Lok Sabha Question No. 902 (UNSTARRED), answered on 2016-03-01
Subject: Price of Drugs
Ministry: CHEMICALS AND FERTILIZERS
Asked by: RAJEEV SHANKARRAO SATAV, B. SREERAMULU, V. SATHYABAMA, GOPAL CHINAYYA SHETTY, BOORA NARSAIAH GOUD, HARISH DWIVEDI, KAMLA DEVI PATLE

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

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## LOK SABHA

UNSTARRED QUESTION NO.902

TO BE ANSWERED ON 1 st  March, 2016

## Prices of Drugs

## 902. SHRI SATAV RAJEEV:

SHRI B. SRIRAMULU:

SHRIMATI V. SATHYA BAMA:

SHRI GOPAL SHETTY:

DR.  BOORA NARSAIAH GOUD:

SHRI HARISH CHANDRA ALIAS  HARISH DWIVEDI:

SHRIMATI  KAMLA DEVI PAATLE:

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

- (a) the  details  of  the  mechanism  for  controlling  drug  prices  in  the  country  and  the percentage increase in the prices of different drugs during the last three years and the current year along with the reasons therefor;
- (b) whether  the  retail  price  of  some  of  the  drugs  is  11  times  (1000%)  higher  than  their production  cost  affecting  the  patients  of  cancer,  heart,  kidney  and  liver  illnesses,  if  so,  the details thereof and the reasons therefor;
- (c) whether the price of drugs are fixed by private companies which is much higher then their actual cost, if so, the details thereof and the reasons therefor along with the steps being taken by the government to check this practice and strengthen during research and development and minimize drug manufacturing cost;
- (d) whether  the  Government  plans  to  cap  trader's  margin  at  around  100%  across  drug categories generic, branded, scheduled and non scheduled, if so, the details thereof: and

(e) whether  the  proposed  move  will  bring  down  the  prices  of  crucial  drugs,  if  so,  the details thereof along with the time by which the decision in the matter will be taken?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF CHEMICALS    & FERTILIZERS (SHRI HANSRAJ GANGARAM AHIR)

(a) to (e): The National Pharmaceuticals Pricing Authority (NPPA) fixes the ceiling prices of medicines listed in the First Schedule of the Drugs (Prices Control) Order (DPCO), 2013 on market  based  pricing  methodology.    NPPA  has  fixed  ceiling  prices  of  530  medicines (including 53 formulations for cardiovascular diseases, 6 for diabetes, 20 for HIV / AIDS, 24 for Tuberculosis, 47 for  Cancer  and 6 for kidney disease) based on market price data under provisions of the said order.   For  non-scheduled  formulations,  there  is  no  control  over  the launch price.

DPCO, 2013 provides that all the existing manufacturers of scheduled  formulations are  required  to  revise  the  prices  of  such  formulations  downward  not  exceeding  the  ceiling price (plus local taxes as applicable) fixed by the  Government. All other existing manufacturers selling such scheduled formulations at a price lower than the ceiling price (plus local taxes as applicable) so fixed by the Government shall maintain their existing maximum retail price.

Annual revision in the prices of scheduled formulations is permissible to the extent of increase in the Wholesale Price Index (WPI) for the particular year. In respect of medicines not under price control, manufacturers are allowed to increase Maximum Retail Price (MRP) by 10% annually.

In  case  any  manufacturer/marketer violates the provisions of DPCO, 2013, action on recovery of amount as per Essential Commodities Act is taken.  The DPCO, 2013 provides that sixteen percent of price to retailer shall be allowed as a margin to retailer while fixing ceiling price of scheduled formulations and retail price of new drugs. For non-scheduled drugs, there is  no  provision  in  DPCO,  2013  for  fixing  the  margin  to  retailer.    There  is  also  no  specific provision in the DPCO, 2013 to examine and regulate the ceiling price with reference to the production cost of medicines.

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