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Last Updated on November 8, 2021 by The Health Master
Download Latest on National Pharmaceutical Pricing Authority (NPPA)
National Pharmaceutical Pricing Authority (NPPA) was constituted vide a Government of India Resolution dated August 29, 1997 as an attached office of the Department of Pharmaceuticals (DoP), Ministry of Chemicals & Fertilizers, as an independent Regulator for pricing of drugs and to ensure availability and accessibility of medicines at affordable prices.
Drugs Prices Control Order, 2013
The Department of Pharmaceuticals, Ministry of Chemicals and Fertilizers, notified the Drug (Prices Control) Order 2013 (DPCO 2013) in May 2013, which may fluctuate the pricing of 348 essential drugs. Prior to the 2013 regime, the DPCO 1995 included 74 bulk drugs within its ambit and the pricing of the drugs were fixed on the basis of manufacturing costs declared by the drug manufacturers.
The DPCO 2013 empowers the National Pharmaceutical Pricing Authority (NPPA) to regulate prices of 348 essential drugs. As per the DPCO 2013, all strengths and dosages specified in the National List of Essential Medicines (NLEM) will be under price control.
Para 2(i) of the DPCO 2013 defines the term “Formulation” as a medicine processed out of or containing one or more drugs with or without use of any pharmaceutical aids, for internal or external use for or in the diagnosis, treatment, mitigation or prevention of disease and, but shall not include –
- i. any medicine included in any bonafide Ayurvedic (including Sidha) or Unani (Tibb) systems of medicines;
- ii. any medicine included in the Homeopathic system of medicine; and
- iii. any substance to which the provisions of the Drugs and Cosmetics Act, 1940 (23 of 1940) do not apply;
As per the DPCO 2013, “Scheduled formulation” means any formulation, included in the First Schedule whether referred to by generic versions or brand name. “Non scheduled formulation” has been defined as a formulation, the dosage and strengths of which are not specified in the First Schedule.
“Schedule” is the Schedule appended to the DPCO 2013.
Pricing of Scheduled Formulations:
Para 4 of the DPCO 2013 provides formula for the calculation of ceiling price of a scheduled formulation as follows –
Step1. First the Average Price to Retailer of the scheduled formulation i.e. P(s) shall be calculated as below:
Average price to retailer P(S) = (Sum of prices to retailer of all the brands and generic versions of the medicine having market share more than or equal to one percent of the total market turnover on the basis of moving annual turnover of that medicine) / (Total number of such brands and generic versions of the medicine having market share more than or equal to one percent of total market turnover on the basis of moving annual turnover for that medicine.)
Step2. Thereafter, the ceiling price of the scheduled formulation i.e. P(c) shall be calculated as below:
P(c) = P(s). (1+M/100), where P(s) = Average Price to Retailer for the same strength and dosage of the medicine as calculated in step1 above. M = % Margin to retailer and its value =16
Calculation of Ceiling Prices of following has also been provided in the DPCO 2013.
- a. Ceiling price of a scheduled formulation in case of no reduction in price due to absence of competition
- b. Calculation of Retail price of a new drug for existing manufacturers of scheduled formulations.
Pricing of Non-Scheduled Formulations:
Apart from the price fixation of the Scheduled Formulations, the NPPA is also empowered to monitor the maximum retail prices (MRP) of all the drugs, including the non-scheduled formulations and ensure that no manufacturer increases the maximum retail price of a drug more than ten percent of maximum retail price during preceding twelve months and where the increase is beyond ten percent of maximum retail price, it is empowered to reduce the same to the level of ten percent of maximum retail price for next 12 months. The manufacturer shall be liable to deposit the overcharged amount along with interest thereon from the date of increase in price in addition to the penalty.
Display of prices of Scheduled & Non-Scheduled formulations and price list:
Para 24 and 25 of the DPCO 2013 mandate that every manufacturer of a Scheduled & non-Scheduled formulation intended for sale shall display in indelible print mark, on the label of container of the formulation and the minimum pack thereof offered for retail sale, the maximum retail price of that formulation with the words “Maximum Retail Price” preceding it and the words ‘inclusive of all taxes’ succeeding it. Para 26 lays down that no person shall sell any formulation to any consumer at a price exceeding the price specified in the current price list or price indicated on the label of the container or pack thereof, whichever is less.
Recovery of overcharged amount under DPCO 1987 & 1995:
Para 23 states that notwithstanding anything contained in the order, the Government shall by notice, require the manufacturers, importer or distributor or as the case may be, to deposit the amount accrued due to charging of prices higher than those fixed or notified by the Government under the provisions of Drugs (Prices Control) Order, 1987 and Drugs (Prices Control) Order, 1995 under the provisions of this Order.
Margin of retailer & maximum retail price:
Para 7 lays down that while fixing a ceiling price of scheduled formulations and retail prices of new drugs, sixteen percent of price to retailer as a margin to retailer shall be allowed. Para 8 specifies that the maximum retail price of scheduled formulations shall be fixed by the manufacturers on the basis of ceiling price notified by the Government plus local taxes wherever applicable. Even the loose quantities of any formulation shall not be sold at a price which is in excess of pro-rata price of the formulation.
Drugs (Price Control) Amendment Order 2019
Drugs (Prices Control) Order, 2013 (DPCO)
Drugs (Prices Control) Order, 1995 (DPCO)
Drugs (Price Control) Order 1979 (DPCO)
DPCO – Schedule-I
Click below link
NPPA Updated 30-09-2020 – List of Ceiling prices fixed for scheduled formulation under DPCO 2013 ( NLEM 2015)
NPPA – Updated price list as on 01-04-2020
NPPA – Updated price list as on 07-02-2020
NPPA Updated 13-08-2018 – List of Ceiling prices fixed for scheduled formulation under DPCO 2013 ( NLEM 2015)
NPPA – Form-IV Performa
NPPA – National Pharmaceutical Pricing Policy 2012
NPPA – Pharmaceutical Policy 2002
NPPA – Drug Policy Amendment 1986
NPPA – Drug policy 1986
Delegation of powers
S.O. 1249(E) dt. 06-04-2020 – Delegation of Powers under DPCO 2013
S.O. 1394(E) dt. 30-05-2013 – Delegation of Powers under DPCO 2013
Source: NPPA Website
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