Govt tweaks DPCO to limit liability in overcharging cases, ease compliance

Industry says amendments reduce procedural burden while tightening documentation and record-keeping norms for drug manufacturers under the pricing order

The Centre has amended the Drugs (Prices Control) Order (DPCO), 2013, introducing a series of changes that the pharmaceutical (pharma) industry says will simplify regulatory processes, reduce manufacturers’ exposure in overcharging cases, and bring greater clarity to the implementation of drug price control rules, while simultaneously strengthening compliance requirements.

 

The amendments, notified on June 30, provide relief to manufacturers in cases involving overcharging of scheduled formulations after price revisions. Under the revised framework, where a manufacturer can demonstrate compliance with the prescribed requirements for communicating revised prices, its liability for overcharging will be restricted to the quantity of stock sold above the notified price by the distributor, retailer, or stockist found to be in violation, rather than extending more broadly across the supply chain. The notification states that such liability shall be “restricted to the quantity of stock traded through the distributor or retailer found to have effected such overcharging”, provided manufacturers comply with the prescribed dissemination requirements.

   

Sudarshan Jain, secretary-general of the Indian Pharmaceutical Alliance, which represents leading pharma companies, said the amendments simplify procedural requirements while strengthening compliance under DPCO. “One of the major changes relates to overcharging provisions. Earlier, manufacturers could face recovery proceedings even when overcharging occurred further down the supply chain. Under the amended framework, if a manufacturer can demonstrate compliance with the prescribed price dissemination requirements, its liability will be restricted to the quantity of stock actually overcharged by the distributor, retailer, or stockist found to be in violation. This brings greater clarity and fairness to the enforcement framework while ensuring accountability across the supply chain,” Jain said.

 

The relief, however, comes with stricter compliance obligations. Manufacturers must demonstrate that they circulated revised price lists to dealers and retailers, advertised price reductions in at least two national newspapers, updated revised prices on their websites, issued revised price lists, and maintained batch-wise production and stock details.

 

The government has also introduced several measures aimed at reducing procedural requirements. Existing manufacturers launching the same new drug within 12 months of the government fixing its retail price will no longer have to seek fresh price approval from the National Pharmaceutical Pricing Authority. Instead, they will only have to intimate the launch through the newly introduced Form IA within one month. The amendment states that such manufacturers “shall not be required to apply” for a fresh retail price if they launch the same new drug within 12 months of the initial price fixation.

 

A senior pharma industry executive said the change would largely reduce duplication in the approval process. “It removes duplication while ensuring companies continue to report launches through the prescribed mechanism,” the executive said.

 

The amendments also empower the government to notify separate ceiling or retail prices for the same drug after considering factors such as pack size, packaging, dosage compliance, and whether it is in liquid, gaseous, or any other form, where there is a specified therapeutic rationale.

 

A regulatory affairs expert with a Mumbai-based pharma company said the provision addresses a long-pending industry demand. “This is a practical change that the industry has been seeking for a while. Different presentations of the same medicine don't always cost the same to make or bring to market. Earlier, there was very little flexibility to account for those differences. This amendment gives the regulator room to recognise them wherever there is a genuine clinical need,” the expert said.

 

Another important change relates to record maintenance. Manufacturers will now be required to maintain records relating to active pharmaceutical ingredients, bulk drugs, and formulations for at least seven financial years. Records must be preserved for longer where proceedings under DPCO are pending.

 

Industry executives said the record-retention requirement aligns the DPCO with other legislation and brings greater certainty to compliance. “The seven-year record-maintenance requirement is in line with provisions under the Income-Tax Act and other laws. Earlier, companies were often required to furnish records going back much further. Having a clearly defined retention period provides greater certainty for both industry and regulators. Overall, these amendments will simplify the process while improving regulatory certainty,” the industry executive quoted above said.

 

Taken together, industry executives said the amendments simplify the implementation of the DPCO by reducing procedural bottlenecks while making compliance obligations more explicit, reflecting a shift towards stronger implementation rather than additional price controls.