Lok Sabha Question No. 1443 (UNSTARRED), answered on 2016-05-03
Subject: Production Cost of Medicines
Ministry: CHEMICALS AND FERTILIZERS
Asked by: HARISH DWIVEDI

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

## LOK SABHA

## UNSTARRED QUESTION NO.1443

TO BE ANSWERED ON 3 rd May, 2016

## Production Cost of Medicines

## 1443. SHRI HARISH CHANDRA ALIAS HARISH DWIVEDI:

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

- (a) whether the production cost  of  non-controlled  drugs  is  many  times  higher  than  that  of price controlled drugs, if so, the details thereof;
- (b) the steps taken by the Government in this regard;
- (c) whether  the  Government  has  formulated  any  policy  to  lower  the  prices  of  drugs  for cancer and AIDS as well as of other life-saving drugs, if so, the details thereof;
- (d) whether some pharmaceutical companies have threatened to stop manufacturing of drugs in protest against this policy; and
- (e) if so, the reaction of the Government thereto?

## ANSWER

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

(a) to (b): There is no specific provision in the DPCO, 2013 to examine and regulate the actual cost of production of medicines with reference to the ceiling prices / retail prices, as DPCO 2013 follows a market based methodology instead of cost-based methodology.

(c) to (e): Pursuant  to  the  announcement  of  National  Pharmaceutical  Pricing  Policy,  2012, (NPPP, 2012) Government notified Drugs (Prices Control) Order, 2013 (DPCO, 2013) on 15 th May, 2013. All medicines specified in the National List of Essential Medicines 2011 (NLEM) have been included in the First Schedule of DPCO, 2013. NPPA fixed the prices of 530 medicines under First Schedule of DPCO, 2013 (including 53 medicines for cardiovascular disease, 6 anti-diabetics, 20

anti-HIV/AIDS,  24  anti-Tuberculosis  (TB),  47  anti-Cancer  and  6  medicines  for  Kidney  disease) based on market based pricing methodology as enunciated in NPPP, 2012.

NLEM 2015 has been notified vide Ministry of Health and Family Welfare notification dated 27 th December, 2015. Department of Pharmaceuticals vide notification dated 10.03.2016 has amended Schedule-I  of  DPCO,  2013  substituting  NLEM,  2011  with  NLEM,  2015.  Ceiling  Price  of  226 scheduled  medicines  of  revised  Schedule  I  (including  20  medicines  for  cardiovascular  disease,  5 anti-diabetics, 14 anti-HIV, 12 anti-tuberculosis (TB) and 29 anti-cancer) have also been fixed.

NPPA has also fixed the retail price of 289 'new drugs' which fall within the purview of Para 2(u) of DPCO, 2013  under Para 5 of DPCO, 2013.

In  addition,  maximum  retail  price  (MRP)  was  capped  under  Para  19  of  DPCO,  2013,  in respect of 106 non scheduled medicines vide price notification date 10.07.2014, out of which 84 are used for treatment of cardiovascular diseases and 22 for diabetes.   The price notifications have been challenged in the Delhi High Court and Bombay High Court where the matter is sub-judice.  The Government  is  defending    the  price  notifications  in  both  the  Courts.    A  large  number  of manufacturers  have  already  implemented  the  price  reduction  and  the  price  notifications of 10.07.2014 issued by the NPPA are still in operation.

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