Lok Sabha Question No. 833 (UNSTARRED), answered on 2024-11-29
Subject: Pricing of essential Drugs
Ministry: CHEMICALS AND FERTILIZERS
Asked by: Dr. Kirsan Namdeo

## GOVERNMENT OF INDIA MINISTRY OF CHEMICALS & FERTILIZERS DEPARTMENT OF PHARMACEUTICALS

LOK SABHA UNSTARRED QUESTION NO. 833 TO BE ANSWERED ON THE 29 TH  NOVEMBER 2024

## Pricing of essential Drugs

## 833. Dr. Kirsan Namdeo:

Will the Minister of CHEMICALS AND FERTILIZERS be pleased to state:

- (a)  the  criteria/guidelines  prescribed  by  the  Government/National  Pharmaceutical  Pricing Authority  for  determining  and  deciding  prices  of  essential  drugs  including  drugs  used  for treatment of cancer, diabetes, HIV, heart and kidney diseases;
- (b) whether the prices of essential drugs and other drugs have increased manifold;
- (c) if so, the details thereof and the reasons therefor; and
- (d) the steps taken/proposed to be taken by the Government to control/reduce the prices of pharmaceuticals/drugs during each of the last three years and the current year and the extent to which success has been achieved in this regard?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF CHEMICALS & FERTILIZERS (SMT. ANUPRIYA PATEL)

(a) to (d): National Pharmaceutical Pricing Authority (NPPA) under Department of Pharmaceuticals  (DoP)  regulates  the  prices  of  drugs  as  per  the  National  Pharmaceuticals Pricing Policy, 2012 and provisions of Drugs (Prices Control) Order, 2013 (DPCO, 2013). The key principles of the policy are Essentiality of Drugs, Control of Formulations Pricing and Market Based Pricing. The National List of Essential Medicines (NLEM) of the Ministry of Health  &  Family  Welfare  (MHFW)  is  incorporated  as  Schedule-I  of  the  DPCO,  2013. Medicines under NLEM, 2022 are mentioned according to their therapeutic category. Anticancer  formulations  including  immunosuppressive  and  palliative  care  are  mentioned  under Section 7, Anti- diabetic medicines under section 18.3.1, Medicines used in HIV under Section 6.7, Cardiovascular Medicines under Section 10, and Diuretics are mentioned under Section 15 of Schedule-I of DPCO, 2013.

NPPA fixes ceiling prices of scheduled medicines specified in Schedule-I of the DPCO, 2013  in  accordance  with  the  provisions  of  DPCO,  2013.  All  manufacturers  of  scheduled medicines  have  to  sell  their  products  within  the  ceiling  price  (plus  applicable  Goods  and Service Tax) fixed by the NPPA.

Ceiling prices of 926 scheduled formulations across various therapeutic categories are effective as on 25.11.2024. These includes 131 anti-cancer, 11 anti-diabetes, 29 anti-HIV, 65 cardio vascular, 1 haemodialysis solution and 10 Diuretics scheduled formulations.

Further the retail price of a new drug as defined in para 2(1)(u) of DPCO, 2013 are fixed  by  NPPA  as  per  Para  5  of  DPCO,  2013  for  existing  manufacturers  of  scheduled formulations. The retail price of a new drug is applicable to the applicant manufacturer and marketer and they cannot sell the new drug above the price notified by NPPA. Upto 25.11.2024, retail price of around 3046 new drugs have been notified under DPCO, 2013 including drugs

used for treatment of cancer, diabetes, HIV, heart and kidney diseases.

In case of non-scheduled formulation, a manufacturer is at liberty to fix the maximum retail price of a non-scheduled formulation (branded or generic) launched by it. However, as per  the  DPCO,  2013,  the  manufacturers  of  non-scheduled  formulations  are  not  allowed  to increase the maximum retail price of such formulations by more than 10% of the maximum retail  price in the preceding 12 months. Instances of overcharging are dealt with by NPPA under the relevant provisions of the DPCO, 2013.

As per provisions of DPCO, 2013, the ceiling prices of scheduled medicines are revised annually on the basis of Wholesale Price Index (WPI) (all commodities) for the preceding calendar year on or before 1st April of every year, which is notified by the Government on the 1st day of April every year.

The  WPI  increase  is  based  on  the  data  published  by  Department  for  Promotion  of Industry  and  Internal  Trade  (DPIIT),  Ministry  of  Commerce  and  Industry,  Government  of India. For the Financial year 2024-25, the annual change in WPI of all commodities worked out  as  0.00551%  during  the  calendar  year  2023  over  the  corresponding  period  in  2022. Accordingly, the ceiling prices of the formulations have been increased by 0.00551% w.e.f. 01.04.2024. Although, the annual permitted increase in the prices of Scheduled drugs is based on  the  increase  in  WPI  (all  commodities),  the  WPI  increase  is  the  maximum  permissible increase which may or may not be availed of by the manufacturers based on market dynamics.

NELM, 2022 was notified on 11.11.2022 as Schedule-I of DPCO, 2013. The fixation of ceiling price of scheduled formulation under NLEM, 2022 has resulted in average reduction of 16.82% in the prevailing prices.

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