Govt to closely monitor price hikes of drugs outside essential list

The NPPA will ensure drug companies do not exceed the 10% annual price increase limit on non-essential medicines

The national pharmaceutical pricing regulator will keep a close watch on overcharging by drug companies for medicines outside the purview of the price control list.

 

In an office memorandum dated July 22, the National Pharmaceutical Pricing Authority (NPPA), under the Ministry of Chemicals and Fertilisers, said, “The government shall monitor the maximum retail prices (MRP) of all drugs, including non-scheduled formulations, and ensure that no manufacturer increases the maximum retail price of a drug by more than ten percent of the maximum retail price during the preceding twelve months…” Business Standard has reviewed the document.

 

The NPPA will monitor how companies are increasing prices of non-scheduled drugs. These are medicines that are not under direct price control, for which the NPPA fixes ceiling prices using the change in wholesale price index as well market data (average price to retailers of all brands of the medicine with a market share of 1 per cent or more). The prices of scheduled drugs, which are mentioned in the National List of Essential Medicines (NLEM), are fixed every year by the NPPA.

 

In case of non-scheduled drugs that are not part of NLEM, companies are allowed to take a 10 per cent hike annually. The NPPA will now closely monitor whether the price hikes are in line with this. 

 

If anyone raises prices beyond the permissible limit, they will be liable to deposit the overcharged amount along with interest thereon from the date of increase in price in addition to the penalty, the memorandum warned.

 

Moreover, to ensure companies cannot launch the same medicine under different brand names at higher prices, the NPPA has said: “All manufacturers are directed to align the prices of non-scheduled formulations launched under different brands… so that the difference in MRP is not more than ten percent."

 

Any violation of this rule will invite strict action under the DPCO, 2013, and the Essential Commodities Act, 1955.

 

The office memorandum signed by NPPA Deputy Director (Enforcement) Manisha Khuntia has been sent to all drug manufacturers, industry associations, and stakeholders.

 

Till September 2024, NPPA has raised cumulative demand of Rs 9980.6 crore from pharma companies as penalty towards overcharging in 2545 cases. Many cases are stuck in litigation.