The document outlines the role and objectives of the National Pharmaceutical Pricing Authority (NPPA) in India, which regulates drug pricing to ensure accessibility and affordability of essential medicines. It details the implementation of the Drug Price Control Order (DPCO) 2013, focusing on price fixation for scheduled formulations and monitoring market prices. Additionally, it includes definitions of key terms and the importance of the National List of Essential Medicines (NLEM) in promoting rational drug use and quality care.

1. K.Y.D.S.C.T.’s college of pharmacy, sakegaon

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National Pharmaceutical Pricing Authority
 Government Regulatory Organization, constituted under Drugs Price Control
order,1995.
 Established by the central government on dated 29 th August 1997 as an
independent, autonomous regulator.
Objective
 Pricing of drugs.
 To ensure availability of drugs.
 To ensure accessibility of medicines at affordable prices.

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1. To implement and enforce the provisions of DPCO.
2. To undertake relevant studies in respect to pricing of drugs/formulations
3. To monitor availability of drugs, identify shortages and to take remedial steps.
4. To collect data on production, exports, market shares of companies etc. for bulk
drugs/formulations.
5. To deal with all legal matters arising out of decisions of the Authority.
6. To advice the central government on changes in drug policy.
7. To assist the central government in parliamentary matters relating to drug pricing.

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DPCO 2013 is issued by the central
government in conformity of powers
given under Section3 of the “Essential
Commodities Act,1955.”
1. To implement and enforce
provisions of NPPP,2012.
2. To ensure availability of essential,
lifesaving drugs and medicines of
good quality at reasonable prices.
3. To encourage cost effective
production and distribution of
quality drugs.
4. To promote rational use drugs in
cost effective manner.
5. To enable Indian Pharmaceutical
Industry, to grow in the innovative
and competitive international
economic environment.

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1. Price control of essential drugs and formulations specified in “National list of
Essential Medicines”.
2. Fixation of ceiling price and Retail price of scheduled formulations.
3. Market based pricing of Scheduled formulations, in place of cost based.
4. Regulation and monitoring of bulk drugs and formulations.
5. Monitoring price of of Scheduled formulations.
6. Recovery of over charged amount.
7. Monitoring prices of non-scheduled formulations.
8. Price hike of non-scheduled formulations.
9. Display of price lists and maximum Retail prices.
10. Reduction in margins of wholesalers and retailers to 8% and 16% respectively.

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DEFINATIONS
1. Drug
Medicines for internal or external use of human beings or
animals.
2. Bulk Drug /API
Any pharmaceutical, chemical, biological or plant product
including its salts, esters and derivatives confirming to the
pharmacopoeial standards and which is used as such or as
an ingredient in any formulation.
3. Ceiling price
A price fixed by the Government for Scheduled formulations according to the
provision of DPCO,2013.

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4. Distributor
Person engaged
in distribution of
drugs and
includes an
agent or a
stockiest,
stocking drugs
for sale to a
dealer.
5. Dealer
A person
carrying on the
business of
purchase or sale
of drugs
whether as a
wholesaler or
retailer
including his
agent.
7. Retailers
Dealer
carrying on
the retail
business of
sale of drugs
to customers.
6. Wholesaler
Dealer or his agent or
stockiest appointed by a
manufacturer or an
importer for sale of his
drugs to retailer,
hospital, dispensary,
medical, educational or
research institutions
purchasing bulk
quantities of drugs.

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8. Formulation
A medicine containing one or more bulk drugs with or without
pharmaceutical aids, for internal or external use in diagnosis, treatment,
mitigation or prevention of diseases in human beings or animals, but
does not include:
i. Ayurvedic, Siddha, Unani and Homoeopathic medicines and
ii. Any substance to which provisions of Drugs and Cosmetics Act , do
not apply.
9. Scheduled Formulation
Any formulation included in the First Schedule whether referred to by
generic versions or brand name.
10. Non- Scheduled Formulation
Formulation the dosage and strength of which are not specified in First
Schedule.

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Price fixed by the Government for
scheduled formulations under
DPCO,2013.
Price fixed by the Government
under para 5 of DPCO,2013.
Ceiling price or retail
price plus local taxes
and duties as
applicable, at which
the drug shall be sold
to the ultimate
customer and such
price is mentioned on
the pack.

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 Retail Prices of a scheduled Formulation
R.P = (M.C.+C.C.+P.M.+P.C.) × 1+ M.A.P.E. + E.D.
100
Retail price is calculated by following formula

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Maximum retail price
Maximum retail price =
Ceiling price + Local taxes
as applicable
sum of prices to retailer of all brands
and generic versions of the medicine.
Total number of such brands and generic
versions of the medicine
P(s) =
P(c) = P(s).
M
100
1 +
Ceiling price of a scheduled formulation:
M= % Margin to retailer = 16%
P(s)= Average price to retailer of the
scheduled formulation

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 Government of India enunciated Pharmaceutical Policy,2002
To ensure availability of quality medicines for mass
consumption, at reasonable price.
To reduce trade barriers for cost effective production
and exports.
To strengthen quality control system of drugs and
pharmaceuticals.
To create incentive framework:
(a) to promote new investment, and
(b) (b) to encourage introduction of new technologies and new drugs.
To promote rational use of pharmaceuticals.
Pharmaceutical
Policy
2002

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Subject to provisions of Industrial
Policy, industrial licensing is
abolished for.
(i) all bulk drugs cleared by Drugs
Controller General India,
(ii) All their intermediates and
formulations.
However, this is not applicable to
following classes of drugs:
(a) Bulk drugs produced by using
recombinant DNA technology.
(b) Bulk drugs requiring in-vivo use
of nucleic acids as active principles
(c) Specific cell/tissue targeted
formulations.
This facility is availed to all bulk drugs
cleared by the Drugs Controller
General India, all their intermediates
and formulations.
1. Imports of drugs and pharmaceuticals are
allowed as per EXIM policy in force.
2. Strict regulatory processes are enforced by
Ministry of Health and Family Welfare for
import of bulk drugs and formulations.
Imports
Foreign Investment
Industrial Licensing

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Pricing
1. Span of price control.
2. Maximum Allowable Post
Manufacturing Expenses
(MAPE).
3. Margin for Imported
Formulations.
4. Pricing of formulations.
5. Ceiling prices of
formulations
6. Pricing of Scheduled bulk
drugs
7. Utilization of amount
accrued in Drug Price
Equalization Account
(DPEA)
Encouragement to R&D
1. The establishment of the
Pharmaceutical Research and
Development Support Fund
(PRDSF) under administrative
control of Department of Science and
Technology, is approved.
2. A Drugs Development Promotion
Fund (DDPF) is constituted to
administer the utilization of PRDSF.

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National List of Essential Medicines (NLEM)
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 List of essential medicines included in First Schedule of DPCO,2013.
 Time to time updated and published by the Ministry of Health and Family Welfare
by notification in the Official Gazette.
 Ministry of Health and Family Welfare has prepared and released first NLEM in
1996.
 Objective
 To promote rational use of medicines considering
cost, safety and efficacy.

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(i) It provides cost effective medicines.
(ii) It is useful in quality care and better management of medicines.
(iii) It helps in monitoring prices of medicines.
(iv) It guides the procurement and supply of medicines in public sector.
(v) It directs correct dosage form and strength while prescribing.
(vi) It improves prescribing and health results.
(vii)It helps in public education and training of health care providers.
(viii) It promotes rational use of medicines.
USES