Pharma Sector – Drug Pricing, NPPA, FDC, Generics, etc.

Prices of Essential Medicines set to hike


From UPSC perspective, the following things are important :

Prelims level: Essential Medicines

Mains level: Read the attached story


Prices of 384 essential drugs and over 1,000 formulations are set to see a hike of over 11%, due to a sharp rise in the Wholesale Price Index (WPI).

Implications for customers

  • Annual hikes in the prices of drugs listed in the National List of Essential Medicines (NLEM) are based on the WPI.
  • The price surge will mean that consumers have to pay more for routine and essential drugs, including painkillers, anti-infection drugs, cardiac drugs, and antibiotics.

What are Essential Medicines?

  • As per the World Health Organisation (WHO), Essential Medicines are those that satisfy the priority healthcare needs of the population.
  • Ministry of Health and Family Welfare hence prepared and released the first National List of Essential Medicines (NLEM) of India in 1996 consisting of 279 medicines.
  • The list is made with consideration to disease prevalence, efficacy, safety and comparative cost-effectiveness of the medicines.
  • Such medicines are intended to be available in adequate amounts, in appropriate dosage forms and strengths with assured quality.
  • They should be available in such a way that an individual or community can afford.

NLEM in India

  • Drugs listed under NLEM — also known as scheduled drugs — will be cheaper because the National Pharmaceutical Pricing Authority (NPPA) caps medicine prices and changes only based on wholesale price index-based inflation.
  • The list includes anti-infectives medicines to treat diabetes such as insulin — HIV, tuberculosis, cancer, contraceptives, hormonal medicines and anaesthetics.
  • They account for 17-18 per cent of the estimated Rs 1.6-trillion domestic pharmaceutical market.
  • Companies selling non-scheduled drugs can hike prices by up to 10 per cent every year.
  • Typically, once NLEM is released, the department of pharmaceuticals under the ministry of chemicals and fertilisers adds them in the Drug Price Control Order, after which NPPA fixes the price.

Who regulates Drugs prices?

  • The NPPA was set up in 1997 to fix/revise prices of controlled bulk drugs and formulations and to enforce price and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995-2013.
  • Its mandate is:
  1. To implement and enforce the provisions of the DPCO in accordance with the powers delegated to it
  2. To deal with all legal matters arising out of the decisions of the NPPA
  3. To monitor the availability of drugs, identify shortages and to take remedial steps
  • The NPPA is also mandated to collect/maintain data on production, exports and imports, market share of individual companies, profitability of companies etc., for bulk drugs and formulations and undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals.

How does the pricing mechanism work?

  • Prices of Scheduled Drugs are allowed an increase each year by the drug regulator in line with the Wholesale Price Index (WPI) and the annual change is controlled and rarely crosses 5%.
  • But the pharmaceutical players pointed out that over the past few years, input costs have flared up.
  • The hike has been a long-standing demand by the pharma industry lobby.
  • All medicines under the NLEM are under price regulation.


Try this MCQ

Q. Which of the following is not a mandate of the National Pharmaceutical Pricing Authority (NPPA)?

A) Fixing and revising prices of controlled bulk drugs and formulations

B) Enforcing price and availability of medicines in the country

C) Monitoring the availability of drugs and taking remedial steps

D) Regulating the import and export of pharmaceutical products


Post your answers here.
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