Drug Price control order, 1995

1. 1
Mr. Rohit Kamboj
Assistant Professor
GGSCOP, Yamuna Nagar
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2. 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.
• The origin of this control dates back to 1970 when for the
first time the government placed limits on profitability of
pharmaceutical companies.
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3. History of
Price
regulation in
India
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4. Objective of DPCO
• To ensure availability, at reasonable prices of essential
and life saving and prophylactic medicines of good
quality.
• Promoting the rational use of drugs in the country To
encourage cost-effective production with economic
sizes OBJECTIVE

5. DPCO
provides
• The list of price controlled drugs.
• Procedures for fixation of prices of
drugs.
• Method of implementation of prices
fixed by Government.
• Penalties for contravention of provisions
**All formulations containing the bulk
drugs either in a single or combination
form fall under the price control category.
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6. DPCO 2013
 The government has notified the DPCO 2013 under the Essential
Commodities Act, 1955, which will give power to the NPPP 2012 to
regulate prices of 348 essential drugs along with their specified strengths
and dosages under NLEM 2011.
 Main Features of the DPCO 2013
1) The new order will bring 348 drugs & their 652 formulations under price
control.
2) The new policy uses a market-based pricing mechanism against the earlier
proposed cost-plus method. The ceiling price would be calculated by
taking the simple average of prices of all brands of a drug with a market
share of 1% or more.
3) Margins of wholesalers & retailers have been cut down to 8% & 16%
respectively.
4) Companies selling medicines above the government-mandated ceiling
rated would have to slash prices to meet the demands of new rules, but
those selling drugs below the ceiling price wouldn’t be allowed to raise
prices.
5) Firms that launch new medicines can sell them at or below government-
set price caps.
6) Existing firms will not be allowed to stop production of any drug without
permission from the government.
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7. Latest
Amendments
• NPPA notification dated May 18, 2016
fixing/revising ceiling prices of 27 scheduled
formulations of Schedule-I under Drugs
(Price Control) Amendment Order, 2016 and
Retail Price of 4 formulations under DPCO,
2013.
• Example: Revised ceiling price of 2
(Abacavir+Lamivudine) & (Cefotaxime)
scheduled formulations of Schedule-I under
Drugs (Price Control) Amendment Order,
2016.

8. • This order doesn’t cover patented drugs. Earlier in March this year the
Department of pharmaceuticals (DOP) had issued a draft proposal on price
negotiation of patented drugs.
• Prices of 652 formulations spanning over 27 therapeutic classes are regulated by
DPCO 2013.Prices of some additional anti-cancer drugs including the much talked
about Imatinib, Carboplatin, Dacarbazine, Daunorubicn, Chlorambucil, Oxaliplatin
and some anti-retroviral cocktails like Zidovudine-Lamivudine-Nevirapine and
Stavudine- Lamivudine will now be regulated by the current order.
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Which drugs will come under price
control

9. Scheduled
Formulation
• Scheduled formulation shall mean
Formulation with Same strength and
Same dosage form as in the schedule.
• If Dosage Form & Strength of a
scheduled formulation are changed, it
ceases to be a non- Scheduled Drugs
• Example.
• Amoxicillin Capsules 250mg is covered
under schedule
• Amoxicillin Tablet 125mg shall not be
called a Scheduled Drug

10. Non -
Scheduled
Formulation
• "Non-Scheduled Formulation"
means a formulation, containing
the molecule, the dosage and
strengths of which are not specified
in the First Schedule; (Non- NLEM
Drug / Formulation)
• Example: Aceclofenac,Norfloxocin,
Rabeprazole

12. B) NLEM Formulations with same specified dosage and
strength as combined with another Non - NLEM Formulations
• Example 1:
• Paracetamol 500mg Tablet is Scheduled Formulation
• Aceclofenac 100mg Tablet is Non - Scheduled Formulation
• Paracetamol 500mg + Aceclofenac 100mg Tablet is New
Drug

13. • C) NLEM Formulations by changing its strength
• Example 1:
• Paracetamole 500mg Tablet is a Scheduled Drug
• Paracetamole 325mg Tablet is a New Drug
• D) NLEM Formulations by changing its dosage
• Example 1:
• Diclofenac 50mg Tablet is a Scheduled Drug.
• Diclofenac 50mg Ointment is a New Drug.

14. Calculation of
retail price of
formulation
• The retail price of a formulation shall be
calculated by the Government in accordance
with the following formula namely:
• R.P. = (M.C. + C.C. + P.M. + P.C.) x (1 +
MAPE/100) + ED. where"R.P." means retail
price;
• "M.C." means material cost and includes
the cost of drugs and other pharmaceutical
aids used.
• "C.C." means conversion cost worked out in
accordance with established procedures

15. • "P.M." means cost of the packing material used in the
packing of formulation, including process loss.
• "P.C." means packing charges worked out in accordance
with established procedures of costing.
• "MAPE" (Maximum Allowable Post-manufacturing
Expenses) means all costs incurred by a manufacturer from
the stage of ex-factory cost to retailing and includes trade
margin and margin for the manufacturer and it shall not
exceed one hundred per cent for indigenously manufactured
Scheduled formulations;
• "E.D." means excise duty: Provided that in the case of an
imported formulation.

16. DPCO boon
or bane.?
• The Drug Price Control Order (DPCO) has been
the bugbear of the Indian pharma industry.
• Almost 40% of the value of the turnover of the
industry comes under the purview of the DPCO.
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17. What
companies
do to avoid
getting into
DPCO…
• Changing the composition of the formulation by
putting in ingredients (if possible) that are not
subject to price control.
• Transferring the brand to a small–scale unit,
which produces the product for a subsidiary.
• Case studies:
• Pfizer for instance did change the composition of
its B–complex vitamin brand Becousules (which
ranks second in branded sales in the country).
However the DPCO clamped down on this move
and brought the entire range of B–complex
vitamins under its purview.
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18. EFFECT
ON
PHARMA
INDUSTRY
• DPCO covers a majority of the
antibiotics, cough syrups, vitamin and
mineral supplement which together
comprise over 25% of the market in
value terms.
• The bigger players in antibiotics and
vitamins such as Glaxo, Sun Pharma,
Cipla and Merck derive almost 60% of
their revenues from products that are
under price control.
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19. 19

20. Companies
in loss

21. Companies
which
benefited
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Companies Growth per cent
Cipla 15.6%
Mankind 20.3%
Alkem Labs 19.8%
Aristo 24.8%
Intas 5.8%
Dr. Reddys 8.9%
Torrent pharma 8.9%

22. Thank
You
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