NPPA and DPCO

National Pharmaceutical Pricing Authority (NPPA) was constituted in 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.

It fixes/ revises the prices of controlled bulk drugs and formulations and to enforce prices and availability of the medicines in the country, under the Drugs (Prices Control) Order, 1995.
The organization is also entrusted with the task of recovering amounts overcharged by manufacturers for the controlled drugs from the consumers.
It also monitors the prices of decontrolled drugs in order to keep them at reasonable levels.

Functions of NPPA

To implement and enforce the provisions of the Drugs (Prices Control) Order in accordance with the powers delegated to it.
To monitor the availability of drugs, identify shortages, if any, and to take remedial steps.
To collect/ maintain data on production, exports and imports, market share of individual companies and profitability of companies for bulk drugs and formulations.
To undertake and/ or sponsor relevant studies in respect of pricing of drugs/ pharmaceuticals.
To render advice to the Central Government on changes/ revisions in the drug policy.
To render assistance to the Central Government in the parliamentary matters relating to the drug pricing.

Drug Price Control Order

The Drugs Prices Control Order, 1995 is an order issued by the Government of India under Sec.3 of Essential Commodities Act, 1955 to regulate the prices of drugs.
The Order provides a list of price controlled drugs, procedures for fixation of prices of drugs, method of implementation of prices fixed by the government and penalties for contravention of provisions.
For the purpose of implementing provisions of DPCO, powers of the government have been vested in NPPA.
All drugs marketed in the country aren’t under price control. The National List of Essential Medicines (NLEM) 2011 is adopted as the primary basis for determining essentiality, which constitutes the list of scheduled medicines for the purpose of price control.
The DPCO 2013 contains 680 scheduled drug formulations spread across 27 therapeutic groups. However, the prices of other drugs can be regulated, if warranted in public interest.
As per the provisions of DPCO, NPPA fixes the ceiling price for medicines in the controlled category. The ceiling price of a scheduled drug is determined by first working out the simple average of price to retailer (PTR) in respect of all branded-generic and generic versions of that particular drug formulation having a market share of 1% and above, and then adding a notional retailer margin of 16% to it.
On April 1st 2020 medical devices were notified and all these devices shall be regulated by the Government of India as drugs aiming for effective control and price monitoring. Currently the Government is regulating 24 devices which are regulated as drugs under Drugs & Cosmetics Act, 1940 and Drugs & Cosmetics Rules, 1945.
Of the above 4 are the medical devices scheduled for which ceiling prices had been fixed are: cardiac stents; drug eluting stents, condoms and intrauterine devices (Cu-T).