this presentation deals with drug price control in India. it has also updated information on drug price regulation. any suggestion regarding this topic is most welcomed.

1. DRUG PRICE CONTROL IN
INDIA
PRESENTED BY-
DR. AAKANKSHA PRIYA
JR- 1
DEPARTMENT OF
PHARMACOLOGY
AIIMS, PATNA.

2. OVERVIEW
 Introduction.
 Factors Influencing Drug Price.
 National Pharmaceutical Pricing Authority.
 Procedure for Price fixation of Bulk drugs.
 Procedure for Price fixation of formularies.
 Recent Advances.
 Conclusion.

3. INTRODUCTION
 The World Health Organization(WHO) reported that
one third of the world’s population lacks reliable
access to required medicines and the situation is
even more worse in developing countries, which is
finding it increasingly difficult to finance medicine as
expenditure on medicine has been growing steadily.

4. DEFINITION
The 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”
Bulk Drug means any pharmaceutical, chemical, biological or plant product including its
salts, esters, isomers, analogues and derivatives, conforming to standards specified in the
Drugs and Cosmetics Act, 1940 (23 of 1940) and which is used as such or as an ingredient
in any formulation.

5. HISTORY OF REGULATION OF
DRUG PRICE
 The first time, the Drug Price Control Order was put in
place after the Indo-china war of 1962 because
pharmaceutical companies started to profit
immensely and it became necessary in public interest
to cap drug prices.

6. CONT…
Defence of India Act,
1963.
Essential
Commodities Act,
from 1970 onwards
under DPCO
DPCO was revised in
1979,1987, 1995 and
2013

7. TABLE OF REGULATIONS FOR DRUG
PRICE CONTROL IN INDIA
DRUG REGULATIONS ISSUING YEAR SAILENT FEATURES
Drug(display of
prices) order
1962  For the first time
prices came under
control of
Government of India.
Drug (control of
prices) Order
1963

8. Drug Regulations Issuing Year Salient Features
Drug Prices( Control ) Order 1966  It was mandatory for the
manufacturers to obtain prior
approval from the government
before increasing price of any
formulations.
Drug (Price Control ) Order 1970 Order was passed Under section
of Essential Commodities Act.
Authorizing it to fix and regulate
the prices of essential bulk drugs
and their formulations.

9. DRUG REGULATION ISSUING YEAR SALIENT FEATURES
The Hathi Committee 1974 Abundant availability of
essential medicines at a
reasonable price.
Drug ( Price Control)
Order
1979 370 drugs came under price
control.
These drugs were divided
4 categories: I- Life
Saving(40%), II- Essential, III-
Less Essential, IV- Non
essential.
These categories have
different Maximum Allowable
Post Manufacturing
Expenses(MAPE).

10. DRUG REGULATION ISSUING YEAR SALIENT FEATURES
The Kelkar Committee 1984 Exclusion of a no. of
drugs for price control.
Drug Price control order 1987 No. of Bulk drug under
price control was
reduced from 370 to
142.
The Drug Policy 1994 Allowed foreign
investment up to 51%.
Drug Price control order 1995 No. of Bulk drug under
price control was
reduced from 142 to 76.
Drug prices was based
on manufacturing costs.

11. NATIONAL PHARMACEUTICAL
PRICING POLICY, 2012 [NPPP]
The dept. of Pharmaceuticals drafted National Pharmaceutical Pricing
Policy, 2011 based on NLEM,2011 and was placed before Ministry of
Health and Family Welfare
Based on the recommendation by Ministry
National Pricing Policy, 2012 was formed and was put before
Cabinet
The cabinet approved NPPA 2012 in its meeting held
on 22.11.2012.

12. KEY PRINCIPLES OF NPPP, 2012
NPPA
Essentiality
of drugs
Market-based
pricing
Control of
formulations
only

13. DPCO, 2013
 This new order bring 652 drugs( scheduled drugs) under
price control.
 It will enable the National Pharmaceutical Pricing Policy 2012
to regulate price of 348 drugs which are covered under
National List of Essential Medicine 2011.

14. CONT…
 In this current order, ceiling prices would be
calculated by taking simple average of all the drug
brands having market share more than 1% + Local
Taxes + a 16% retailer’s profit margin ( so there is a
shift from cost based price calculation to market
based methods).

15. DPCO 2019
 Paragraph 9. Reference data and source of market based
data.– (1) Initially, the source of market based data shall be
the data available with the pharmaceuticals market data
specializing company as decided by government [IMS Health
(IMS)] and if the Government deems necessary, it may validate
such data by appropriate survey or evaluation.

16. CONT…
 Paragraph 32
 (i) a manufacturer producing a new drug patented under the
Indian Patent Act, 1970 (39 of 1970) (product patent) and not
produced elsewhere, if developed through indigenous
Research and Development, for a period of five years from the
date of commencement of its commercial production in the
country. (not applicable in DPCO 2013).

17. CONT….
 Paragraph 32
 Sub Paragraph iv is included
 Drugs for treating orphan diseases as decided by
Ministry of Health and Family Welfare, Government
of India.

18. FACTORS INFLUCENING DRUG PRICE
Drug
Price
Bulk drug
Pack-aging
cost
Advertising Cost
Manufacturing
Cost

19. NATIONAL PHARMACEUTICAL
PRICING AUTHORITY(NPPA)
 The NPPA is an organization of government of India
established to fix/revise prices of controlled bulk
drugs and formulations.
 It came into existence on 29th August 1997 as an
independent body of experts as per decision taken
by Ministry of Chemical and Fertilizers.

20. FUNCTIONS OF NPPA
1) Implement and enforce the provisions of the DPCO.
2) Deal with all legal matters arising out of decision of
the authority.
3) To Monitor the availability of drugs.
4) Maintain data on production, exports and imports,
market share and profitability of individual
companies for bulk drugs.
5) Undertake and/or sponsor relevant studies.

21. CONT….
6) Render advice to the central government on
changes/ revisions on drug policy.
7) Render assistance to the central government
in the parliamentary matters relation to the
drug pricing.

22. PROCEDURE FOR PRICE FIXATION OF
BULK DRUGS
 As per paragraph 3 of DPCO, 1995 prices of
scheduled bulk drugs are fixed by the NPPA to make
them available at a fair price from different
manufacturers.
 These prices are fixed from time to time by
notification in official gazette.

23. STEPS INVOLVED IN PRICE
FIXATION/REVISION OF BULK DRUGS
Step1:
Identification
of bulk drugs
Step 2:
Collection of
data(form 1)
Step 3:
Preparation of
actual cost
statement
Step 4:
Preparation of
technical
parameters
Step 5:
Preparation of
Estimated cost
Step 6:
Fixation of
maximum sale
price of the drug
Step 7:
Notification to
the official
Gazette

24. PROCEDURE FOR PRICE FIXATION OF
FORMULARIES
 As per paragraph 8(2) of DPCO 1995, a manufacturer using
scheduled bulk drug in his formulation is required to apply
for fixation of price of formulation within 30 days of fixation
of price of such bulk drugs.
 Price of formulation is fixed in two ways-
a) Based on application from the manufacturer.
b) Suo-motu basis.

25. PROCEDURE
STEP 1.
Examination of
Technical
Parameters
STEP 2.
Examinations of
prices of bulk
drugs
STEP 3.
Examinations of
Excipient Claims
STEP 4.
Examination of
PL, CC, PC and
PM cost
STEP 5.
Application of
MAPE
STEP 6.
Working out the
Retail Price.

26. Retail price calculation
 R.P = [ M.C. + C.C. + P.M. + P.C ] * [ 1 + MAPE/100 ]
+ E.D
 M.C = Material cost
 C.C = Conversion Cost
 P.M = Cost of Packing Materials including process
loss
 P.C = Packing Charge { procedure of costing).

27. SUO-MOTU BASIS
 If the manufacturer or companies do not apply for
revision of formulation prices as required under
paragraph 8(2) DPCO 1995 within a period of 30
days of price reduction of bulk drug, thus steps are
taken on suo-motu basis.

28. PHARMA JAN SAMADHAN
 The Pharma Jan Samadhan provides the consumer
with an effective and time bound grievance
redressal system to effectively deal with complaints
related to pricing, shortage and non-availability of
medicines.

29. PHARMA SAHI DAAM

31. Recent steps taken by the
government to control Drug Prices in
India

32. 1. Reduction of prices of medicines
 In September 2016, drug price regulator (NPPA)
reduced the prices of around 33 essential medicines,
which brought down their retail prices by 30-50%.
 The medicines include antibiotics and drugs used to
treat ulcerative colitis, anti-allergics used for
common cold and cough, arthritis, gastro-
esophageal reflux disease (Gerd), psoriasis, and
tuberculosis.

33.  2. REDUCTION IN THE PRICES OF
CORONARY STENTS
 In July 2016, the Ministry of Health and Family Welfare
entailed coronary stents in the National List of Essential
Medicines, 2015 (NLEM, 2015).
 On 13 February 2017, the National Pharmaceutical Pricing
Authority (NPPA) issued an order which capped the price of
coronary stents up to 40 per cent lower than their existing
market prices.

34. CONCLUSION
 From the historical analysis, it is cleared that the
Indian Government has successfully controlled the
drug prices steadily. Previously, the regulations on
drug prices were not very strict but by time to time
changes in the drug price control order made the
precise guidelines for pharmaceutical industries.

36. NATIONAL PHARMACEUTICAL
PRICING POLICY, 2012 [NPPP]
 The Department of Pharmaceuticals had prepared a draft National
Pharmaceutical Pricing Policy, 2011 (NPPP-2011) based on the criteria of
essentiality as per the medicines as under National List of Essential
Medicines-2011 (348 drugs with specified dosage and strengths), as
stipulated by the Ministry of Health and Family Welfare which was placed
before the Group of Ministers (GoM). Based on the recommendations of
the GoM, National Pharmaceutical Pricing Policy 2012 (NPPP-2012) was
formulated and placed before the Cabinet. The Cabinet considered
NPPP-2012 in its meeting held on 22.11.2012 and approved the same with
certain modifications.