Court limits govt bid to control medicine prices: What it means for you
Bombay High Court ruling narrows National Pharmaceutical Pricing Authority's reach, raising fresh concerns over affordability as most drugs sold in India remain outside price caps
It held that drug variants not explicitly listed for price ceilings cannot be brought under price control.
The decision is expected to have wide-ranging implications for India’s pharmaceutical market, where the government directly fixes the upper ceiling for a number of commonly used medicines, including those used to treat fever, pain, diabetes, hypertension, infections, and even cancers.
The Court has ruled that the National Pharmaceutical Pricing Authority (NPPA) cannot extend price caps to drug variants that are not directly listed in the National List of Essential Medicines (NLEM). The NLEM was last updated in 2022.
India Today explains what the ruling means and the impact it will have on medicine prices.
HOW DRUG PRICING WORKS
India’s dual framework for drug pricing divides medicines into “scheduled” and “non-scheduled” categories. Scheduled drugs – those included in the NLEM – are subject to annual ceiling prices fixed by the National Pharmaceutical Pricing Authority.
These drugs are also procured in bulk by the Union and state governments for various health programmes.
The NPPA can fine companies found selling scheduled medicines at prices higher than the stipulated limits.
Currently, the NLEM comprises 384 drugs and 1,000 formulations across 27 therapeutic categories, accounting for about 18 percent of the total drugs in India’s pharmaceutical market.
An industry source said that a drugmakers’ association had challenged the NPPA’s move to fine several companies on the grounds that they were charging higher prices for versions of scheduled medicines classified as “extended release” (ER), “controlled release” (CR), or “sustained release” (SR).
DEBATE OVER FORMULATIONS
ER refers to formulations that slow the release rate to extend a drug’s duration of action. CR is a more advanced type of extended release that delivers the drug at a predetermined, constant rate, while SR releases the drug over an extended period but often lacks the precise, constant rate of CR.
For instance, if a 10 mg dose of a high blood pressure medicine is price-capped at Rs 10 per pill, and a company charges Rs 20 for its SR version, the NPPA had been imposing fines for violating the Drug Price Control Order, 2013, said a senior member of the Indian Drug Manufacturers’ Association (IDMA), the largest body of generic drugmakers in the country.
He stressed that ER, CR, and SR formulations serve specific purposes and are often produced at higher input costs than standard formulations.
“Therefore, the same price ceiling norm should not be applied to these special formulations, as price ceilings for most available dosage strengths of scheduled drugs are already under price control,” the IDMA member added.
However, public health advocates warn that this creates a loophole that could undermine affordability. Pharmaceutical companies, they say, often introduce slight modifications to existing drugs to position them outside the ambit of price control, thereby commanding higher prices.
“NPPA can still bring these special formulations under price control by including them specifically in the NLEM, as is done for different dosage strengths or formulations of the same drugs in many cases,” pointed out Chinu Srinivasan, co-convenor of the New Delhi-based patient rights group All India Drug Action Network (AIDAN).
Another member of the group underlined that price control of drugs in the country is currently based on average prices of a drug by all companies and not based on the cost of production.
“In fact, we have been pushing for this to be the case – so the argument given by the IDMA for having differential pricing for special formulations does not hold here,” said the AIDAN member.
It held that drug variants not explicitly listed for price ceilings cannot be brought under price control.
The decision is expected to have wide-ranging implications for India’s pharmaceutical market, where the government directly fixes the upper ceiling for a number of commonly used medicines, including those used to treat fever, pain, diabetes, hypertension, infections, and even cancers.
The Court has ruled that the National Pharmaceutical Pricing Authority (NPPA) cannot extend price caps to drug variants that are not directly listed in the National List of Essential Medicines (NLEM). The NLEM was last updated in 2022.
India Today explains what the ruling means and the impact it will have on medicine prices.
HOW DRUG PRICING WORKS
India’s dual framework for drug pricing divides medicines into “scheduled” and “non-scheduled” categories. Scheduled drugs – those included in the NLEM – are subject to annual ceiling prices fixed by the National Pharmaceutical Pricing Authority.
These drugs are also procured in bulk by the Union and state governments for various health programmes.
The NPPA can fine companies found selling scheduled medicines at prices higher than the stipulated limits.
Currently, the NLEM comprises 384 drugs and 1,000 formulations across 27 therapeutic categories, accounting for about 18 percent of the total drugs in India’s pharmaceutical market.
An industry source said that a drugmakers’ association had challenged the NPPA’s move to fine several companies on the grounds that they were charging higher prices for versions of scheduled medicines classified as “extended release” (ER), “controlled release” (CR), or “sustained release” (SR).
DEBATE OVER FORMULATIONS
ER refers to formulations that slow the release rate to extend a drug’s duration of action. CR is a more advanced type of extended release that delivers the drug at a predetermined, constant rate, while SR releases the drug over an extended period but often lacks the precise, constant rate of CR.
For instance, if a 10 mg dose of a high blood pressure medicine is price-capped at Rs 10 per pill, and a company charges Rs 20 for its SR version, the NPPA had been imposing fines for violating the Drug Price Control Order, 2013, said a senior member of the Indian Drug Manufacturers’ Association (IDMA), the largest body of generic drugmakers in the country.
He stressed that ER, CR, and SR formulations serve specific purposes and are often produced at higher input costs than standard formulations.
“Therefore, the same price ceiling norm should not be applied to these special formulations, as price ceilings for most available dosage strengths of scheduled drugs are already under price control,” the IDMA member added.
However, public health advocates warn that this creates a loophole that could undermine affordability. Pharmaceutical companies, they say, often introduce slight modifications to existing drugs to position them outside the ambit of price control, thereby commanding higher prices.
“NPPA can still bring these special formulations under price control by including them specifically in the NLEM, as is done for different dosage strengths or formulations of the same drugs in many cases,” pointed out Chinu Srinivasan, co-convenor of the New Delhi-based patient rights group All India Drug Action Network (AIDAN).
Another member of the group underlined that price control of drugs in the country is currently based on average prices of a drug by all companies and not based on the cost of production.
“In fact, we have been pushing for this to be the case – so the argument given by the IDMA for having differential pricing for special formulations does not hold here,” said the AIDAN member.
