Drugs and formulations have been
subjected to price control for more than three decades now. The economic
reforms initiated by the Government of India in July 1991, trickled down to
the Pharmaceutical Industry only in 1994 and that too partially. Price
control in a large number of industries has already been abolished.
The main objectives of the Drug Policy after the modifications in the
Policy of 1986 announced in September 1994 are to ensure availability, at
reasonable prices of essential and life saving and prophylactic medicines of
good quality; strengthening the system of quality control over drug
production and promoting the rational use of drugs in the country; creating
an environment conducive to channelizing new investment into the
pharmaceutical industry to encourage cost-effective production with economic
sizes and introducing new technologies and new drugs; and strengthening the
indigenous capability for production of drugs.
The Drugs Price Control Order (DPCO), 1995 is an order issued by the
Government of India under Section 3 of the Essential Commodities Act, 1955
to regulate the prices of drugs. The Order inter alia provides the list of
price controlled drugs, procedures for fixation of prices of drugs, method
of implementation of prices fixed by Government and penalties for
contravention of provisions among other things. For the purpose of
implementing provisions of DPCO, powers of the Government have been vested
in the National Pharmaceutical Pricing Authority (NPPA). Drugs are essential
for health of the society. Drugs have been declared as essential and
accordingly put under the Essential Commodities Act. Only 74 out of 500
commonly used bulk drugs are kept under statutory price control. All
formulations containing these bulk drugs either in a single or combination
form fall under the price control category. However, the prices of other
drugs can be regulated, if warranted in public interest.
The NPPA was established on 29th August 1997 as an independent body of
experts following the Cabinet Committee’s decision in September 1994
while reviewing the Drug Policy. The Authority, inter alia, has been
entrusted with the task of fixation/revision of prices of pharmaceutical
products (bulk drugs and formulations), enforcement of provisions of the
Drugs (Prices Control) Order and monitoring the prices of controlled and
decontrolled drugs in the country.
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