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

[op-ed snap] A band-aid


From UPSC perspective, the following things are important :

Prelims level : API

Mains level : Price regulation in India


India’s drug regulator, the National Pharmaceutical Pricing Authority (NPPA), used the public interest provision of the Drugs Prices Control Order 2013 to allow manufacturers to increase prices of 21 essential drugs by as much as 50%. 

Price Rise

  • Critical diseases – Most of these drugs are used to treat critical diseases such as tuberculosis, malaria, and leprosy and are crucial to the country’s public health program. 
  • Usually reduces – the regulatory authority is usually known to slash prices of life-saving drugs. This decision is compelled by an extraordinary situation. 
  • Costs of production – For nearly two years, drug manufacturers are claiming an inability to keep up with the country’s healthcare demands due to increasing costs of production. 
  • Immediate crisis – Easing the price ceiling could help the healthcare system. It may preempt a situation where the public is forced to switch to costlier alternatives. 

Root cause

  • The drug regulator and the Department of Pharmaceuticals need to do much more to address the root cause of the shortage of critical drugs.
  • Imports – India’s pharma industry imports more than 60% of active pharmaceutical ingredients (APIs) or bulk drugs from China. 
  • Chinese regulators – In 2017, Chinese regulators cracked down on bulk drug manufacturing units as per the country’s environmental regulations. The Chinese API industry has raised prices. This has spin-off effects in India. 
  • Example of price rise – the cost of making Vitamin C pills has gone up by more than 250% since 2017. This has led to a 25-30% shortage of this drug in India. 
  • Leprosy drug – Pharma major, Abbot, applied to the NPPA to discontinue the production of the leprosy drug, Hansepran. It pointed out that increasing costs of API imports had made the production of Hansepran unviable in India.

Price control

  • Essential control – Making medicines more accessible to those who need them is essential. 
  • Failure – Drug price control measures in India have not always achieved this objective. 
  • Past – The ceiling on prices of 74 bulk drugs in 1995 forced many companies to opt-out of API production. 

Draft Pharmaceutical Policy 2017 

  • Indigenous API – Giving preference to drugs produced from indigenously produced APIs in government procurement and taking them out of price control for five years.
  • R&D – More importantly, the draft talked about creating research and development facilities for API production. 
  • It needs to be revisited in light of the country’s current medicine shortage.


Active Pharmaceutical Ingredients(APIs)

These are the ingredients that give medicine its therapeutic value.

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