under
section 3 of Essential Commodities Act 1955.
DPCO 1966 replaced by DPCO 1970
DPCO 1970 Replaced By DPCO 1979
DPCO 1979 Replaced By DPCO 1987

11. HISTORY
DPCO 1987 Replaced By DPCO 1995
DPCO 1995 Replaced By DPCO 2013
Finally, DPCO 2013 replaced by DPCO 2019

12. DEFINITIONS
• “Act” means the Essential Commodities Act,1955.
• “Ceiling price” means price fixed by the Government for Scheduled
formulations.
• “Dealer” means a person carrying on the business of purchase or sale of
drugs.
• “Maximum retail price” means ceiling price or retail price plus local taxes
and duties as applicable.
• “Moving annual turnover” means cumulative sales value for twelve months
in domestic market.

13. DEFINITIONS
• “New drug” means a formulation launched by an existing manufacturer of a
drug of specified dosages and strengths as listed in the National List of
Essential Medicines (NLEM).
• “Non-scheduled formulation” means a formulation, the dosages and strengths of
which are not specified in the First Schedule.
• “Scheduled formulation” means any formulation, included in the First Schedule.
• “Retailer” means a dealer carrying on the retail business of sale of drugs to
customers.
• “Retail price” means the price fixed by the Government for a new drug.

14. DEFINITIONS
• “Formulation” means a medicine processed out of containing one or more
drugs, for internal or external use for or in the diagnosis, treatment,
mitigation or prevention of diseases, but shall not include-
• Any medicine included in any Ayurvedic (including Siddha) or Unani (Tibb)
systems of medicines.
• Any medicine included in the Homeopathic system of medicine.
• Any substance to which the provisions of the Drugs and Cosmetics Act, 1940
do not apply.

15. CALCULATION OF CEILING PRICE OF A
SCHEDULED FORMULATION
• Step1: First the Average Price to Retailer of the scheduled formulation i.e. P(s) shall be
calculated as below:
Average Price to Retailer, P(s) = (Sum of prices to retailer of all the brands and generic
versions of the medicine having market share more than or equal to one percent of the
total market turnover) / (Total number of such brands and generic versions of the medicine
having market share more than or equal to one percent of total market turnover on the
basis of moving annual turnover for that medicine.)
• Step2. Thereafter, the ceiling price of the scheduled formulation i.e. P(c) shall be
calculated as below:
P(c) = P(s).(1+M/100)
where P(s) = Average Price to Retailer for the same strength and dosage of the medicine as
calculated in step1 above. M = % Margin to retailer and its value =16

16. FIXATION OF CEILING PRICE OF
SCHEDULED FORMULATIONS
• No manufacture shall sell the scheduled formulations at a
price higher than the ceiling price so fixed and notified by the
Government.
• Where any manufacture sells a scheduled formulation at a
price higher than the ceiling price fixed by the Government,
such manufacturers shall be liable to deposit the overcharged
amount along with the interest thereon.

17. FIXATION OF RETAIL PRICE OF A NEW
DRUG OF SCHEDULED FORMULATIONS
• Government shall form a Standing Committee of experts to
recommend the retail prices of new drugs on the principles of
“Pharmacoeconomics”.
• Where an existing manufacturer of a drug with dosages and
strengths as specified in NLEM launches a new drug, shall
apply for prior price approval from the Government in form-I
under Schedule-II of this order.

18. FIXATION OF CEILING PRICE OF A DRUG
UNDER CERTAIN CIRCUMSTANCES
• In public interest the Government may fix the ceiling price or
retail price of any drug for such period, as it may deem fit.
• The Government may allow an increase or decrease in the
ceiling price or the retail price.

19. MONITORING THE PRICES OF NON-
SCHEDULED FORMULATIONS
• The Government shall monitor the MRP of all the drugs, including non-
scheduled formulations.
• Ensure that no manufacturer increases the maximum retail price of a drug
more than 10% during preceding twelve months and where the increase is
beyond 10%, it shall reduce the same to the level of 10% of MRP for next
twelve months.
• Manufacturer shall be liable to deposit the overcharged amount along with
interest.

20. POWER OF ENTRY, SEARCH AND SEIZURE
Any Gazetted Officer of the Central Government or of a State Government
authorised in this behalf have been compiled with:
• Enter and search any place;
• Seize any drug, in respect of which he suspects that any provision of this
order is being contravened;
• Seize any document, such as cash memo or credit memo books and books of
account in respect of which he suspects that any provisions of this order is
being intervened.

21. EXEMPTIONS
• A manufacturer producing a new drug patented under the Indian Patent
Act, 1970, if developed through indigenous research and development, for a
period of 5 years from the date of commencement of its commercial
production in the country.
• A manufacturer producing a new drug by a new process developed through
indigenous research and development and patented for a period of 5 years
from the date of commencement of its commercial production in the
country.
• A manufacturer producing a new drug involving in a new delivery system.

22. AMENDMENTS MADE IN DPCO 2019
• A drug maker who has brought in an innovative patented drug will be
exempted from the price control regulations for 5 years from the date of
marketing.
• Drugs for treating rare or “orphan” diseases too will be exempted from
price control, with a view to encouraging their production.
• The Centre will continue fixing prices in line with market-based data
available on drugs. The source of market-based data shall be the data
available with the pharmaceutical market data specializing company as
decided by the government.

23. THANK YOU